Is p2p investing really investing?

[Colgar]

So here we are looking at "investing" funds into an entity that exists to lend to people who cannot get funding from a bank. Is this really something that could or should be termed an investment? Brand new vehicle and rapidly growing number of suppliers would seem to be a recipe for a little caution it would seem.

Borrowers who use p2p are not all in the the 'can't get funding from bank' boat. People who chose to use P2P may do so because the rates are better, approval is faster and criteria more flexible. Why is this?

Banks are laden with legacy issues regarding how they can lend and the cost of lending. Risk, compliance, AML, CAPEX, OPEX and lending arrogance have made a rod for their backs.

Harmoney is the closest you'll find to consumer finance and I agree with you, caution is needed, because these borrowers are near the bottom rung - the interest rates border on usury.

LendMe has the most secure and ethical offer and although they're taking their time, they launched with secured lending. As a business, why wouldn't you want to borrow with an interest rate starting as low as 6.64%, unlike a bank, no hidden costs to inflate the true rate.

Like any investment, proceed with caution, but the FMA has create a once in a generation change for a reason.