Peer to peer lending Philippines – what is it? Many Filipinos are looking for a new source of credit. One such unique solution is peer-to-peer lending, which allows you to look at the financial system in a new way and discover new opportunities and horizons. Peer-to-peer (P2P) lending in the Philippines is a crowdsourced version of borrowing money. If you have a small, growing business with a bit of history, borrowing from your peers can be a great alternative to borrowing from a bank. Conversely, if you’re looking to provide a loan, P2P loans can be a great way to make money by helping a small business.
This system aims to increase profits for lenders and reduce restrictions on borrowers by removing traditional middlemen (banks) from the system. In essence, peer to peer lending Philippines is almost identical to the conventional lending system. However, the leading players have changed slightly.
- What is Peer to Peer Lending Philippines?
- Benefits of P2P Lending
- Benefits for Lenders
- How do Peer-to-Peer Lending Platforms Work?
- How to Choose a Company
- The Most Sought-After Platforms in the Philippines
- Vidalia Lending
- Kiva Philippines
- How Borrowers Should Work on Peer-to-Peer Platforms
- Is P2P Lending Right for Your Business?
- Invest Money Safely: How Vital is Creditworthiness for Peer-to-Peer Loans?
- On a Final Note about P2P In The Philippines
What is Peer to Peer Lending Philippines?
Peer to peer lending is a lending scheme that is an alternative to traditional banking. The issuance and receipt of funds are carried out directly between individuals who are not related to each other by any relationship. They can act as both lenders and borrowers, and the interaction between the parties is carried out through specialized sites.
- P2P loans are primarily unsecured and have a high level of risk for lenders;
- As a rule, in such a scheme, there is no thorough verification of potential borrowers for their integrity and solvency;
- For this reason, the interest rates for the use of borrowed funds are pretty high. It can either be set at a fixed level or determined at a reverse auction, where lenders compete to fulfill the borrower’s application.
Benefits of P2P Lending
If you wonder is peer to peer lending worth it, keep in mind those benefits. The significant advantages of such lending in the Philippines:
- Potential return. P2P lending offers investors a high possible return. Investments are divided into different risk classes so that the investor can weigh the risk and return. Private investors even get special online tools to get an overview quickly of some platforms. They do not need to acquire any special knowledge;
- An intelligent investment. For numerous investors, it is essential that their money generates a profit and serves a valuable purpose. With crowdlending, the investor knows that he is supporting private projects;
- Transparency. P2P lending is considered to be largely transparent and understandable. They are just direct loans with fixed terms compared to many other asset classes, which work in a complicated way that even banking advisers often cannot control the process;
- Small Investment Opportunity. Investors can invest small amounts in crowdlending. It means that investments are not only available to a wide range of investors but also provide easy risk diversification.
Benefits for Lenders
By investing in lending companies, lenders can earn much higher returns than they would from a bank. Instead of entering into a blind contract with the bank, the person gives the cash directly to the borrower so that he can use the interest rate spread.
Finally, this means that the individual has more control over what they finance. Your bank lends money to people you don’t like or people who do things you don’t like. Whether it’s building bombs or baking donuts, your savings will likely support a host of obnoxious strangers. On the other hand, with P2P lending, you can support projects you believe in.
How do Peer-to-Peer Lending Platforms Work?
If you wonder how lending works in the Philippines, pay attention to this. When you observe the whole process from a borrower’s perspective, contacting a peer-to-peer lending website for a loan in the Philippines is just like applying for a loan from any other type of private lenders Philippines. P2P platforms will ask for the borrower’s income, profit, and trading history. They will also ask to see their bank statements and account history. In addition, they will screen borrowers according to their buying habits, credit score, and history to determine if it is safe to lend them money.
After the borrowers have passed the initial screening, their request for a loan is published. Their loan is then available on the platform for investors. These investors then provide small chunks of credit that will add up to offer the total loan you want to borrow.
Peer-to-peer lending platforms manage this process in different ways. For instance, some use a bidding style approach to provide an interest rate. Others will allow lenders to set an interest rate and let investors choose the specific loans they want to invest in. If everything works smoothly, you will receive all your target amount and cash within a short time.
How to Choose a Company
First, you choose the P2P platform you want to invest in. The criteria by which you decide for or against the platform can be as follows:
- When was it founded? Beware of young companies. Platforms that have been around for a long time tend to be more trustworthy.
- Where is the company headquarters? Platforms from the Philippines have the advantage that communication is simplified in case of platform bankruptcy in case of legal disputes.
- What is an investment amount and term? Check how high the corresponding investment amount is on the platform and what conditions are offered. Small investment amounts and short maturities provide a high level of diversification and are therefore less risky.
- What is a platform fee? Check if the platform charges a fee for matching an eligible loan application, as some peer to peer lending Philippines platforms do.
Once you have decided on the platform, register online, to do this, follow the instructions on the respective website.
The Most Sought-After Platforms in the Philippines
You can find such companies on the list of the most peer-to-peer lending companies in the Philippines.
MoneyMatch is a one-of-a-kind online peer-to-peer loan marketplace. The organization’s primary goal is to give lenders and borrowers an accessible, transparent, efficient, and secure place for financial transactions. Individuals or businesses can apply as borrowers or lenders using its online platform once a claim is made. The company’s key advantage is a secure contemporary platform that assures consumer security and privacy. He also abides by Philippine laws and regulations.
Vidalia Lending is considered one of the best peer to peer lending Philippines because the company has existed since 2008 and has helped millions of Filipinos get loans during that time. According to the company’s website, you may acquire a loan ranging from 10,000 to 500,000 pesos. If borrowers miss payments, investors aren’t harmed because the corporation has a fixed interest rate. Here, you will get a guaranteed return on your investment. They also provide investors the option of receiving checks with a future date. Furthermore, the organization allows lenders to invest their funds for two to twelve months.
FundKo is one of the most famous in peer to peer lending Philippines reddit. It is a subsidiary of Guevent Investments Development Corporation (GIDC). The main feature of this company is that it functions as a crowd-lending platform that connects lenders and borrowers. FundKo allows borrowers to borrow up to 500,000 pesos.
Another excellent alternative for Filipinos is Uploan. The site offers low-cost family loans to workers by working with Filipino firms. Employee data is used to determine the best rates for workers who need to borrow money. Uploan is unique in that it may give finance to clients within 24 hours.
Kiva Philippines is a no less popular company that will allow you to take a loan. According to the company, a client can finance loans with as little as $25 and provide the rest to another lending investor Philippines. It is an international non-profit organization founded in San Francisco in 2005. The platform’s main objective is to provide financial access to low-income communities.
It is critical to follow these guidelines to apply on the platform:
- Borrowers can apply for a loan through a Kiva field partner (individuals who locate, screen, and evaluate borrowers, issue loans, and collect payments) or through the Kiva website.
- The loan is subsequently subjected to underwriting and approval.
- Loan revenues are prepaid for loans made through Kiva Field Partners. However, there will be a fundraising time for loans made through the Kiva website. The money will be transferred to the borrower once the desired amount is attained.
- The borrower will then return the loan, and the lender will use the money toward future loans, contributions, or withdrawals.
How Borrowers Should Work on Peer-to-Peer Platforms
No investor is willing to invest unless the borrower has a meaningful tender. Consequently, loan applicants must describe themselves and their loan requests in as much detail and clarity as possible.
The more detailed and better the reports made by the borrower, the higher the chances of obtaining a loan. Landing platforms have developed credit check procedures regarding creditworthiness and personal financial circumstances. The further borrowers go, the higher the probability of finding an investor.
For example, it’s often not enough that you want to buy a new car. It is better to imagine precisely why a new car is needed, why it costs so much and why a loan is required. Additional information on redemption is also welcome.
Is P2P Lending Right for Your Business?
You need money to start and grow your business. If you don’t have access to traditional lenders and have a history of keeping banks happy, peer-to-peer lending can be your lifeline. The risks are real but manageable, and the system has many benefits.
If you have a well-established brand with a history of growth, you may find that your bank can offer you better rates than the P2P model. You may also have a great relationship with your bank, in which case it’s best to go the traditional route.
Invest Money Safely: How Vital is Creditworthiness for Peer-to-Peer Loans?
The credit score for peer-to-peer lending Philippines sec loans plays an important role. A minimum credit score must also be guaranteed. If you cannot get a loan from a bank simply because of a bad credit score, peer-to-peer loans can be an alternative.
The prerequisite for this is that the applicant does not otherwise have any negative characteristics: if, for example, there is also a personal bankruptcy, the chances of a peer-to-peer loan are also low. Investors who already have a strong portfolio can often take on more risk due to attractive interest rates.
On a Final Note about P2P In The Philippines
The best way to get a loan is through P2P lending. You can use this option if you want your money back or need extra cash and don’t have enough savings accounts that don’t earn you any interest.
Many people look to these platforms because they offer an alternative to borrowers who require funds but not the risk associated with traditional bank loans. They can find what they need in P2P lending, which can surprise even the most experienced lenders!
With P2P lending, consumers get the opportunity to make the most profitable transactions. They can earn money at high-interest rates by getting loans from affordable plans. It is because borrowers are given loans according to their level of risk. Those with a high level of risk must pay high interest.
Peer-to-peer lending services are becoming more popular as a loan option. This type of financing is beneficial to both the lender and the borrower. It offers better interest rates than traditional banks. In addition, P2P lending platforms help consumers worldwide meet their financial requirements by expanding access to credit for people who might not otherwise be able to get credit. So, if you need some extra cash or want to invest your money with low risk, consider using a P2P lending service — you won’t be disappointed.