Investing with Impact
Individuals are fortunate that New Zealand is home to a thriving investment scene with an excellent selection of opportunities to diversify their portfolios. MoneyShop, in particular, is an example of how one investment option, peer-to-peer (P2P) lending, is gaining phenomenal traction and returning favourable returns for investors.
We provide a lending service where individuals seek loans to be funded by investors. MoneyShop assesses potential lenders to ensure they comply with our strict lending standards. When you purchase a loan contract from us as an investor, you’re not only selecting an alternative investment but also uplifting the lives of those needing financial support when they need it the most.
One of the most important decisions an investor will make is which type of loan to support. This blog explores the most common loan options that individuals have access to on P2P platforms.
Car Loans
Car loans finance a vehicle upfront while giving you a reasonable repayment timeframe. They are typically a secured loan, meaning the purchased vehicle is used as collateral. This security measure ensures that if the borrower defaults on the payments, the lender has the right to seize the car, providing some comfort for investors.
Car loans typically have a fixed interest rate, which means the interest percentage remains constant throughout the loan term. This provides predictability and helps borrowers plan their finances. The lending amount, interest rate, and repayment period will depend on various factors, including the borrower’s credit score, income, and the price of the vehicle being purchased. This type of loan can also be used if you have a damaged, uninsured car and need money to cover repairs.
Emergency Loans
Emergency loans are a convenient solution for covering unexpected or urgent expenses. With their quick application and approval process, borrowers can swiftly access the funds they need. These loans come in various forms, including personal, payday, and credit card advances.
Debt Consolidation
Debt consolidation loans allow individuals to pay off existing debts by combining them into a single loan. Often, this means a lower interest rate and potentially lower monthly payment. By investing in such loans, you’re essentially supporting financial well-being and potentially lower the risk of default as the borrower streamlines their debts.
Wedding Loans
Planning and hosting a wedding can be highly stressful, with so much attention to detail required and so many different costs, from catering to buying a wedding dress. Wedding loans help families celebrate one of the most critical milestones in a person’s life without enduring the mental stress of funding the event.
Holiday Loans
When you suddenly have the time to travel but not the budget, a holiday loan is handy! Interest rates are typically fixed for holiday loans, making it a comprehensive way of financing your travel and holiday.
Unsecured Loans
An unsecured loan is a secure financial decision that doesn’t require collateral and is approved based on creditworthiness. Collateral used for security often includes high-value assets, such as land or vehicles, so when a person doesn’t need to secure a loan with a purchase like this, it’s an unsecured loan.
Unsecured loans are generally the best bet for fast cash, providing a quick and reliable financial solution.
Additional Factors to Consider when Choosing Loans
- Loan Term: Loan terms can vary from a couple of months to several years. Short-term terms often provide lower returns, but mean investors have faster capital access. In comparison, longer loan terms attract raised interest rates but may counter your liquidity.
- Risk Rating: Risk ratings are assigned to borrowers based on their financial situation and credit history. Higher risk ratings often mean the opportunity for higher returns, but this is paired with a greater risk of a borrower defaulting on their loan.
Remember…
- Diversification is Key: Spreading your investments across a series of loan types and borrowers reduces the risk of losses. This means not putting all your eggs in one basket. Regardless of the type of loan, this investment strategy is an essential aspect of P2P lending.
- Do Your Research: P2P platforms should provide you with an in-depth look into the profiles of the intended lenders and their creditworthiness. Use this information to make wise decisions about which loans to support and navigate the world of P2P lending with confidence!
Why People Choose MoneyShop
MoneyShop has helped people across New Zealand with their finances since 1993. For people seeking a loan, we provide an easy online application process, competitive rates, and excellent customer support.
For our investors, we offer investment returns in New Zealand from 8.25% p.a. Furthermore, to date, we have not missed a payment to an investor.
Investment Options FAQ
Q. What types of loans can I invest in through MoneyShop?
Your investment can fund any of the types of loans we offer: car loans, debt consolidation, unsecured loans, etc. Each type of loan carries different risk and return potential, giving you the opportunity to diversify your investment.
Q. How does MoneyShop assess borrowers before approving a loan?
MoneyShop evaluates borrowers based on strict lending criteria, including their credit score, income, and financial stability. This ensures that loans are only granted to individuals who meet our rigorous standards, providing investors with more confidence in their investments.
Q. How are loan terms determined?
Loan terms vary depending on the type of loan and borrower’s financial situation. Short-term loans may offer lower returns but quicker capital turnover, while longer-term loans provide higher interest rates at the cost of liquidity.
Q. What happens if a borrower defaults on their loan?
In the event of a borrower default, secured loans like car loans may result in repossession of the collateral (such as the vehicle). MoneyShop commits to delivering payments to investors, regardless of the borrower’s payments to MoneyShop, and to date we have not missed a payment to an investor.
Q. What is the typical return on investment for P2P loans?
Returns for P2P loans on MoneyShop can range from 8.25% p.a., depending on the loan type, borrower risk rating, and loan term.
