Peer-to-Peer & Private Lending Risk

Source:

PrivateLender.org: Setting the Global Standard for Private Equity Investment into Credit Instruments

The below information page is excerpted from: Click Here

Is Private Lending Risky?

Yes, it can be risky, so minimize the risk!

The risk of Peer-to-Peer & Private Lending:

Historically, there are three roles in the peer-to-peer & private lending world.

Borrowers

Brokers

Investors and Lenders

Whether you are a borrower, broker, investor or lender, there is risk to all these roles. Risk comes in many forms, including:

Incompetence

Inexperience

Fraud

Market Conditions

Systemic Conditions

Some risk can be managed or eliminated, other risk can neither be managed nor eliminated. At PrivateLender.org, we have found that the most common risk when dealing with peer-to-peer or private lending transactions is incompetence risk and inexperience risk, based upon the role of the individual involved in the transaction.

Borrower Risk: A person in the role of borrower might look to a broker or a lender to arrange private funds but due to the broker's incompetence or the lenders inexperience (or both), the borrower gets no money and might have lost money for upfront fees or related costs.

These are only a few of the many types of examples. Fraudsters are very creative and will find many ways to con you. To learn more about unscrupulous finance brokers or private lenders, see: Predator Brokers and Predator Lenders.

Broker Risk: A person in the role of a broker might be approached by a private lender who promises to provide credit to clients "when banks say no". If the broker does not effectively review the private lender for capacity, ability and experience, the broker might be unwittingly exposing his her or her clients to a predatory lender or worse.

These are only a few of the many types of examples. Fraudsters are very creative and will find many ways to con you. To learn more about unscrupulous private lenders, see: Predator Lenders.

Investor and Lender Risk: A person in the role of an investor or private lender might be approached by a mortgage broker who claims to have good borrowing opportunities but in fact, are colluding with borrowers to obtain your money through false applications and wrong information. Or, the investor or private lender has no experience in lending in private situations and due to a combination of lack of experience and systems, they end up losing money because they advertised their name and address in the local newspaper or website and became targets of a criminal element because people know that "they have money". This is why it is important to have a broker represent you -- but make sure the broker is a good (experienced) broker. PrivateLender.org helps you with finding a good broker.

These are only a few of the many examples that an investor or lender might face. To learn more about unscrupulous finance brokers, see: Predator Brokers.

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