Investing in Loans through Carilend - A Different Approach
When you put your money to work with Carilend, you are investing through lending. The Peer to Peer Lending concept is explained in detail on our website (including in our blog post Putting Your Money to Work with Carilend). As an investor at Carilend, you become a “Lender” investing in loans via our platform. Through a simple and convenient process, you are in control of your investment by specifying your lending preferences.
On the other side of the equation, Borrowers come to Carilend seeking financing for their various needs. The loans that these Borrowers obtain through Carilend become the investments that produce the returns for Lenders. Carilend makes this type of investing possible by facilitating the matching of Lenders preferences and Borrowers financing needs.
Since many potential Lenders will not have invested in loans before, there will naturally be some questions. “How good are these loans?” “How do I know that this is a safe investment?” “Is repayment of my money assured?” These and other related questions are all understandable and relevant.
“As an investor at Carilend, you become a “Lender” investing in loans via our platform. Through a simple and convenient process, you are in control of your investment by specifying your lending preferences.”
As some of our other blog posts have referenced (see What are the Risks in Peer to Peer Lending? and What Every Investor Should Keep in Mind), all investment carries risk. It is a matter of understanding the risk, mitigating it and assessing the reward versus the risk.
At Carilend, we take our responsibility seriously, and we will not approve a loan for a potential Borrower unless we are confident that they can afford it, based on the information provided. We undertake rigorous checks to validate the information provided by customers and utilise a robust credit scoring system on all applications. In addition, we perform credit checks, including to local institutions and credit bureau databases. All of these checks are designed to give us a comprehensive view of the Borrower's financial position before we make a decision on their applications.
An important aspect of being a Lender via Carilend is that the investment is spread among many loans and many Borrowers, as opposed to one amount to one Borrower. In fact as part of setting up your “Lender preferences” (we discussed this process on a previous blog post, Putting Your Money to Work with Carilend), we recommend that you split up your investment into a minimum of 100 loans. A $10,000.00 investment is recommended to be at least 100 loans of $100.00 each. This process of diversification (or “spreading the risk”) should be comforting to an investor.
Another important aspect in Carilend’s “risk mitigation” approach is that all Borrowers contribute a percentage of their loan amount into a Reserve Fund, which is available to assist in the repayment of loans which go bad. Of course before it gets to that stage, Carilend will investigate and take all necessary actions to get Borrowers back on track when payments are missed. A final layer of protection is that Borrowers’ loans are insured in the event of death, disability or long term sickness of the Borrower.
So while lending as an investment may be new to some, it is not much different to other types of investing. We trust that our explanation of the process to facilitate the investment into loans has enhanced your understanding of how Peer to Peer Lending works at Carilend. If you have any further questions, check out our FAQs or the Invest page on our website or get in contact directly via our Contact Us page. We look forward to welcoming you as an investor with Carilend! Register now!