Lending money at interest is now much easier and safer
Investing in loans: exploring the opportunities.

Lending money at interest is now much easier and safer

Want to lend money and earn interest? Lending at interest is a good way to generate extra income and increase the value of your capital. Find out how.

Lending money at interest has always been one of the most profitable and sustainable ways to earn money. Nowadays, a wide variety of money lending instruments are available, from traditional promissory notes to modern crowdfunding platforms. Whichever lending instrument is chosen, the main purpose of lending money is always the same: to make money. Therefore, it would certainly be worthwhile now to discuss the safest and most profitable ways to make money from money lending.

Firstly, lending money at interest to friends and acquaintances, even with a promissory note or a loan agreement, is risky enough. First of all, there is always the risk that the money you lend will not be repaid on time. Secondly, even if you manage to recover the money you have lend through the courts, you will certainly damage your relationship with your friends. However, if you want to make money from lending your own money, modern online technology offers a great alternative. Peer-to-peer lending, or crowdlending, which is growing in popularity across Europe, allows you to put your savings to good use and enjoy an extra income.

Main options: how to make money by lending money?

Peer-to-peer lending takes place on dedicated online investment platforms. Once you have registered on a platform, you can start lending your money at interest to other people or businesses. Thus, it is possible to invest in loans on such platforms and get a fairly solid return on investment. Depending on the platform you choose, your investments in loans will usually be made in the following areas:

  • Consumer loans for ordinary people
  • Loans for property development
  • Business loans

Lending money online for consumption to ordinary people

Consumer loans are probably the most popular area of money lending among investors. As consumer loans are only issued to natural persons, investing in such loans means that you are lending money to ordinary people. If you choose this area of lending, you should be aware that consumer loans are issued without any collateral. In this case, the collateral is the borrower himself and his ability to repay the loan out of the income he earns. So, when investing in consumer loans and lending money to ordinary people, be sure to pay attention to their income and length of service at their workplace.

Interest-bearing lending for real estate development

Lending money to property developers is commonly referred to as crowdfunding. P2P investing just like loan-based crowdfunding lending is carried out on dedicated online platforms. These platforms bring together real estate developers and individuals seeking to invest their money. The platform's administration selects the most promising real estate projects and presents them to investors. Investors then decide for themselves whether the projects on offer are attractive to them and finance them. As lending money for real estate development is usually secured by collateral, such investments are considered safer than consumer loans.

Lending money at interest to businesses

Businesses can also lend their money through investment platforms. These loans are mostly used by small businesses facing a lack of working capital, so when lending to a business, make sure you pay attention to the company's cash flow. Sometimes it is also possible to lend to start-ups and new business ideas. Business loans up to €10,000 are usually secured by a personal guarantee from the business owner himself. For larger loans, specific real estate collateral is already required. So, if you want to lend to existing businesses or to help a new business idea come to fruition, you can choose the field of business loans.

Lending at interest always involves risk

Lending money at interest is a quite profitable and efficient way to employ your savings. However, it should be borne in mind that when lending money to other people or businesses, there is always the risk that the money lent will not be repaid on time. On the other hand, current investment platforms help to manage and greatly reduce all investment risks. These peer-to-peer sites allow you to lend very small amounts of money to many different borrowers. Spreading your investments in this way allows you to significantly reduce the risk of defaulting on your loan and to expect a planned return.