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 individuals outside your circle 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 portfolio with steady earnings that average out to better returns than that from savings accounts, FDs, PPF etc. The loans amounts range between 20,000 to 1,50,000 and are approved for tenures between 3-12 months. This helps lenders as now you can lend small amounts and recoup them in quick time reducing the window of risk and allowing quick rotation of funds.
Become a Lender
It is free and takes approximately 29 seconds
Register on this site with your details and/or with the total amount you want to lend
Access profiles of borrowers with designated interest rates on the platform and choose the people you want to lend to (or)
Choose either the interest rate category/borrower profile/overall amount and give instructions on how much to put into each category
Once a pledged investment is fully funded, Cashkumar will sign contracts on your behalf with the borrowers and help you transfer the amount through a nodal account
The borrower pays back the loan in EMIs every month through the nodal account which can be credited to your account or reinvested as per preference
Cashkumar does not take any deposits from the Lenders and is an intermediary facilitating flow of funds between the borrower and lenders through the Nodal Account
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. 1000 per borrower. The maximum amount that you can lend to a single borrower is capped at 20% of the loan amount or Rs.20,000 whichever is higher. This helps safeguard your interests in a single investment. This is called lending a ‘Block’ and you can have multiple ‘Blocks’ as part of your investment portfolio. For instance if a borrower is looking for a Rs. 50,000 loan, you can choose to lend an amount upto Rs. 10,000 and wait for other investors to advance the rest of the money.
Lending in ‘Blocks’ is a good way to expand you investments and de-risk them to a certain limit. It helps you lend money to some profiles at a lower interest rate to get steady returns and at a higher rate to other profiles. As per affinity to exposure 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 Blocks 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 a 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 Block based investment route:
What are the main benefits for Lenders
P2P lending provides a new opportunity to invest and participate in an upcoming financial model that provides you handsome returns
The loans are of smaller amounts and for a short term which helps recover money quickly helping reduce the risk window and gain returns faster
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 ‘Blocks’ upto a certain percentage of any loan amount to hedge risks
We work with banks as well as NBFCs and understand the way these financial institutions evaluate good borrower profiles and bring the same rigor to our underwriting
The interest rate for personal loans through the P2P method is always determined and calculated on the basis of the principle of flat rate of interest. It is a commonly accepted method employed for short quantum, short-term lending. The Flat Rate is a constant overhead applied through the tenure of a loan on the original principal no matter the tenure or repayment. In any EMI paid by a borrower, there is a certain percentage which goes towards payment of interest and the rest towards repaying the principal amount. As per the Flat Rate, the borrower pays a constant amount as interest every month throughout the loan tenure. The rate is taken as a percentage per month on the whole principal so if the same is 2% per month then the yearly return will be 24%
To give an example consider a borrower who has taken a loan of Rs. 50,000 with an interest rate of 2% per month which needs to be repaid in 10 months. The EMI in this case would be Rs. 6000/- per month of which 5000 would be towards the principal and 1000 the interest. If you have invested Rs. 10,000 in this loan then you will get Rs. 1200 every month amounting to a total of Rs. 12,000 over the entire tenure of the loan. This is a return on investment of Rs. 2,000 in a 10 month period. The returns are obviously higher if every EMI is reinvested into other loans.
Borrowers on our platform will be able to pre-pay with no charges levied but part-payment is not allowed. 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 of a loan simply means that a borrower has the facility to return the entire balance principal at a given point in time before end of the loan tenure. We allow the borrower to pre-pay in full only after the payment of 3 EMIs on a loan or at any point before that by paying 3 months interest.
As an investor you can benefit in two ways through this facility. First because it creates liquidity in the system, you will be able to rotate or take out your funds when available. So if you have advanced Rs. 20,000 @ 2% to a borrower which is returned in 3 months, you get returns of Rs.1200 in 3 months or earlier apart from the principal.
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. Ultimately lenders need to realize that the risk of the investment lies entirely in their own self (unless otherwise specified through principal protection plans).
You can easily become a lender on this platform if you fulfil the following criteria:
- You are a Resident Indian
- You have completed 23 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
- 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 Account Details
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 600 and above or excellent profiles which are CIBIL 0 or -1
- Monthly net income of Rs. 20,000 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. Our 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
Default: 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 eligible 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 20% of the loan amount or Rs.20,000 whichever is higher. 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 delay 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 a 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 2017. Post 31st March 2017, we will charge Rs.1000 for registering on the platform to start lending.
Apart from registration fees, you will be charged a very nominal processing fee of about Rs 2 to Rs 5 on every EMI that is transferred by the borrower. Apart from this we will charge a facilitation fee on each loan of 1% of the amount lent.. 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.