Trade Finance Forum › Forums › Trade Finance › Basics › Hi all, I’m interested in understanding the potential risks associated with peer-to-peer lending. Does anyone have insights or personal experiences they could share on this topic? › Reply To: Hi all, I’m interested in understanding the potential risks associated with peer-to-peer lending. Does anyone have insights or personal experiences they could share on this topic?

I’ve been engaged with a prominent P2P lending platform for roughly five years but have spent the last year gradually withdrawing my investments as the loans are repaid.
Here’s why:
The platform offered borrower data intended to aid lenders like me in reducing risk, including credit scores, employment duration, default history, credit line usage, housing status, and more. However, there was little to no correlation between these supposed risk indicators and the actual likelihood of default. For instance, a borrower categorized as high-risk, who never made a payment, was initially predicted to yield a return of 11.24% despite a projected 27.99% if the loan had been paid off. This borrower had a clean financial history, low debt-to-income ratio, and stable employment, yet defaulted immediately.
Even borrowers with seemingly more secure profiles, such as higher income, professional occupations, or military service, experienced defaults, sometimes declaring bankruptcy within the first few months.
The discrepancy between the risk assessment provided by the platform and the reality made it clear that the information was not reliable.
Moreover, the platform’s calculation of returns was complex and eventually revealed to be overly optimistic. What was once claimed to be a 12% annual return was corrected to 5.5%, showcasing a dependency on the platform for accurate financial processing and calculation.
When loans defaulted and went into collections, the platform’s ability to recover funds was opaque, especially if the borrower declared bankruptcy. Furthermore, a deal made by the platform granting preferential access to lending opportunities to large investors significantly reduced the selection for smaller lenders like myself, from over 75 opportunities to just a few, raising concerns about fairness and transparency.
Ultimately, my experience highlighted significant issues with the platform, including its transparency, accuracy of provided investor information, return on investment calculations, and preferential treatment of certain investors.
Search Forums
Join our forum
Topic Views List
Forum Statistics
- Registered Users
- 78
- Forums
- 16
- Topics
- 210
- Replies
- 424
- Topic Tags
- 8