P2P lending platform in real sense is a direct link between the borrower and lender. Its kind of a market place. In the month of May, I came across an article on P2P lending in India. Thought of trying the platform both as a lender and borrower. Found few such platforms including FAIRCENT. Here is my experience with Faircent.
Paid 1000 fee not knowing that that is a charge for lender too while I was under impression that this relates to borrower only. Failing to get a proper response(rather got a real rude response) on why a lender should pay such amount, I wrote to Vinay Mathews(Chief Operating Officer) and here is his response:
The registration fee is towards lender curation cost. Also, we have seen in the past, lenders committing & withdrawing last minute & delaying the entire process. Because of this we have the registration fee & 1-2% as commission towards all the borrowers that we onboard for our lenders. The expense is towards validation, verification, credit appraisal of the borrowers(for lender to pick curated borrowers) & servicing, collection & legal support for our lenders.
Here I must underline "SERVICE FOR LENDER TO PICK CURATED BORROWERS" besides the 1% transaction fee on the amount of investment. Somehow I thought to try with 15000 since the platform is doing all the due diligence and atleast the other worries are eliminated.
This is the investment and returns so far:
Lost 5000(lent at 23%) where only 2 EMIs received(40% of the total investment lost)
Unsure of the rest 9000(facing irregular EMIs and had to send reminders)
1000 paid as registration fee in addition to the transaction fee
My mails were initially responded but now even the COO is also not responding.
Here, we must understand that the lending at 18% yields an effective interest of 10.01% only.
Now at the end of 6 months, I am relatively unsure of getting back 9000 of my 15000. I am fairly sure that I lost at least 40% of my investment.
Here are my thoughts:
Please do not rely on them to do any due diligence for the lender
I have heard the situation is same for everyone
I doubt their ability to understand financial standing or repayment capability of the borrower
I heard it almost harasses good borrowers, hence good borrowers do not return for second time