The title sort of says it. Would you, acting as a lender, bother with the various Peer-to-Peer (P2P) lending offerings out there. The upshot for the investor is a better interest rate. The downsides, well, they are newer and there is a higher risk of default. Parenthetically, there is a piece over on Forbes that discusses the current state of the market, in case anyone is interested: The Disappearance Of Peer-To-Peer Lending
I'm no stranger to the lending industry. It can be very profitable, but of course it's always risky. I always found that the bottom 10% or 1% who either paid late or didn't pay created 90% of your work and headaches. Collecting can be a challenge, and is generally best left to a third party if that option is available. Like much in life, it's a numbers game. The best thing to do is try to know who you're dealing with as much as possible. Lots of rules and regs as well.
I would not bother about it as long as the peer does not forget to return the money. It is really irritating when a person does not remember to return the money and one has to constantly nag the person to get the money from him. When that happens I feel like why did I ever bother giving them any money.
I am assuming this peer to peer lending is on a serious level, not the type of lending one does to help out someone they know right? My father always told me if you lend a friend money you should expect it might not come back, so don't lend what you can't afford to lose. Now on a business level things are much more complicated, I have seen people I know that would be good for a loan denied for whatever reason and I have seen people get loans for ideas that were half cocked right out of the gate. Angel investors might be a better solution then peer investing. At least the angels know it is an investment and not a loan, and you don't have to fear someone coming to break your legs if it gets tough. My question is what is the dividing line between investing and loaning? Can a peer just loan you money and not be an investor? I thought this was pretty regulated as to what or who could be considered a lender?
No I would not bother with peer-to-peer lending because I just don't have an interest in it. Right now I'm staying away from this and probably won't be doing this in the future either.
It seems very tempting due to the high interest rates but I've stayed away for now. I just see it as too risky. Rather stick my money in investment grade bonds or dividend paying shares.
