The slumping economy has made peer-to-peer lending more attractive to borrowers and investors. Here are a few tips for both:
For borrowers:
• Check your credit score first. Many sites use it to determine your interest rate.
• Be realistic about the loan amount. Too much and you’ll not get any investors.
• Write your “story” before posting it. Keep it short.
• If you post a photo, be discreet.
• Check banks to determine the going interest rate, then see whether it’s better at P2P websites.
For lenders:
• Don’t do it if you can’t afford to lose it.
• Determine your level of risk. The higher the interest return, the more likely a borrower will default.
• Spread your risk around by giving small loans to many people. Making one big loan is much riskier.
• Gains are taxable, but losses are deductible.
