Personal loans for p2p?

You'll find that personal loans with investing as the purpose aren't available. Or at least I did when I looked a few years ago. the one place that appeared to offer them really didn't and declined automatically when that was given as the reason. Repaying other borrowing is an acceptable reason so you can start out with credit cards then use a loan to repay them.

Credit card stoozing is one way to go. It's cheaper than personal loans, often much cheaper, say 3% fee for three years of use of them money.

This can be lucrative, it depends in part on what P2P you use. It's much less so for the low rate P2P because the cost of money eats up a lot of the return.

I'm not sure what you mean by P2P assets. Do you mean the loans, the security for the loans, whatever might be worked on by the customer or something else?

There are assorted potential asset-related issues, including:

1. A business customer borrowing to expand by buying equipment who then loses their main customer, leaving the firm in severe difficulties rapidly if they can't replace the customer. But this is one loan and borrowers can be selected that have no undue customer concentration, so it's not a major risk when diversified across loans.

2. A business customer borrowing to redevelop property who finds unexpectedly large extra work is required that they can't get funding for and who has to abandon the project, leaving partially completed property as the loan security, potentially below the assumed value. Again a single company risk preventable with loan diversification.

3. A business customer borrowing to buy stock based on an existing order -effectively invoice finance - who finds their customer breaching contract by cancelling the order, leaving the borrower with stock to sell and a need to find a new buyer. Loan diversification protects again.

4.A business borrower for property redevelopment after a major economic shock that causes demand for the property being produced to fall and properties in general to become hard to sell. On an individual loan level security valued conservatively can help but more broadly this can affect many borrowers and a whole platform, so diversification of platforms and lending types is the way to protect against it.



I was loosely likening it to the way that some investment trusts use leverage / borrowing to enhance their returns or as house owners most of us have done well on borrowed money. Sometimes it goes wrong ...


I do feel that the p2p market is pretty young and we have not seen it all yet. It was not a particularly serious observation though.