Phantasm
Banned
To begin with, P2P lending allows individuals to extend credit to other people or businesses through the help of online platforms rather than using traditional banks. Among the merits are such as making capital accessible for borrowers whose credit is not good, equitable interest rates as well as diversification of investors’ portfolio, high returns and a simplified application process. However, risk factors include borrower default risk, platform risks in case P2P fails, liquidity risk due to limited marketability, interest rate risks and regulatory risks. Although there are numerous opportunities offered by P2P lending it is important to understand this complex risk exposure that calls for prudent decisions through investment diversification and undertaking a detailed due diligence on the p2p platforms. Hence, one should weigh the risks against its benefits before involving themselves into any form of lending or investing activity so that they can make informed choices.
