Peer to Peer Lending (P2P loans) is an excellent opportunity which opens a whole new category of limited risk investments for you. The idea is simple and something which you might already be doing at a personal level. As a person with savings, you might have been in a situation when you lent money to a friend, relative or colleague. Peer to peer lending helps you advance money to strangers with the same amount of confidence and attractive returns. This confidence can be derived from the strong credit screening algorithm we have developed working with banks and NBFCs. Peer to peer lending helps you build a high earning investment with steady earning that average out to better returns than that from savings accounts, FDs, PPF etc.
Become a Lender
It is free and takes approximately 29 seconds
Register on Cashkumar with your details like Name, Email and Mobile Number
Access profiles of borrowers with designated interest rates on the platform and choose people you want to lend to
Once a requirement is fulfilled, Cashkumar will assist in signing contracts with the borrowers and help you lend the amount through cheque or ECS
PDCs will be issued by the borrower for the entire term which will be the method of getting back the principal along with interest
We provide complete flexibility in how, who and when you want to lend through the peer to peer model. As a lender, you can decide to give a loan to a single borrower or multiple borrowers. You can also decide the exact amount that you want to lend to a single borrower which can start from Rs. 5000 or 5% of the loan amount, whichever is lesser. The maximum amount that you can lend to a single borrower is capped at 25% of the loan amount which helps safeguard your interests in a single investment. This is called lending a 'slice' and you can have multiple 'slices' as part of your investment portfolio. For instance if a borrower is looking for a Rs. 1,00,000 loan, you can choose to lend only Rs. 10,000 and wait for other investors to advance the rest of the money.
Lending 'slices' is a good way to expand you investments and de-risk them to a certain limit. It helps you lend money to strong profiles at a lower interest rate to get steady returns and at a higher rate to riskier profiles to earn more. As per affinity to take risk and expectation of returns, you can build and modify the investment portfolio.
P2P loans provide you with great returns on your investments which far outstrip the income from traditional instruments. By investing in slices you can hedge your risks while also aiming for high returns with a greater degree of confidence. Our rigorous checks ensure that only trust-worthy borrowers are allowed on the platform ensuring an extremely low default rate. You can be highly confident that the investments will garner the average RoI as per chosen profile. The table below indicates the average RoI that you can gain through a slice based investment route:
|Utilization of Funds
|Funds in Rotation
|Rate of Interest
|Percentage of Funds Parked
|Average Ticket Size
|Number of Investments
|Interest(Less Bad Debt)
Main Benefits to Lenders
P2P lending provides a new opportunity to invest and participate in an upcoming financial model which provides you handsome returns
A robust and researched algorithm at Cashkumar ensures that investments are safe and you lend to borrowers who are verified as well as trustworthy
We provide you with the opportunity to lend in 'slices' and to a certain percentage of loan amount to keep your investments safe and hedge risks
We work with banks as well as NBFCs and understand the way these financial institutions evaluate good borrower profiles and ensure only they are allowed to borrow from you
The interest rate for personal loans through the P2P method is always determined and calculated on the basis of the principle of Reducing or Diminishing Rate of Interest. It is a commonly accepted method employed by all major banks and other financial institutions. As opposed to a Flat Rate which is a constant overhead applied through the tenure of a loan, a reducing rate is applied only on the outstanding principal. In any EMI a borrower pays, there is a certain percentage which goes towards payment of interest and the rest towards repaying the principal amount. As per the reducing balance method, you pay interest on only the balance principal in the next month as compared to the previous one.
To give an example consider a borrower who has taken a loan of Rs. 5,00,000 with an interest rate of 15% which needs to be repaid in 5 years. The EMI in this case would be Rs. 11,895/- per month. In the 1st year, he pays a total EMI of Rs. 1,42,740 of which Rs. 72,596/- goes for interest and the balance Rs. 70,144/- goes towards interest. Now the interest rate is calculated at 15% only on the balance principal amount i.e. Rs. 4,37,404/- . Using this method if a borrower has the ability to pay larger amounts as part payment, the interest will reduce accordingly.
Borrowers on our platform will be able to pre-pay or part pre-pay a loan with no charged levied. We have allowed this to allow more chances of liquidity for you as an investor while still making a tidy sum on the investment. Pre-payment or pre-closure of a loan simply means that a borrower has the facility to return the entire balance principal at a given point in time before the end of loan tenure. We allow the borrower to pre-pay in full or start paying in part only after the payment of 3 EMIs on a loan with a minimum sum amounting to 3 EMIs.
As an investor you can benefit in two ways through this facility. First because it creates liquidity in the system and you will be able to rotate or take out your funds when available. Second, because of the way interest rate works, you will get more interest in the first three months of the loan gaining a higher return on investment than designated for the loan. So if you have advanced Rs. 1,00,000 @ 15% to a borrower which is returned in 3 months then you get returns of Rs.3,708 at a much higher rate.
Peer to peer lending is a great new addition to your investment portfolio to balance out risk-free and low earning instruments with a low-risk, high-returns tool. While we are happy for everyone to become a part of this exciting financial opportunity, there are some conditions that we lay down to protect investor interests. We invite investors with adequate liquidity to ensure you don’t face difficulties in normal life through investing in a medium term instrument like peer to peer loans.
It is important that the funds are invested for a period of time and adequate tenure is given for a borrower to return the principal with interest. We provide you with the mechanism to earn higher returns through this route and expect a mature and thorough approach. We help you to take scientific judgements on the risk you can take and request an investment which is measured.
You can easily become a lender on this platform if you fulfil the following criteria:
- You are a Resident Indian
- You earn a minimum salary of Rs. 6 lakhs a year
- You have completed 25 years of age at the time of registration
- You have a PAN card and have filed income tax returns the previous year
- You have a bank account in any nationalized or private bank in India
- You have a Debt to Burden Ratio of not more than 25%
- You have investments in other instruments like PPF (Public Provident Funds), FD (Fixed Deposits), MFs (Mutual Funds) or Stocks
- Two Photographs
- PAN Card
- ID proof (any of PAN Card, Aadhar Card, Voter ID, Passport)
- Address Proof (any of Passport, Aadhar Card, Voter ID, Rental Agreement, Bank Statements, Mobile Bill)
- Bank Statements of last 3 months
Borrowers on our platform have been chosen through a rigorous process with every care taken to obtain and scrutinize their personal and financial details. The rigorous underwriting algorithm on the platform makes sense of all this data and grades them according to risk. The grades have been scientifically researched and each of these are allocated to an interest rate category. The interest rates have been decided by studying the lending patterns of the best banks and NBFCs that we work with. This ensures that the default percentage or tendency on the platform remains extremely low and you get the expected returns on investments. Some of the minimum criteria we look at before accepting borrowers are:
Minimum Borrower Criteria
- A CIBIL Score of 650 and above or excellent profiles which are CIBIL 0 or -1
- Monthly net income of Rs. 25,000 and above
- Total obligations (including EMI for requested loan) should not exceed 60% of total monthly income
- Average Quarterly Bank Balance of 1.25 times the EMI amount (calculated as per fixed dates)
The criteria processed by our algorithm while allocating grades are critical to deciding on the interest rates. The rigorous research and experience of working with the best financial institutions is built into the algorithm which buckets loan seekers into different grades based on the following factors:
City, Company, Monthly Salary, Position, Experience, CIBIL Score, CIBIL Report (for past credit history), Current obligations, AQBB (Average Quarterly Bank Balance), Social Score etc
Just like you, we do not want the hassle or cost of a default on a loan and ensure every possible care is taken to avoid it. The first step in this process comes at the stage of choosing borrowers where every possible care is taken to ensure only the most trust-worthy get through. We also incorporate the element of a social score in the algorithm which is allocated from the analysis of a borrower’s activity on social media. Based on contacts, activity and behaviour on social media profiles like facebook, twitter, linkedin etc, the algorithm provides a score for the stability of a person which is part of the formula to allocate a grade. These rigorous practices ensure that loan seekers are always reliable and least prone to default. We also restrict the amount you can lend to a single borrower to 25% of the loan amount. This is capped to reduce your exposure to risk from a single default and protect your investment.
In the rare case of a default, we follow every legal process allowed by authorities to ensure that the amount is recovered. In most cases a default might happen due to a sudden emergency on the side of the borrower which might hold up a payment. But most borrowers pay the amount at a subsequent period in which case an additional interest is levied on the delayed amount. In the case of a complete default, the Cashkumar legal team is active in pursing all options to recover the amount. Any settlement is distributed among all lenders on pro-rata basis of the principal remaining.
We seek to encourage peer to peer lending as an alternate source of credit in India and hence you can register for free on the platform and start lending. There are no registration fees till the 31st of March 2016. Infact we will start you off by crediting your account with Rs. 1000 if you sign before 31st March 2016. You will only be able to utilize this money in the beginning to start lending on the platform. Post 31st March 2016, we will charge Rs. 1000 for registering on the platform to start lending.
Apart from registration fees, you will be charged a processing fee of Rs. 750 for upto every Rs. 1 lakh you lend on the platform. This charge is for an amount of upto a lakh and will even be levied if you choose to lend a lesser amount. The charge is repeatable on every next lakh you lend. We are transparent and open in our pricing process and all taxes will be calculated on these fees and will be applicable over and above it.