How_Money_Works_-_The_Facts_Visually_Explained

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PERSONAL FINANCE

Money in the digital age

Borrowers

After being subject to a credit

check and graded for credit

risk, borrowers usually receive

funds a few days after applying,

although the transfer may take

up to 14 days. Borrowers

usually require a credit score of

640. The loans made range
     from $1,000 upward.

Lenders to borrower The

amount loaned to an individual

borrower is pooled from the

funds of several lenders.

Lenders to borrowers Lenders

spread the amount they are

willing to lend among several

borrowers, reducing their risk.

Borrower pays

back loan + 9%

interest on repayments

SPREADING YOUR RISK

Some lenders reduce their risk by actively managing their

loans, providing a portion of what they are willing to lend to

one borrower, and leaving other lenders to provide the rest.

❯❯Defaults A P2P lender risks not

being repaid if the borrower

defaults on their loan.

❯❯Intermediary only P2P firms

do not have large cash reserves.

❯❯Protection Savings are not

FDIC-insured.

❯❯Liability If a P2P firm goes

bust, lenders are then liable for

collecting the loans themselves.

❯❯Untested As P2P is a relatively

new form of lending, it has not yet

been tested in a tough climate

such as a recession.

WARNING

LENDERS BORROWER LENDERS BORROWERS

$ 1 trillion

the forecasted value of

global P2P lending by 2025

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