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PERSONAL LOAN


Personal Loan

Borrowers can choose at secured or un-secured loan. A borrower might receive the full loan amount or only a portion of what borrower asked from the investor.

 

Before you make a loan, you must carefully check for;

- Read the Terms and Conditions

- Is there any fees may applied

- Interest rate charged

- Term of loan and Repayment schedule

 

If you have any questions, give us a call or you can email us.

Peer to peer lending matches people who have money to invest with people who are looking for a loan. A more appropriate term for this practice is marketplace lending because an online platform, usually a website, is used to match investors with borrowers.

It is the same with P2P Lending, only P2P Loan at opposite direction. Peer to peer loan matches people who looking for a loan with people who are have money. A more appropriate term for this practice is marketplace loan because an online platform, usually a website, is used to match investors with investors.

How does peer to peer lending work?

 

Peer to peer lending involves borrowing money without going through a traditional lender such as a bank, building society or credit union. It can be used by individuals or companies that need a personal or business loan.

 

The money comes from investors who can be individuals or companies.

 

People who invest through this type of lending are buying a financial product, typically a managed investment product; while borrowers are taking out a loan that is repaid over time, with interest.

 

P2P lending sites and companies

 

P2P lending involves a financial service provider (the lending platform) that acts as an intermediary between investors and borrowers.

 

The platform will promote itself to both borrowers and investors, and makes money by charging fees to both parties.

Interest rates

 

Investors may be attracted to this type of lending because of the interest rate they are offered for their investment. Borrowers may choose to get a loan this way because it may offer loans with lower interest rates than they can get from a traditional lender.

 

Interest rates and the methodology for calculating interest may vary among the lending platforms.

Matching investors with borrowers

 

An investor decides how much they want to invest and, depending on the lending platform, how their money will be used. For example, an investor may be able to choose to fund one loan in particular or be able to invest in a portfolio of loans. In addition to this, investors may be able to choose the minimum interest rate and select a loan period that fits their needs.

 

Repayments from borrowers are collected through the lending platform and passed on to the relevant investors at predetermined intervals. The investor's capital can be returned as part of the repayments or at the end of the loan period.

 

When borrowers apply for a loan, the platform operator will evaluate their suitability by checking their credit history and their capacity to repay the loan. These factors allow the platform operator to assess the lending risk. Not all platforms disclose the lending risk of each borrower.

 

The platform operator keeps the personal details of all investors and borrowers confidential.

Understand the investment

Before you hand over your money always read the product disclosure statement (PDS). In the PDS, look for information about these features:

-Security - Are the loans secured or unsecured?

-Interest rate - How is the interest rate determined and by whom?

-Choice of loans - Can you select the loans and/or borrowers? Can your investment be spread over more than one loan? (This may reduce the risk of losing all your money.)

-Repayments - How long will it take before you get any money back?

-Getting your money back - Do you have any cooling off rights if you change your mind? Do you have the ability to redeem your investment and get your money back?

-What happens if the borrower defaults - What will the platform do to recover your investment? Who pays the expenses associated with any recovery action?

-What if the platform fails - What will happen if the platform operator becomes insolvent or goes into external administration?

-Fees - Are there any fees payable to the platform operator? Is there a fee when you invest as well as a fee for handling repayments or accessing your money early?

Understand the loan

Most loans organised by P2P lending platforms are used by borrowers to consolidate debts, to fund large purchases such as cars, or for business purposes. However, it is possible to get larger loans to buy property or refinance a mortgage.

Like a loan from a more traditional lender, borrowers pay back the amount of the loan, plus interest. However, interest rates may be lower than the rates offered by traditional lenders. This is because borrowers can get interest rates based on their personal circumstances, such as their credit rating.

Some lending platforms keep a fund of money that it can use to compensate investors who suffer losses due to borrower defaults. Borrowers may be asked to pay a fee that will be paid into that fund. The fee will depend on the creditworthiness of the borrower.

Applying for a loan

Like all credit providers who offer consumer loans, P2P lending platforms must lend responsibly.

If you are applying for a loan through a lending platform, you should expect to be asked the same questions that a traditional lender will ask to assess your suitability for the loan and your ability to repay it.

The lending platform will also check your credit report. See credit reports for more information about what's included in your credit report.

Credit providers

The credit provider for your loan will be either the platform operator or a custodian company that enters all loans on behalf of the platform and the investors.

If you have difficulties repaying your loan, you will be dealing with the platform operator or the custodian company, rather than the investors.

For individual borrowers (not businesses) the loan will be a consumer credit contract, so the platform operator will need to have an Local Authorized Credit Licence and comply with the National Credit Act when it sets up the loan.

-Getting your money back - Do you have any cooling off rights if you change your mind? Do you have the ability to redeem your investment and get your money back?

Before you sign up for a loan

Before you sign up for a personal loan through a P2P lending platform you should always read the information on their website and any loan documents to make sure you understand the terms and conditions of the loan.

To help you assess the loan, take a look at the comparison rate to see how much the loan is likely to cost you with the fees included. You should also check whether you will need to pay any upfront fees to set up the loan.

It's also important to shop around and compare the marketplace loan with the loans being offered by traditional lenders.

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