Before choosing any P2P platform to put your money in, it's essential to recognise that investing in loans involves taking risks, and the default rate is a crucial aspect to consider. Keep in mind that different platforms offer different risk levels for defaulting loans.
Late Loans
When evaluating P2P lending platforms, one crucial aspect is the percentage of late loans within their portfolio. Late loans refer to borrowers who have failed to make timely payments according to the agreed-upon terms. It's worth noting that late loans can vary across platforms and loan categories. It is a potential risk that investors must acknowledge when engaging in P2P lending. While reputable companies plan for such outcomes and use different risk management tools, investors must be aware of the possibility of borrowers defaulting.
Due Diligence
It's important to note that attractive returns can be achieved through careful selection of platforms, diversification, and understanding the underlying risk factors. Before investing on any P2P lending platform, thorough due diligence is crucial. It includes reviewing platform-provided data and statistics regarding late loans. As with any investment, historical performance is a valuable indicator of risk and recovery on P2P lending platforms. Although past performance does not guarantee future returns, it provides insights into managing investment processes. The historical performance of late loans on the platform usually is published on the platform's website.
The Current Situation in the Market
After reviewing the data of late loans provided by the other popular marketplaces to invest in loans, currently, the default rate range between 8% and 19%. However, we are happy that hive5 can offer its customers an exclusive advantage - at the moment, not a single loan is late on our platform. If the loan is delayed for even one day, we return all invested money and earned interest to investors, and loan originators carry out debt collection. Hence, investors can accurately predict returns and plan further investment steps.
To Sum Up
It's vital to recognise that default rates are an inherent risk in this type of investment. By understanding the historical performance and exercising due diligence in selecting platforms, investors can make wise decisions and navigate the P2P lending landscape more effectively.
