Social researchers and large businesses are always fascinated by Millennials. It is because they are the first generation who grew up completely in a digital era and also they are part of the second and even bigger Baby Boom. in simple words we can say that they are the first generation to regard the internet and social media as part of their everyday life. So Millennials are highly confident about digital technology, having grown up using their computers, laptops and connected devices. They prefer to carry out their daily activities online.
Young people find themselves struggling with saving or investing money. They do not want to take any risk and lose all their money. Today, a large number of millennials are getting into peer to peer lending and earning high returns. There are several reasons due to which millennials are attracted to the idea of investing money in p2p loans. In this article, we are discussing some main reasons why p2p lending is the right choice for millennials. But let’s first understand what p2p lending is.
—P2p Lending In A Nutshell−
Peer to peer lending is a way of lending money to individuals or businesses through online platforms. This type of lending is beneficial for borrowers and investors. Borrowers can get quick access to funds compared to traditional bank loans while investors can earn high returns. Investors can choose the type of loans and borrowers and also have the option of auto investing. You should bear in mind that the more the returns the riskier the loan will be. You should also remember that p2p is an investment not saving so your money is not 100% safe. There are risks and you may lose your money and also your investment is not protected by the Financial Services Compensation Scheme (FSCS).
Now let’s take a look at reasons why Millennials invest in p2p lending.
—Easy To Start And Manage—
One best thing about p2p lending are that you can do all the things online. From registering yourself on a p2p platform to selecting borrowers and depositing money to receiving monthly repayments all the processes take place online. You can manage your portfolio through your mobile or computer from anywhere. That is why young people who are beginning their investment portfolio p2p lending is a great option. P2p platforms allow investors to select borrowers which help young people to invest in loans that have low risk. This simplicity is appealing to borrowers.
—High Returns—
P2p loans offer high returns as compared to traditional loans. Studies show that some inventors also earn double-digit returns. If your money sits idle in your bank account, you can not make any profit from it and you will earn 1 to 2% return per annum. This is a very small percentage and is not enough to keep up with the inflation rate. Through p2p loans, you can earn 5 to 6% returns and when you get the experience of p2p lending this return will increase with time. Investors can also diversify their p2p portfolio by investing in different p2p loans. It helps them to reduce risks and earn high returns.
—How does peer to peer lending work?—
The process of borrowing or investing through an online p2p platform is simple: interested individuals input information about themselves and how much capital they wish to commit, and then browse opportunities based on their preferences. If an individual decides to lend money, he or she essentially becomes a bank without any regulatory oversight, but with all of the freedom that comes with that.
Borrowers, on the other hand, can get a loan for almost anything, including debt consolidation, home improvement, small business loans, and more. They simply need to submit an application with information about their credit score, income, and debts.
The beauty of p2p lending is that it cuts out the middleman and connects borrowers and lenders directly. This allows both sides to negotiate better terms than they would receive from a traditional financial institution. For example, a borrower might be able to get a lower interest rate by agreeing to pay back the loan over a longer period of time.
—What are the risks?—
  Credit Risk – You own securities tied to borrowers who could default on their loans. If this happens, you could lose part or all of your investment (at least for now). In a worst-case scenario where 100% of a borrower’s outstanding principal and interest payments were not made according to the terms outlined in the promissory note, investors would be left with nothing.
