Social lending, also called social lending or peer-to-peer lending (P2P), is a form of an innovative and very interesting loan.
It consists of the elimination of the role of the bank as a lender and in the replacement of the financial institution with a normal citizen who lends to another citizen and obtains a fair remuneration in exchange.
The loss of the role of the Bank should facilitate the loan allowing, even to subjects who obtain money from the banking system with less ease, to obtain loans at lower costs.
For the lender, social lending is instead an excellent opportunity to earn and obtain an alternative source of income.
In this article
- Who are the social lending operators?
- How a social lending platform works
- How to get income from a social lending platform?
- Conclusions
Who are the social lending operators?
In the beginning, the first P2P Lending platform was Zopa, followed by Boober. but initially, these platforms did not pass the checks of the Bank of Italy and were temporarily suspended and then resumed their activities.
Today on the ashes of Zopa Smartika.it was born, which remains one of the most historic platforms with more lenders and applicants.
Moreover, new operators have been added, including international ones, as in the case of Prestiamoci, which recently became part of the TrustBuddy network, a leading cash Swedish operator.
For some time now, new platforms have also emerged that allow businesses to lend.
In this context, I would like to point out the Credit Exchange.
How a social lending platform works
A social lending platform allows the meeting of subjects who require money and subjects who can lend it. The tasks of the platform, technically a payment institution supervised by the Bank of Italy, are precisely those of:
- put these two subjects in contact;
- assigning a rating/creditworthiness to individual loan applicants;
- manage the transfer of money and the collection of money;
- protect lenders through recovery actions and also through forms of guarantees.
Obviously, in the face of these services, the platform requires the payment of a commission equal to at least 1% of the amount provided.
In terms of how much you can lend, we consider that the minimum is equal to Euro 100.00 and the maximum is equal to Euro 50,000.00.
How to get income from a social lending platform?
To earn with a social lending platform, just sign up on one of these platforms, transfer money to your account, select the risk level, and then activate your offer at a certain rate.
Once the offer is accepted, we turn into lenders and we will have an outgoing and incoming flow from our debtors who will repay their debt with monthly installments including interest.
What is earned can be reinvested and on average over the last 12 months, the money invested in these instruments has generated a return of 6 / 6.5% (before insolvency and taxes).
It is a good return but also exposes to the risk of non-repayment, which however has a rather low and lower incidence than that of the banking world.
In terms of taxation, earnings from social lending are taxed at the source with a withholding tax of 26% carried out by the platform.
Conclusions
Ultimately I think that peer-to-peer lending can be a good opportunity to earn and is destined to increase its volumes.