Knowing the peer to peer lending bad credit is a good sign that you’re on the right track, especially if you want to start investing. Today, there are two types of P2P lending: traditional and crypto-backed. All you need to start peer to peer lending investment returns are a bank account and a platform for lending out money to borrowers. You deposit your funds to the platform online, check it for loans that match your interest rate and default risk, and then fund the loan to start earning interest.
On the other hand, crypto-backed loans are a form of collateral-backed lending. While banks take things like cars, houses, and other assets as collateral for loans, this type of lending requires borrowers to put up cryptocurrency as collateral. Crypto-backed lending works similarly to traditional P2P lending, except that they’re lower-risk.
For investors, its main disadvantage is that you can’t charge high interest rates. At the same time, it also requires a lot less risk assessment as loans are backed up by a strong asset. And this can be very helpful if it’s your first time investing in loans.