Risk In P2P LendingAhead of a glut of new offerings on site, all with attractive yields, we thought it appropriate to remind readers, users and lenders of the risks of P2P lending. If you don't understand the risks, you shouldn't invest money. With that in mind, we look at the following statement: "Risk versus return in the peer-to-peer lending (P2P) market is defined by the borrowers," write our friends at Orca Money.We run a short extract of the Orca piece below. The success of a P2P platform is measured by their ability to originate good quality borrowers; investors will gravitate to wherever attractive risk-adjusted returns are on offer. The size of the P2P market and the size of the P2P platforms is therefore constrained by the level of borrower demand in the market and, more critically, how effective the platforms are at originating borrowers.
We currently have on A-rated, five-year loan on site. With a fixed rates of 8 per cent it is secured against property – and will close when filled.In addition to new loan offerings, our secondary loan market, offering existing loans for sale by lenders, is available to registered Money&Co. users.All loans can be held, tax-free, in an Innovative Finance Individual Savings Account, or Innovative Finance ISA.
Risk: Security, Access, YieldDo consider not just the return, but the security and the ease of access to your investment.We write regularly about these three key factors. Here's an earlier article on security, access and yield.If you haven't made a loan via Money&Co. before, please read the risk warnings and the FAQ section. You may also wish to consult a financial adviser before making an investment. Capital is at risk, once loaned.