Content articles
RainFin has developed a platform that allows Borrowers to access affordable debt capital and Investors (Institutional and Retail) to invest in a new asset class earning attractive returns. It is the first lending marketplace in South Africa.
It bypasses large financial institutions and cuts out the cost of banking fees. The online platform links borrowers and lenders directly.
What is Peer to Peer Lending?
In a society where it’s becoming more difficult to access credit from traditional financial institutions, peer to peer lending offers an alternative solution. This is a global phenomenon https://best-loans.co.za/lenders-loan/just-money/ that allows borrowers and lenders to interact directly, bypassing large banks with their fees. Borrowers list their needs for a loan on an online platform and investors can then choose to provide funding. This allows borrowers to get the money they need without having to go through the hassle of filling out lengthy application forms and paying expensive fees and rates.
There are currently a number of P2P platforms operating in South Africa. These online platforms prequalify borrowers and allow them to apply for loans. They also allow borrowers to compare offers from different lenders. Once the application is approved, the funds are transferred electronically to the borrower’s bank account.
There are a number of benefits to using P2P lending in South Africa. One of the most obvious is that it’s often easier to qualify for a loan through these platforms than it is at a traditional financial institution. The reason for this is that the P2P lender will conduct a thorough risk assessment of the borrower. This includes looking at their income, spending habits and past credit history. This helps to ensure that the loan will be repaid on time and in full.
Benefits of Peer to Peer Lending
Peer to peer lending is taking the world by storm and has a variety of benefits for both borrowers and investors. It is essentially a digital alternative to traditional banks that bypasses the middle-man by connecting borrowers with investors directly. This results in cheaper loans for borrowers and better returns for investors.
P2P lenders usually run a soft credit search to assess your risk profile before accepting or rejecting your loan application. Once this is done, your profile will be loaded onto the platform for interested investors to browse through. If you are approved, the lender will send across various options for your loan with varying rates. If you accept an offer, the platform will handle the transfer of funds and co-ordinate repayments.
The terms of a P2P loan will vary but are usually between 1-5 years. The length of the loan is dependent on a number of factors such as the size of your mortgage and your credit rating.
The P2P lending market in Africa is growing fast with Kenya and South Africa leading the way. Despite this, 90 per cent of online alternative finance originates from platforms headquartered outside of the continent. Nevertheless, there is ample opportunity for homegrown platforms to succeed.
Getting Started with Peer to Peer Lending
If you’re tired of the old-fashioned way of borrowing money from a bank or want to invest without the high fees, peer-to-peer lending may be the solution for you. This global phenomenon links borrowers and lenders directly, bypassing banks and their fees. It’s a safe and secure investment that can also help you get the funds you need quickly.
Unlike traditional banks, peer-to-peer providers follow strict credit criteria in order to protect borrowers from debt traps. The loan application process is quick and easy, and you’ll know the rate you’ll pay before you apply. You can prequalify for a peer-to-peer loan through a site’s prequalification process, which will give you an estimate of your potential loans terms and annual percentage rates.
Peer-to-peer (P2P) lending is a market of growing traction in Africa, particularly in Kenya and South Africa. A recent report, Finnovating for Africa, tracked 65 lending and financing startups across the region and found that both P2P consumer and business lending accounted for most of the online activity in 2015.
The unsecured loans sector has seen a significant spike in growth, driven by rising disposable incomes. The business finance segment is expected to see the fastest expansion over the forecast period, as small businesses require funding to grow, upgrade machinery and equipment, maintain inventory levels or raise working capital.
Peer to Peer Lending Companies in South Africa
South Africa’s P2P lending market is expected to grow significantly in the future. This is partly due to the increased demand for online finance platforms in the country. However, the market is still maturing and requires more active risk management, given the higher default rates associated with P2P lending.
As such, it’s important to choose a P2P lender with strict credit criteria. This will ensure that you’re not investing in an individual with a bad credit history who might not be able to repay the loan. You should also look for a company that offers a low abortion fee.
Lastly, it’s essential to diversify your P2P lending portfolio. This way, you’ll have a greater chance of making money in the event that you lose money on some loans. However, it’s important to remember that all investments carry some risk.
In addition to P2P lending, investors can also invest in debt securities offered by banks and credit unions. These securities are backed by the government and offer high-income returns. They’re an excellent option for investors who are looking for a stable income and low-risk investments. However, they should be viewed as satellite allocations rather than core holdings at this stage of the market’s evolution. P2P lending is an alternative income source, but it isn’t suitable for a balanced portfolio.