In the peer to peer platforms, people both lend as well as borrow from each other. Usually, borrowers who are not able to avail of funding from a bank mostly due to a low credit score opts for these platforms.
When in need of some money, be it due to some emergency or to buy the thing that you were eying for some time, there are various ways to get a loan, one of them being P2P lending platforms. They have emerged as a reliable alternative financing option for those looking to get unsecured loans quickly. They also offer attractive interest rates.
In the peer to peer platforms, people both lend as well as borrow from each other. Other than as a loan option these platforms are quite famous for their returns, which are usually in double digits, which is higher than that from debt-oriented mutual fund schemes. Usually, borrowers who are not able to avail of funding from a bank mostly due to a low credit score opts for these platforms.
If you are also planning to opt for a loan from a P2P lending platform, here are some things to keep in mind;
1. Before applying for a loan, the borrower has to be eligible for taking a loan. Hence, read about the eligibility criteria of that platform, minimum and maximum amount that they provide, the locations that they cover, who they give loans, etc. If you are looking for a higher limit of loan, find out the company’s upper limit as even though RBI has set a limit for a loan of Rs 10 lakhs to a single person, there are many P2P lenders who have their own upper limit.
2. NBFC-P2P lending platforms are required to follow RBI guidelines. For instance be it in terms of security, privacy, disclosure of information, collection, etc. Hence, find out if the P2P lender is registered as NBFC-P2P with RBI or not. These platforms also need to inform about their loan repayments to credit bureaus like Experian, CIBIL, etc. With these borrowers paying their EMIs on time, they will have a better CIBIL score, only if the P2P lender is RBI registered NBFC-P2P.
3. If you are in an emergency, and in a hurry to get the money, check with the lending platform, about the time they have taken to disburse the money. Usually, platforms claim to have turn-around-time (TAT) of 2 to 3 days which might vary if the platform does not have enough lenders. Experts say, borrowers if the loan amount is above Rs 10 lakhs, it is quite possible that one may not get loan amount even after waiting for 15 to 20 days.
4. Firstly, check with the lender if there are any types of additional fees attached to the loan. For instance many charges processing fees, registration fees, etc. with the EMI amount which the borrower will have to pay. Experts say borrowers should account for all the fees which he/she will have to pay starting from registration fees till the final disbursal and then calculate the effective rate, which the borrower will have to pay.
5. Also, check with the lender if they have any penalty and pre-closure charges. Even though most P2P lenders do not charge pre-closure but it is better to check if there are any. Hence, read the loan agreement carefully and learn about such charges, which you may have to pay in case of delay in repayment, check bounce, change in the bank, etc.