Helping newcomers navigate P2P lending

An increasing number of investors are flocking towards peer-to-peer lending but there still are misconceptions that platforms need to dispel. By Lisa Holmes, head of investor relations, Kuflink

Heading up investor relations at Kuflink, I speak to a wide range of people every day – some will be quite experienced with investing in general, while others are taking their first steps. Regardless, my team and I often come up against the same kinds of questions so I thought it’d be useful to lay out how I see newcomers navigating peer-to-peer lending (and crucially how we can help).

Getting to grips with the platforms

A lot of people will mostly learn about P2P through the platforms they engage with. It’s important not to just skim read the T&Cs and instead take time to really get familiar with the platform and how they have generated results in the past, as well as how they deal with defaults when they occur. I’d suggest reaching out to the P2P platform directly and asking them questions about how they operate. My team and I make ourselves available for these sorts of calls and it can really make a difference in helping people become familiar with P2P.

Read more: P2P lending’s next era

It’s important investors do their own research, and platforms engage with them on this, as I often see the former turn to review websites. These will often reflect one person’s specific scenario – they’ll have had a bad experience with a platform and just want to vent online about it. Interesting yes, but not representative of P2P and platforms as a whole!

Investors’ key concerns

My team and I get asked all sorts but the questions will often come down to the worst-case scenarios. What happens to their money if the platform were to wind down? People naturally want to plan ahead and learn about what protections their money could benefit from.

At Kuflink, this is when we spend time explaining all the processes behind the scenes – essentially covering the journey from an initial enquiry to a loan being completed. We explain how the loans are underwritten and detail the thorough checks made by the team throughout our due diligence process.

Battling misconceptions

It’s crucial to understand the process behind P2P, not just how a specific platform works but how this operates as an investment. Unfortunately, many still compare P2P to savings accounts which are very different. People like to be able to withdraw what they want, whenever they want, from their savings account. P2P does not operate this way and investors need to have that understanding when they are engaging with this platforms.

Read more: What newcomers need to know about P2P’s revolution

This even extends to defaults. A default is a loan that’s more than 180 days past its contractual payment date but even in that moment the platform can be working closely with parties to resolve the situation. It’s a normal part of lending, and that’s what people get confused about sometimes with P2P. I tell people not to look at defaults in a negative light necessarily. Instead focus on the recovery outcomes, timeframes and the communications you are being sent by the provider.

This is commercial content, produced in partnership with Kuflink.