This blog is about finding creative ways to earn more, save more, and invest your money. Peer-to-peer (P2P) lending is definitely the most creative of the investing models, and I’ve recently become a huge fan of the movement. There are quite a few reasons to love P2P, and I’m going to break down my top five right here in this post.
#1 – You Can Cut Out the Middleman
P2P lending companies like Lending Club and Prosper are fantastic because they serve as platforms for borrowers and lenders – independent people like you and me – to make loans. There are no banks involved – no officers or meetings or weird programs. Just regular people making loans to one another, you can try here to get a loan.
I guess I like the simplicity of it. Banks have taken a major beating and suffered a seriously bad rep after the economic meltdown, and for good reason. It’s nice to see people move away from dependence on the banking system and help one another instead.
#2 – The ROI is Out of Sight
If you invest in traditional vehicles such as CDs or mutual funds, the rate of return is pretty dismal (especially these days). I’m a big fan of the Roth IRA – even opening one myself soon – but as far as other investments go, P2P has my heart.
You can earn 6%, 10%, or even 15% interest depending on the amount and types of loans in your portfolio. Where else can you earn returns that high? I want to add one caveat, though: as I’ve asserted in many other posts I’ve authored lately on P2P, spreading your money around among many different loans in micro amounts is the safest way to invest on these websites.
#3 – You Have Stats and Figures at Your Fingertips
Other investments give you the goods, yes. But your dashboard on P2P lending sites is a living, breathing thing. You can spy on all your loans in one place, in real-time, and adjust your lending strategy accordingly as you see fit. This gives you complete control over everything.
#4 – It’s a Snap to Bail Out
Say you don’t want to do the peer-to-peer thing anymore and you want out. Most of the websites offer open marketplaces where you can sell notes to other lenders and quickly recover your funds.
So, if you’ve invested a good chunk of change and suddenly something urgent arises that requires you to access the tied up funds, you can sell your existing notes and recoup your money to use it for the crisis.
But in case you need to do bail bonds, there are services to help you how to find out if you have an active Connecticut warrant and learn if you need a bailbond or not.
#5 – You Can Feel Good About Helping Others
This is my favorite part. When you become a P2P lender, you’re helping people obtain loan financing when they may not have otherwise had the opportunity. Some of these people are trying to consolidate debt and get a fresh start. Others have a medical crisis or some other financial emergency they need the funds to handle. Nothing will make you feel better than funding loans for these people at Atlanta. That’s more than you can say for a CD.