Is Peer-to-Peer Investing Safe?

Jul 29, 2019

Any kind of investing involves some level of risk. With peer-to-peer or P2P investing, securing your investment will depend on how the platform you’re choosing works. It would be helpful to have a complete understanding of how P2P lending and borrowing functions to ensure that your hard-earned money is placed in good hands.

Finding ways to invest your money isn’t just a walk in the park. It requires a lot of research, consultations with experts, and a lot of decision-making. On top of that, you need to make sure that your investment is kept safe and secure – meaning little to no losses at all – while you wait for your ROI, which also takes time.

With Blend PH, we employ several steps to minimize risk for investors. Lenders like you deserve nothing but the best service because you are already doing your part in serving borrowers on our platform. For instance, we have a team that evaluates borrower applications. This is why it takes us time to approve loans. We verify all documents and ensure that we only let quality and responsible borrowers through our system. We also have a team that facilitates collection. They work alongside our legal team to ensure that borrowers follow the agreed repayment schemes.

We pattern our credit evaluation after banks, so stringent rules still apply. However, we employ a bespoke, technologically advanced system to qualify borrowers on the platform. This allows for a faster online sign-up and application process, which usually results to faster loan approval for those who qualify.

Minimum risk acceptance criteria

All loan applications are subject to a minimum risk acceptance criteria. Blend bases its qualification process on annual income, employment or source of income, age, civil status, dependents, and the like. When an applicant fails to match any of the given criteria, they would not be allowed to continue on the platform or request for funding.

Validation and verification of requirements

When a borrower signs up and applies for a loan, they will be asked to produce various documents that will support the application. Our team shall validate and verify this information manually, and cross-check the answers provided during the sign up process. Important details such as place of employment and residential address are thoroughly checked.

Risk tags

Investors will be at ease upon learning that they can diversify their lending portfolio on the platform. This means that their investments can be spread among different borrowers with different risk tags. Risk tags are based on a person’s credit score or the capability to repay a loan. For instance, one type of risk tag is for someone who has existing credit history but hasn’t defaulted and has a good credit score. Another risk tag is for someone with a credit history, has defaulted or incurred late payments but has already settled his or her payments.

Lenders can invest on high risk or low risk borrowers, and expect varying levels of returns. For high risk borrowers, the earnings can be higher, while for low risk borrowers, ROI can be average. Investing on loans at multiple risk levels can result to a more stable income, which in turn scatters and minimizes risk.

The P2P process on Blend PH is guaranteed safe, because safeguards and stringent processes are in place. But as with any lending or investment vehicle, there is a certain amount of risk involved. As a start, investing in smaller loans is recommended and waiting for your investment to develop is key to stability. Give yourself some time to study your investment options, and consider advice and look at various perspectives before jumping in.