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- 1). Sign Up With a P2P Website: The first step in becoming an person to person lender is to sign up with a website and deposit funds. Some of the more popular P2P website are Prosper.com, LendingClub.com and Zopa.com. Do your research and decide which website will work best for you.
- 2). Choose Borrowers: You will be able to peruse various borrowers online and find out how much they want to borrow, their credit rating, what they plan on using the loan for and whether or not they are a homeowner. Obviously, the people who are the highest risk are going to be assessed the highest interest rate. It is not recommend to choose borrowers with terrible credit scores and multiple delinquencies. Try and find homeowners with A or B credit scores who might only have one negative item on their credit history - chances are that these folks are not going to want to ruin their credit from a small P2P loan. Also, choose loans that are smaller amounts - such as $5,000. It is not recommend to pursue borrowers that want $20,000+ in a loan.
- 3). Diversify: When giving person to person loans, it is best to give out many small loans rather than a few large ones. This way, if someone defaults on a small $50 loan - it won't break your bank or ruin your chances at turning a good profit with P2P interest.
- 4). Lower Risk: Person to person loans are still relatively new and it would not be wise to put all of your life's savings into loans. It is best to dabble in person to person loans with only a portion of your savings and slowly invest more as you see your lender account yielding results. P2P lending looks to be a great way to earn nice interest income, but as with any investment it is best to start slowly.
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