Peer-to-peer or P2P lending and investing have become quite popular nowadays. Investors are slowly realizing the potential P2P lending has and how they can use it to earn great returns over time. Another significant reason for its popularity is the easy availability of loans for borrowers who don’t have good credit scores or are unable to get funds from traditional banks. However, with this new trend comes a lot of misconceptions. There are numerous myths about P2P lending and many people wonder, “Is P2P safe?” or “How safe is P2P lending?”. Let’s clear up some common myths about P2P lending and look at the real facts about it.
What is P2P Lending?
P2P lending is all about lending money directly to others who need it without involving traditional banks. In return, lenders earn great interest, which is often more than what they would get by leaving their money in a savings account.
Common Myths and Facts about P2P Lending
Myth: P2P lending is extremely risky
Fact: There is no doubt that P2P lending has some risks. However, it is not as risky as some people think. P2P platforms like 13Karat have systems in place to check borrowers’ ability to repay. Only after checking credit scores, income, and other factors, the borrowers are allowed to take loans.
Myth: Only desperate borrowers use P2P lending
Fact:It is quite a common belief that only people who can’t get loans from banks or those who have a bad credit score turn to P2P lending. However, this is not true. Many borrowers with good credit use P2P lending because it can offer lower interest rates or faster approval times compared to traditional banks.
Myth: Lenders can lose all their money
Fact: Not at all! While there is a risk of losing money if a borrower does not repay, losing everything is not possible. It is mainly because P2P platforms like 13Karat often diversify their investments by lending smaller amounts to multiple borrowers. This way, even if one borrower defaults, you have other investments safe.
Alt Tags – How Safe is it to Invest Money in P2P Lending
Myth: P2P lending is a quick way to get rich
Fact: Some people think P2P lending is a great way to get rich quickly, but that’s not how it works. The returns can be huge, but they take time. Like any investment, patience is key in P2P lending as well.
Myth: P2P platforms aren’t regulated
Fact: Another common myth is that P2P lending platforms operate without any regulation. However, the truth about P2P lending is that several rules and regulations have been laid down by the RBI (Reserve Bank of India) to protect both borrowers and lenders. These regulations make sure that P2P platforms follow certain rules and make the process safer for everyone involved.
Myth: P2P lending is only for tech-savvy people
Fact: Some people believe that P2P lending is complicated and only for those who are good with technology. The truth is that P2P platforms are designed to be user-friendly. They offer websites and apps with easy user interfaces, making it simple for anyone to start lending or borrowing.
Reasons People Invest In P2P Lending
Conclusion
If you wish to earn good returns and grow your wealth, P2P lending and investing make for one of the most significant ways. However, make sure you understand the investment product before starting your journey and do not fall prey to myths. Now that you know the truth about P2P investing, you can invest with confidence.
With 13Karat, you can invest in the 6-month plan and 3-month investment plans and earn returns of up to 13% and 12% per annum respectively.
