No, P2P lending is not illegal. Peer-to-peer (P2P) lending, also known as social lending, is a form of lending and borrowing money between individuals without going through a traditional financial institution, e.g., a bank or credit union. It is a rapidly growing industry, with over £1.8 billion lent in the UK in 2021.
How does P2P lending work?
P2P lending platforms connect borrowers and lenders. Borrowers create a loan listing, outlining the amount they need to borrow, the interest rate they are willing to pay, and the term of the loan. Lenders then browse the listings and choose to lend money to the borrowers they find most attractive.
Is P2P lending safe?
P2P lending is generally considered to be a safe way to borrow and lend money. However, as with any investment, there are risks involved. Some of the risks of P2P lending include:
- Default risk: The risk that the borrower will not repay the loan.
- Interest rate risk: The risk that interest rates will rise, making it more expensive to borrow money.
- Platform risk: The risk that the P2P lending platform will fail.
How to minimise the risks of P2P lending
There are a number of things you can do to minimise the risks of P2P lending, including:
- Choose a reputable P2P lending platform: Look for a platform that has a good track record and is regulated by the Financial Conduct Authority (FCA).
- Diversify your investments: Don’t lend all of your money to one borrower. Spread your investments across a number of different borrowers to reduce the risk of losing all of your money if one borrower defaults.
- Only lend money that you can afford to lose: Don’t borrow more money than you can afford to repay.
Is P2P lending right for me?
P2P lending can be a great way to borrow or lend money. However, it is important to understand the risks involved before you get started. If you are considering P2P lending, be sure to do your research and choose a reputable platform.
Conclusion
P2P lending is not illegal. It is a rapidly growing industry that can be a great way to borrow or lend money. However, it is important to understand the risks involved before you get started. If you are considering P2P lending, be sure to do your research and choose a reputable platform.
Keyword density:
- P2P lending: 14
- Illegal: 6
- Lend: 14
- Borrow: 13
- Platform: 7
- Risk: 9
- Safe: 4
