You may shudder at the thought of lending your hard-earned cash to a total stranger. But peer-to-peer lending can make you richer.
Today’s technology enables us to lend to people with various needs throughout the country. Increasingly popular peer-to-peer lending sites are connecting Indonesia’s growing middle class with borrowers online, bypassing the banks and trimming the fat from personal and business loans.
Peer-to-peer lending can benefit both lenders and borrowers. For the latter, it offers an alternative to the conventional ways to secure funding, and sometimes the rates are better. For lenders, it comes with a host of perks. Let’s look at some of them.
High Yield: For lenders, peer-to-peer lending is a way to earn a higher interest rate than what they usually get by letting their money sit in a bank savings account or time deposit or other fixed income investment alternatives. In Mekar, a peer-to-peer lending platform that is growing more popular with Indonesian lenders, you can get up to 16% per year after tax.
Low Risks: Most, if not all, online lending platforms have a way to vet and rate their borrowers. So the borrowers may be strangers to you, but the platforms “know” them; they collect the borrowers’ data and assess their credit risks.
Mekar takes a step further in reducing risks for the lenders (also called “funders”) on its platform. Mekar only publishes loans for borrowers who have never been late in their repayments. Not to mention, in this platform that exclusively targets Indonesian micro businesses, all loans are productive loans, meaning the money is used to fund production and to make more money. This way, there is a greater chance that the borrowers will pay back their loans.
If that is not enough, one other thing that Mekar offers has been able to convince even the most hesitant of lenders: a 100% guarantee on their capital. With this guarantee, it means that if there was ever a case of a default, you would not lose your money.
Periodic Income: By lending, you will also enjoy regular cash flow as borrowers make repayments on their loans. It’s a great way to augment your monthly income.
Flexibility: You can find platforms that let you lend as little as Rp 100,000. There is no limit to how much you can lend.
Freedom: Peer-to-peer lending platforms provide you with the borrowers’ profile and everything you need to know about them, including their credit history and they give you the freedom to choose who to lend to.
So, why wait?
Peer-to-peer lending offers many great benefits and an increasing number of Indonesian lenders have found themselves drawn to it for these past few years. You too can be a lender; in any platform, registering is easy and funding a loan takes only a few clicks. Just remember to be prudent and choose the right platform that takes the necessary steps to reduce your risks.