Peer to Peer Lending (P2P) is a growing phenomenon in both the US and UK, providing an alternative form of finance
With huge potential for returns resulting in people beginning to wake up to this emerging asset class, LendingRobot has produced an infographic about P2P investment in the US, highlighting “7 surprising facts about Peer to Peer Lending”. It makes for some interesting reading and I have outlined their seven facts below.
LendingRobot is a US cloud-based financial service that enables individual investors to automate their investments on Lending Club and Propser – two large scale P2P platforms in the US. So what seven facts have they outlined for us?
1. “Hundreds of millions of dollars of peer loans are issued monthly”
Whilst the UK P2P sector is growing and only just starting to attract institutional investment the US market is way ahead, with approximately $500 million of loans issued every month.
2. “Borrowing from peer loans is 70% cheaper than credit cards”
It might not make a difference in the beginning but give it time and you will notice the difference that 70% cheaper makes to you!
3. “Investing in peer lending can be less risky than the stock market”
Stocks have always been a strong asset class, however with economic instability still at the forefront of people’s minds, peer lending is providing a stable alternative.
4. “It’s ok when loans are defaulting because of diversification”
Those investing in P2P platforms spread their investments across multiple loans and in varying amounts, meaning that if a loan defaults it might be that you lose $25 rather than $25,000!
5. “It’s better to lend money for vacations than for education”
This statement comes from the different rates of return in relation to different categories, for example the infographic shows that financing a wedding is better for returns than financing somebody moving house.
6. “Avoid Nevada, invest in Ohio”
The US states vary on how high their rate of return is, it would appear that investing in loans in Ohio offers you a much higher rate of return than loans in Nevada.
7. “Popular loans are fully funded within 30 seconds”
Online platforms make loans available to lenders multiple times in one day, however with there being so much competition the loans that have the highest rates of return are snapped up immediately.
So whilst the US operates in a completely different way to the UK financial market, these facts show the potential of online P2P platforms. P2P lending in the UK is starting to see interest from institutional investors and banks alike, their beginning to sit up and listen, so why don’t you?
Join us at the Peer to Peer Lending and Investment Briefing on 15th October in London to hear from three of the top UK online P2P platforms, RateSetter, Lend Invest and Funding Circle as to how you and your clients can capitalise on this emerging asset class.[Image - Google]