How to choose a P2P lending platform
Choosing the perfect platform for investing in loans is half of the success. It can be as rewarding as the actual investment. Of course, it is easy to be tempted to start on a platform that offers loans with the highest yield, but it would be wise to conduct a comprehensive assessment of your potential business partner with who you’re going to be entrusting your money.
Be careful and ask yourself: Is this platform following industry standards? Have they ever had any defaults? Who owns it? Suppose the platform is brought to the attention of the authorities or disappears altogether. In that case, it will take a long and complicated process to get your money back. So, you have to know your business partner.
Don’t know what criteria to exercise when choosing a platform to invest your money on? This article will cover the main aspects that you should consider before risking your hard-earned money.
How to choose a p2p lending platform
There are 9 key factors you should keep in mind when choosing a p2p platform:
1. Platform size
A good starting point for assessing a lending platform’s credibility is to study the scale and duration of a company’s operations. Likely, other investors have successfully tested the sites with the largest number of participants and financed loans. Some are at higher risk that the company will wind up or operate illegally.
To make sure that the lending platform really is what it claims to be, search the Internet for evidence of its existence. Any platform that does a full-fledged business has full-time employees who perform various functions: From marketing to legal to founders. Look for publicly available data about the people mentioned on their website on social networks, such as LinkedIn. This indicates that the company has nothing to hide. Another crucial part is being transparent about the lending companies, also known as loan originators. It is important to collect information about lending companies that place loans on the platform. If the platform provides loans to borrowers without any middlemen, feel free to ask how they do it.
3. Past performance
History is everything. Because in this industry, where you put your money at stake, you simply must know who handles it. Even if a p2p lending platform claims to have been operating longer than its competitors, you should pay attention to its customers’ success. For example, how much interest have its clients received? The platform should always disclose such information.
4. Customer support
Of course, the determining role in choosing a platform for investing in loans is likely to be played by the ease of use in general or the platform’s reliability and financial results. However, in cases where something goes wrong or you have questions, it’s nice to know that the investment platform you have chosen has invested in customer support. It is even more pleasant if the support is multi-lingual, so they speak your language.
5. Security mechanisms
Even if you are absolutely sure that you have chosen the most reliable P2P lending platform, you need to approach your investment thoughtfully. As an additional layer of protection, some of these platforms offer a BuyBack obligation and a secondary market, where, if you need a fast exit, you can sell your investment before maturity. Also, keep in mind such terms as Group Guarantee, which ensures repayment of the clients’ funds in case of the Loan Originators’ default.
When investing in loans, there is a requirement for a minimum investment amount. Investing in loans is, after all, buying a stake! Simultaneously, the entry threshold should not be too high that only the rich can afford it. One of the benefits of spreading funds among many smaller investments is the ability to diversify your portfolio to include different products instead of putting all your eggs in one basket. On some of the lending platforms, including Esketit, you can start investing with as little as 10 euros. Or purchase an investment in the secondary market at an even lower price. Investors with little experience will also benefit from the auto-invest function if the platform offers it.
7. Opportunities for diversification
Loans and business projects that you can invest in are all different. Serious p2p lending platforms offer a ton of opportunities to build a balanced, well-diversified portfolio. This means that if you have the opportunity to invest in various types of loans, in loans with different maturities and different levels of risk, you can find your balance of risks and returns. Many platforms even provide the ability to invest in loans issued in different countries and different currencies, which experienced investors can use to balance their risks.
8. No hidden fees
You may be the luckiest investor in the world, but it would be incredibly frustrating to lose some of your hard-earned money to avoidable commissions. Please read the small print carefully before registering on the platform and find out, among other things, what their fees are – what and if they’ll charge you for investing, deposits and withdrawals.
9. Investor due diligence
Finally, a clear indicator of the platform’s legitimacy will be that during the registration process, you will be asked to confirm your account with some identification document, tick the box on the protection of personal data and agree to the terms and conditions of use of the platform. The registration process can take some time, you also need to verify your account to proceed. You will have to spend some time carefully reading all the contracts and agreements before clicking the “agree” or “invest” button to rule out any clauses that jeopardize your investment. It is worth noting that while additional checks against illegal activities such as money laundering may seem overkill and intrusive to investors, it is actually a good sign of the platform’s legitimate operation.
… Simply put, it’s time to get it with Esketit.
We are the new up-and-coming European lending investment platform. Esketit was founded by co-founders of Creamfinance Group, Matiss Ansviesulis, and Davis Barons. Creamfinance Group is one of Europe’s major players. Creamfinance has been profitable since its inception in 2012, with a whopping 70 million in revenue in 2019.
Esketit key benefits at a glance:
– BuyBack Obligation for more most of our loans;
– Possibility of automatic investments using the Auto-Invest tool;
– ‘Skin in the game’: The Founders of Esketit own both the platform and loan originators. Why? To ensure that the lending company’s interests are aligned with the interests of the investor, both sides have a stake in the investment. That’s what we call reliable;
– Unrivaled diversification opportunities, including a variety of investment options;
– The minimum investment amount is only 10 euros; opportunities to invest in different markets;
– Zero registration, investment, deposit, and withdrawal fees;
– Access to the secondary market, where you can sell your investment before maturity for fast exit;
– Multi-lingual investor support;
Are you ready to start earning? Tap the Esketit logo on the upper left to start your journey.