Peer to Peer Lending for Dummies
So, what is peer to peer lending all about? Also referred to as marketplace lending, peer to peer lending in its simplest form involves matching borrowers with investors. With OurMoneyMarket, this is achieved 100% online through the OurMoneyMarket investment platform.
There are two sides to the OurMoneyMarket marketplace.
- (1) The borrowers: Everyday people looking to take out personal loans to finance various purposes (e.g. home improvement, debt consolidation, education etc.). Borrowers are assigned an interest rate by OurMoneyMarket who is responsible for assessing the credit risk of the applicant. Upon accepting the loan offer, borrower’s loans are listed on the OurMoneyMarket marketplace for investors to invest in.
- (2) The investors: A mix of mum and dad investors and institutional funds invest in loans in minimum amounts of $50. This minimum threshold makes achieving true diversification easy and simplistic. As a borrower begins to pay back their loan, the principal and interest (net a service fee) is passed on to investors in an amount proportionate to their investment. Again, with a minimum investment amount of $50, investors can spread their risk across many loans according to their specific risk and reward preferences.
Check out our infographic below for more information on peer to peer lending.Peer to Peer Lending For Dummies – OurMoneyMarket
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This information has been prepared as general information only without taking account the objectives, financial situation or needs of individuals. All investors should seek their own financial, legal and taxation advice relative to their own circumstances before making an investment.