India has had a long tradition of community-based financing and lending in the forms of chit funds, thrift societies, community associations, and co-operative societies extending credit to its members and participants. The lack of access to bank credit has forced these unorganized sectors to exist. It is estimated that India may be one of the biggest offline peer-to-peer (P2P) lending markets in the world, as nearly 50 per cent of all credit is circulated amongst friends, families, and communities. But things are changing. The recent years have witnessed the emergence of pioneering technology-enabled P2P lending platforms such as Faircent, Lending Club, Money Club.
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What Is Peer-to-Peer (P2P) Lending?
Crowdlending and “social lending” are other names for peer-to-peer lending. Due to their potential to broaden financial inclusion worldwide, peer-to-peer lending platforms are increasingly being adopted as an alternative method of financing. Because nearly 70% of the population lives in rural areas without organized banking facilities, financial inclusion has always been a problem in India. In addition, it is extremely challenging for individuals with low credit scores, those with low incomes, and small and micro businesses to obtain loans through conventional means of financing. P2P finance is extremely accessible to these people and businesses who are underbanked or unbanked.
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Understanding Peer-to-Peer Lending
Peer-to-peer lending platforms connect the borrowers to the investors. However, the interest rates and terms of each peer-to-peer lending platform differ. In most cases, the applicant’s creditworthiness determines the interest rate.
A P2P lending platform allows investors to open accounts and deposit funds for loans. The interest rate a borrower will pay for a loan will be determined by their financial situation when they apply through the platform. Depending on their financial requirements, the borrower may accept one or more of the offers after reviewing them.
The platform handles all money transactions, including money transfers and monthly payments. The whole interaction is generally automated.
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Advantages Of Peer-To-Peer Lending Platforms Over Banks
- Traditional banks and financial institutions typically refuse to provide loans to people with low monthly incomes and low CIBIL scores. However, lenders in peer-to-peer lending networks have complete control over who they lend money to and who they do not.
- People with low incomes and low CIBIL scores can apply for personal loans on these platforms from a variety of lenders with low interest rates and flexible terms. Additionally, because borrowers are able to directly negotiate with lenders, they occasionally obtain loans at rates that are lower than those offered by banks.
- Getting credits on P2P loaning stages doesn’t need a hard core documentation process. Borrowers can get loans from the lenders on the website with minimal paperwork. The borrowers’ and lenders’ mutual understanding is the foundation of the lending and borrowing process.
- In comparison to banks, P2P lending platforms offer a speedier and simpler process. On these platforms, unlike traditional banks, the processing time is quick, and borrowers don’t have to wait long for the loan to be approved and paid out.
Read: Do P2P lending websites offer better rates than banks? Pros and Cons
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The Money Club
Ex-IIT, INSEAD, and UCLA alums founded The Money Club to provide a platform where one million people can join Money Clubs to save, invest, or borrow money.
It is a concept where people form clubs with peers within their trusted networks. They agree to pool in a fixed amount and bid their interest for the pooled in amount amongst them. To know more of how it works see the video here.
The Money Club also works as a reliable P2P lending platform because the money collected from the members is lent to the highest bidder (reverse bidding). The other members share the balance money as their income. So, Money Club can also qualify as one of India’s most reliable P2P platforms
The Money Club uses technology to help build trusted communities across India to make sure that people save more, borrow less, and invest to get the most out of their money. With an average annual ROI of 25%, Money Club is a good way to grow your savings through investments.
Thus, Money Club is not only a platform to provide you a systematic saving scheme, but we make sure that you have an easy access to your savings and the flexibility to borrow much larger sums, when you need it the most.
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How Is Money Club The Best Online Platform For Peer-To-Peer Lending?
Find out why Money Club is a good way to save, borrow money, and invest.
- Best Onboarding Method: Money Club operates entirely online. You can join the Money Club without having to fill out a lot of paperwork by only going through one round of telephonic verification and basic KYC (paperless).
- Best Client Journey – The entire client venture is a gamified experience. You can easily move on to Money Clubs with larger amounts once you have established a solid transaction history.
- Best in Risk Assessment: Our AI-driven online platform has robust underwriting algorithms that take into account all subscribers’ transactional, demographic, and verification data to assign them to the clubs that best suit them and prevent defaults.
- Best Network of Trusted, Verified Users Before joining the club, each member goes through a stringent series of security and background checks. Besides, every part just will continue to higher clubs by building a decent exchange history. As a result, you can rest assured that your funds will be pooled with a trusted network of disciplined users.
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Benefits Of Joining Money Club
- It is the best platform for middle-class families who cannot obtain loans in an emergency and must rely on high-interest money lenders. With the Money Club platform you can quickly receive a lump sum amount in an emergency if you regularly save small amounts on this platform.
- You join a group of verified friends and pool money with them.
- You can borrow a sum several times greater than the amount you have invested.
- When you need money, you just have to bid, and the money is in your bank account in six to eight hours.
- All transactions are digital. Members of the club deposit funds into your bank account directly. The money does not lie with the organizer.
- You can earn money from home. If you sign up to be a Money Club agent and recommend to 20 of your friends and family, you could win Rs 20,000.
- You can earn 10% to 15% interest on your investment, whereas FDs and RDs in banks may only give you 4% to 6% interest.
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