Keeping you up to date on the world of Marketplace Lending
This article was originally written by and for Grownups.co.nz
Praised by Forbes and funded by tycoons like Richard Branson, peer to peer (also known as marketplace and P2P) lending is rapidly gaining momentum. It’s reimagining the way people borrow and invest, with companies like Zagga using custom-built technology, traditional expertise and big data to matchmake with wild precision. A fiscal cupid, if you will…
Introducing the 4th way to invest
We’re all familiar with property, shares and savings accounts. But what if there was a fourth way to invest? An option designed to empower everyday people, instead of pad out CEO salaries or augment shareholder payouts.
Cue P2P lending. Simple, fast and secure, Zagga is designed to seamlessly match the risk preferences of registered investors to the credit risk of approved borrowers.
Making your funds work harder
For investors, this has opened up an exciting new source of fixed income. At its core P2P lending is all about making funds work harder, with less volatility and higher yields than playing the stock market. P2P loans also offer far more flexibility than conventional bank investments, not to mention low interest rates that run circles around the likes of BNZ, Westpac and other big-name banks. For investors, rather than receiving 3% on your investment, you’ll receive anywhere between 5-10%. This gets even better through Zagga in particular, offering investment security on the borrower’s property.
A matter of can’t, not won’t
Beyond profitability, banks handcuff themselves with strict sets of criteria that create a very narrow window of who’s eligible to borrow. As a team of self-confessed entrepreneurs, we like to think of it this way: Zagga lends to the people banks can’t lend to, not won’t lend to. So, while banks are forced to continually deny loan applications, Zagga is able to broaden its horizons and look beyond the red tape. Flexible lending criteria and the ability to cater for larger loan sizes means Zagga can help more borrowers, while still offering strong, risk-mitigated returns to investors. It’s this ‘can do’ attitude that will continue to alienate banks from the P2P scene and ensure that it remains an utterly people focussed lending solution.
Power to the people
Until now banks have managed to get away with dictating the lending market. Not only have they set strict guidelines on who they lend to, but they also ensure that the majority of profits stay exclusively in house. You’ve got to give it to them for maintaining such a partisan business model for so long. But it’s definitely time for change…
When P2P lending arrived on the scene this bias model was given a serious run for its money. And yes, we mean literally. Fronted by platforms like Zagga, P2P lending is well on its way to displacing the dominance of banks and opening up a world of opportunity for both investors and borrowers.