Know the difference between effective and quantitative P2P lending.

Are you interested in investing in P2P Lending? Therefore, you need to understand these two types of investment platforms: effective P2P lending. and wasteful P2P lending This is important because each type carries different risks. So what is the difference between the two? Read the full description below:

Understanding Effective P2P Lending

Effective P2P lending is a form of peer-to-peer lending where funds are distributed to borrowers who want to build or develop their businesses. Usually in this type of P2P, investors can choose the company or borrower from whom they will receive funds.

Compared to consumer-friendly P2P lending This type has a greater impact on society. Because it means that by investing through this platform You can help people who are having trouble getting funds from banks to get additional funds.

One example of this type of P2P lending is Koinworks– on this platform Investors can provide investments to borrowers using the KoinRobo feature (automatic investing in the best companies in their field), while borrowers can get loans to purchase custom-made goods using Koin Bisnis.

Understanding P2P Consumer Lending

P2P consumer lending is a form of peer-to-peer lending where funds are distributed to borrowers who need to borrow money to fulfill a consumer need, such as buying a mobile phone or laptop. Laptop or buy children's toys

The design of this type of peer-to-peer lending is usually similar to deposits, in that investors only need to deposit money and specify their age. The money is then automatically distributed to multiple borrowers at once to minimize risk. Only when the due date is reached. The investor's money will be returned with interest.

There are many examples of this type of P2P lending. One of them is my property By using this platform You can invest starting at IDR 500,000 and earn interest up to 14.4% per annum.

Difference between effective and quantitative P2P lending

1. Purpose of the loan

As mentioned above The objective of effective P2P lending is business development. While consumable P2P lending involves the purchase of consumer goods or services. This difference brings about differences in the product design of this platform.

Many consumer P2P lending platforms are designed to be similar to deposits. where investors only deposit money And the system will automatically allocate a certain amount to borrowers. In return, in effective P2P lending, Investors will be asked to select their own borrowers. Where the borrower will receive supporting information such as the name and address of the business. Purpose of using the loan and potential risks of the borrower.

2. Loan specified and tenor

Like other productive loans, loans in effective P2P lending also have relatively large amounts and relatively long tenures. The tenure of this type of loan is usually at least 1 month and can be up to a year.

On the other hand, consumer loans in consumer P2P lending are usually short-term loans. Some applications have a duration of 7 days, by simply saving money on the application for 7 days, the value of your property will increase.

This is possible because in addition to the investor's funds being distributed to several borrowers at once. In general, Loans specified for this type of P2P lending are also small. Ranging from hundreds of thousands of rupiah to IDR 5,000,000, P2P consumer loan investments are a good investment option for those looking to invest in highly liquid assets.

3. Interest offered

A third difference between these two types of P2P lending is the interest percentage offered. Effective P2P lending tends to offer lower interest rates than consumer peer-to-peer lending. The nominal interest rate ranges from 10%-20%. In this type of P2P lending, the nominal interest offered is directly proportional to the investment risk. The more interest there is in a project or type of investment, The higher the risk of investing in that project.

On the other hand, consumer P2P lending offers higher interest rates, exceeding even 20% per year. It is not uncommon for the potential interest offered to be distributed evenly across all loans on a single platform. Therefore, investors do not need to sort borrowers by their risk level.

4. Potential risks

Investing on P2P lending platforms basically carries a higher risk compared to investing in deposits or investing in capital markets. This is because investments on this platform are not certified by the Deposit Guarantee Corporation (LPS), and borrowers who receive loans are usually small and medium-sized companies, which is not enough. capable To be listed on the Indonesian Stock Exchange in the areas of capital and human resources (HR).

However, the potential risks between manufacturing and consumer P2P lending are different. The first type of P2P lending involves the risk that businesses will fail to make payments and that the collection process takes a long time. However, to reduce this risk This type of P2P lending platform first conducts borrower assessment to determine their risk level and displays the risk level on the platform. This is so that investors can find more complete information about the companies involved. For this reason, investing on this platform Investors or lenders must therefore take time to analyze risks.

On the other hand, because it is a consumer loan. Therefore, the loan is not used according to business needs. Therefore, there is no investment risk assessment, even though there is a possibility of default.

5. Sharia

multiple platforms Effective peer-to-peer lending offers Islamic financial programs. With a profit sharing mechanism, on the other hand, because it is used for consumption purposes. It is therefore not surprising that investing in consumer P2P loans can be said to be un-Islamic due to the interest accrual.

Then from the above differences Which one is better? Consumer peer-to-peer lending offers higher returns. But there is also a higher risk. This is because loans are used to purchase goods and services. and non-Islamic principles. On the other hand, productive types of P2P are less profitable. But investing in this platform Investors can help support the future development of Indonesia's business and economy. Simply put, investing in P2P lending platforms still requires careful consideration and analysis. Not only in terms of products, you also have to choose. Best P2P Lending Platform This ensures that your assets are stored and managed responsibly.