Friday, December 11, 2020

Calculate loan yield to individuals


The personal loan is an investment which represents an attractive alternative for investors. Far from the greedy intermediaries of the banking circuit, the lender can expect an attractive return.

The concept of loan between individuals

The concept of loan between individuals

The loan to individuals is an investment product which makes it possible to finance consumer credit for households. This is to offer individuals to invest or borrow without going through the banks.

An individual lend only to the trustworthy people and it is based on mutual trust. We can loosely refer it as Personal Lending. It is another form of Peer to Peer Lending but only among a closed group. 

The platforms for connecting borrowers and investors make it possible to secure the investment of money to individuals through:

• pooling of the risk of non-payment;

• strict selection of creditworthy borrowers;

• easier debt collection.

Choosing a platform approved by the bank is an essential guarantee of security. Our company is approved by the prudential control and resolution authority (ACPR), the supervisory body for banking and insurance backed by the bank.

Investment for individuals: performance for the lender

Investment for individuals: performance for the lender

The return on an investment in individuals is relatively high without presenting the same risks as the stock market. Far from the hidden commissions or fees of the banking system, the lender’s remuneration is transparent. Money is not used for stock market speculation. The yield announced is however only an indicative rate, adjustable according to borrowers’ defaults. The yield of loans to individuals also varies according to certain choices made by the investor:

• the investment horizon (2 to 6 years);

• the more or less secure profile of the preferred borrower category.

The remuneration for investments in individuals can reach 5%, after application of the management fees and the impact of delinquencies. The Long Balanced fund (investment in loans with 4 and 5 year maturities granted to category B borrowers) offers a gross return of 7% per year (before the impact of credit defaults estimated at 3% per year). For an investment of $ 10,000, the gain in the long term would be more than $ 4,000 after five years.

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