Peer to peer investment has become very popular among investors and borrowers in some recent years. Let us look closer at what P2P lending and loans are.
Peer To Peer Lending
Peer To Peer Lending is a non-traditional investment in loans.
It occurs through online P2P platforms. These platforms bring investors
and borrowers together, assist the matching of two parties, and transfer
the funds between them. There is no bank or middleman involved
in the process. Therefore, there is no overhead associated with
banking. The lenders and borrowers could benefit from a more
favorable interest rate.
You can start investing in P2P lending by opening an account at any
P2P platform. Once you create your account, set an interest rate and start
lending your money and, in return, get high-interest rates. P2P investment is a perfect option for people who want to boost their investment portfolio and be ready to take some risk.
Peer To Peer Loans
A peer to peer loan is like any other unsecured loan, but the difference is that you are borrowing the money from an individual investor or a group of investors instead of borrowing from a financial institution. You can easily borrow from P2P platforms. They are online, so you do not need to make a loan application in person. You need to tell lenders how much you want to borrow and answer a few questions. The criteria for having P2P loans is different for different lenders. Typically, you should be aged from 18-21, a UK resident and show proof of minimum income for loan approval. The advantage of P2P loans for borrowers is that they can offer lower interest rates than traditional bank loans. Moreover, P2P platforms offer flexible repayment options for borrowers. Interest rates and offers on P2P loans vary widely, so it is essential to shop around to grab the best deal.
IFISA Peer-to-Peer Lending
Innovative Finance Individual Savings Account is one of the types of Peer-to-Peer Lending. It works by providing a consolidated online platform to the investors who can lend the money to borrowers at the interest rates higher than banks. The borrowers can be businesses, entrepreneurs or real estate developers. They can benefit from the loan for meeting their requirements. The best thing about the IFISA is that there is no bank involved you only need to find a reliable online portal to carry out the investment process. The interest rates can range from 7% and 6% to 5%
An IFISA is basically a tax wrapper covering one or more than one Peer-to-Peer loans. The Individual Savings Accounts wrapper suggests that any profits on the investment are exempted from the taxes. For example the capital gains tax and income tax. These taxes are commonly paid on profit or interest. That facilitates you in earning more profits by investing in various types of assets that you won’t receive from other methods of investments. Therefore, Innovative Finance ISA is a lucrative means of investment that can give you a chance to earn high amounts of profits because of the revenue earning opportunity provided by the program.