Who uses P2P lending
P2P lending services are more loyal to the borrower, since all risks are borne by investors, not the platform. Therefore, those borrowers who have been denied a loan at a bank can get approval in the P2P segment. The set of documents for this is substantially less, and the decision on the borrower’s admission to the site is made faster. Of course, it is unprofitable for a platform to have many defaults, especially if their share is publicly disclosed, so there is still some filter borrowers.
From the investor’s point of view, it’s not entirely correct to decide whether such services are better or worse than conventional bank deposits. Potential income in P2P is higher, but it carries higher risks and no guarantees.
What are the P2P lending risks
The borrower will stop paying under the contract. No matter how convincing you are in the description of the service, that they will by all means facilitate the return of funds in case of delays, do not count on it. Of all the risks, this is the most frequent: for example, now my loan portfolio includes 50 borrowers. Of these, six stopped paying.
To return the money, you have to go to court. If you are engaged in self-repayment of funds from unreliable borrowers, you will have to go to court. In this case, the loan agreement is usually signed using an SMS code. Prove that the borrower actually signed the contract via SMS, without the involvement of the platform will not work. Whether they want to help you there depends on the loyalty of the platform. In this case, without the help of a qualified lawyer, you most likely will not be able to cope anyway.
How to make a lawsuit in court
Money can not be returned even through the court. If you won the court and received a writ of execution, this does not mean that it will turn out to return the money even through the bailiff service. The individual borrower may not have official work and funds in bank accounts, and a legal entity with a nominal director may simply cease to exist.
Tax risks – income from your investments is taxed. If the platform pays taxes for you, you do not need to take care of it. Otherwise, you must do it yourself. Of course, it would be tempting not to pay taxes, but then be prepared that sometime this will show up and lead to fines.
There is still a risk of closing the platform – for a long time working in the services market it is not very big, but still there is