While it is important to do your research no matter you are shopping for a loan or going to make an investment because you can’t believe everything you hear. With this blog, we’ll help you spot some popular P2P investing myths and reveal the truth behind them.

1.   It is Dangerous Because it Lacks Regulations

Like the early days of downloading anything and everything freely from the torrent, many people assume that marketplace lending is free to operate. There are no laws and no regulations. But it would be the biggest myth. It stems from the fact that loans are initiated non-institutionally from the people contrasting to banks which are subjected to the RBI regulatory framework.

The Truth: The P2P lending sector is under the RBI regulatory ambit. Plus, the RBI regulations are quite tight. Yes! In fact, we’ve written about How RBI Regulatory Guidelines: Bringing Structure to the P2P Lending Industry previously on our P2P landscape section. Also, to add to your surprise Faircent is India’s 1st NBFC-P2P lending platform to be awarded the certification of registration (CoR) by the Reserve bank of India. So, RBI keeps a close check on us too! :)

Would you like to read the full set of consultation paper on rules of P2P sector? Read here!

2.   You Need a lot of Money to Get Started

100% False. If Rs. 750 / loan is a huge amount then it is all it takes to get started with P2P investing on Faircent. While, the return on investment (ROI) varies depending upon the choice of loan, tenure and the risk bucket.

Beginners can easily make a low-threshold entry in P2P investing space. You can start with a small investment amount initially and slowly as your understanding builds and confidence grows, you can always invest as high as you aspire.

No matter you are a risk taker or a risk-averse investor, P2P proffers double-digit returns in the middle of 12% p.a. to 36% p.a., higher than the returns of any fixed deposit (6% to 8%) in India.

Wanna Understand How Faircent Calculates Your Return on Investment? Go learn!

3.   Investors Can’t Control the Portfolio Performance

Honestly, who spreads such lies? P2P lending platforms are the facilitators. Precisely, the service providers! They develop technology and tools in such a way that it gives the investors full control of the fund allocation.

 The choice is the key here!

With Faircent, the lenders can make a choice whether they want to opt for tech-enabled “auto-invest” tool to invest automatically or invest in a loan-by-loan basis. Our sole aim is to offer you full control of your money. You can invest freely in line with your aim and risk appetite.

4.   Borrowers Simply Default, and Investors Lose

The reality is these online credit marketplaces hold beyond surplus information of borrowers; to collect the loan money in case of default. With the recent RBI guidelines, P2P lending platforms have gained the institutional muscle to recover the debt. If the EMIs are delayed or not paid for a period of 3 months that borrower will be charged a penalty fee. And in case of a default, the P2P platform being the ‘service facilitator’ assists with loan recovery.

At Faircent, our in-house collection team proceeds with the debt collection immediately. Not just this, the CIBIL TransUnion are notified too! It means, the credit score of the defaulters takes a massive dip. So, it would be safe to say that on P2P investing the investor’s principal amount is 100% safe along with the ROI! 

We hope above dismissed some lies and myths around P2P investing space! Now that you know the truth, you may be ready to start the investing more confidently! With its benefits, it is undoubtedly an excellent alternative asset class for investors.