Investing in people’s loans for people is one of the fastest growing industries in the market. How are people’s loans safe for people?
UK savers are disappointed with the interest rates currently offered by banks. They prefer to use other online options such as investing in people’s loans for people who are one of the fastest growing industries on the market.
What are people’s loans for people
Peer-to-peer loans are loans from people to people and therefore, in this way of investing the bank are not needed. Those who invest their money through loans from people for people have a higher yield than in the bank, and on the other hand, those who borrow pay off with less interest than the bank. What is a very clever way to make both sides happy.
People’s loans for people are originally from England
The founder of this sector is Bank, which was founded in 2010. The largest providers that offer loans to people in the UK for people are Bank and Ratesetter. The website allows investors to obtain an interest rate of usually between 5 – 6% pa. These funds are then lent to people interested in the loan.
Risks of investing in people’s loans for people
It’s not about banking and it’s not even savings accounts. It is about investing in unsecured loans where the most common purpose is buying a car, refurbishing or refinancing disadvantageous loans, credit cards, or loans. However, these investments are not protected by the State (Deposit Protection Fund) as deposits with banks are protected.
Risks are and will always be what you invest anywhere. Bank, the founder and the largest provider of 10 years of history, says it was an experience for the company mainly through the financial crisis (2008) that is influencing today’s thinking. Bank has managed for years without losses for investors. Ratesetter, which was set up in 2010, reports that it has always been able to return all the funds invested so far by investors.
How does the Guarantee Fund Work in England
In order for investors to be sure of the return on their deposits and to maintain their trust, people-to-people loan companies have created their own “Guarantee Funds” to redeem their deposits to investors if their “borrowers” are delayed with multiple installments. Thus, even if investments are not protected by the state, companies have treated it in their own way and the investor does not have to worry about losing their money.
Bank has more than £ 9.6 million in its Guarantee Fund to cover potential losses. Ratesseter has more than £ 16.4 million in its Guarantee Fund. At the same time, money from investors is always provided for multiple loans, not just one.
Investing in Slovakia in People’s Loans through Best Financial Euro
Best Financial Euro is a “young” company and that’s why it is dynamic and inspired only by the best. Investing through Best Financial is safe. Protects your deposits with three-stage protection.
1. Scoring system
Although Best Financial is not a bank, it is strict in approving loans. Even stricter than banks. This means that the scoring system in Best Financial, a system of client assessment, has very strict conditions. Best Financial lends money only to those who meet these requirements, as evidenced by the fact that no loan in Best Financial has failed.
2. Guarantee Fund
The Guarantee Fund is designed to cover investments so that no investor loses what he / she invests through borrowing through Best Financial. The Guarantee Fund covers the principal of the investment in late payments. The current amount of the Guarantee Fund is more than € 1 million, for more details, please refer to the Guarantee Fund Rules .
Diversification is one of the most important ways to reduce investment risk. Therefore, in Best Financial one investor never invests the entire amount of investment in just one loan. Each Best Financial investment will be distributed among the largest number of borrowers who have undergone a rigorous approval process to make investors’ money safe.