Marketplace Personal Loans
Traditionally, personal loans are done through a banking institution. Marketplace loans are done through a marketplace system where borrowers are matched with investors. Some of the benefits of marketplace personal loans are:
Lower interest rates for good borrowers
At a bank, loans are set at a fixed price. Sure, you might be able to get 1% off if you’re a long-time customer; however, for the most part interest rates are the same for all of their customers. With marketplace personal loans, interest rates are calculated based on the perceived risk of the borrower. This marketplace pricing model allows those with good credit to potentially get interest rates much lower than the banks. For example, at OurMoneyMarket, we’ve originated unsecured personal loans as low as 8.5%. Compare that to a bank where the average interest rate is currently 13%!
Access to funds for more risky borrowers
There’s something in marketplace lending for all borrowers. In situations where banks may turn the customer away due to a low credit score, marketplace personal loans allow these specific types of borrowers to obtain the funds they’re looking for, albeit at a potentially higher interest rate. If you believe you’re a riskier type of borrower, why not get a quick quote to see what we can do for you.
Giving the money back to the people
It’s no wonder banks are as big as they are when they give you 2.5% on your savings account, but earn 13% on those funds when they lend them out through unsecured personal loans. Marketplace personal loans give the money back to the people. Investors are able to essentially take on the role of the bank and invest their funds directly into marketplace personal loans, taking the profit away from the banks. Sure, this carries a higher level of risk than a savings account, but savvy investors diversify their risk across a large pool of loans and reduce it to meet their individual risk tolerance. This investment vehicle has built the banks and historically earnt them billions and billions of dollars, now we’re giving that money back to the people.
More diversification opportunities for investors’ portfolios
Marketplace personal loans are a relatively new fixed income investment product available to investors. Previously, the most common fixed income products available to investors were term deposits and government or corporate bonds. With this new investment opportunity, retail investors with as little as $50 in savings can invest in marketplace personal loans and gain access to a fixed repayment investment. This type of investment is in high demand from people who have small portfolios with high exposure to any individual sector, typically equities.
Do you have any questions for us?
Do you want to find out how to start investing in marketplace loans with OurMoneyMarket? Give us a call on 1300 990 115 and have a chat with one of our friendly staff. Alternatively, you can chat with us over live chat at any time.