Putting Your Money to Work with Carilend
You have registered with Carilend as a Lender to invest your money and sent money securely from your bank account to your Carilend account. Now you need to get your money loaned out and earning you a great return. So what’s next?
You need to set your Lending Preferences using our easy-to-use tools. This post shows you how simple this process is.
Below you will see an image of our Lending Preferences page:
- The first table shows you the current interest rates available on new loans according to Risk Grade and Loan Term.
- The second table is where you will actually set your Lending Preferences and choose whether you want to invest in short-term and/or medium-term loans.
- “Available Funds” is the amount of money in your General Account that has not been allocated to a category. As you distribute the funds across the terms, the amount in your Available Funds will automatically decrease.
- “Maximum Invested per Loan” is used to determine the amount of money that will be lent out per loan. You have the power to control this amount and change it as desired.
- The “Yes” and “No” checkboxes determine if your funds will be reinvested. Once again, you have complete control over these options and can change them at any time. Any changes will apply to future repayments.
- “Total Investment Amount” is the total amount that has been committed to loans plus any funds that have been allocated and are waiting to be lent out.
“You have registered with Carilend to become a Lender to invest your money and transmitted money securely from your bank account to your Carilend account. Now you need to get your money loaned out and earning you a great return.”
What is meant by Risk Grade?
Loans through Carilend are only approved for people who have a good income from steady employment and are responsible with their money. We assess Borrowers to ensure that they can afford the loans they apply for, and then based on their credit scores, each Borrower is assigned a specific Risk Grade. There are three Risk Grades: A, B and C, and they simply reflect the varying levels of high-quality Borrowers we have approved. Risk Grade A has the lowest risk, B has slightly higher risk than A, and C, while still being very creditworthy Borrowers, they have more risk than A and B. There are Risk Grades D and E, but we would never approve someone with such a low credit score.
For a further understanding of Risk Grades, take a company of employees: Risk Grade A would be one of the executives/senior managers, who would have more spending power; Risk Grade B would typically be middle managers/supervisors, and Risk Grade C would be clerical staff. All of these people would have good employment records, sufficient disposable income to afford the loan repayments and a good credit history. They would typically all be able to obtain financing through banks and credit unions, but they have chosen to use Carilend because of our great customer service, the convenience of our fully online process, quick turnaround and easy-to-use tools.
Risk Grades reflect the relative risk of each loan and are used to determine the interest rate charged on loans. Simply put, the lower risk Borrowers get lower interest rate loans and slightly higher (but still acceptable) risk loans pay slightly higher interest rates. The portion of your money allocated to each loan will always earn the interest rate applicable to the Risk Grade of that loan at the time of approving the loan and fixed for the duration of the loan.
How do I earn interest on the funds that are loaned out?
We group our Loan Terms into 2 groups: 12 to 36 month loans and 37 to 60 month loans, each with varied interest rates. If you have a specific time frame in mind, you can choose the Loan Term that best suits your goal.
You will earn a different rate for each loan that you are matched with. The system will automatically match you with every loan as long as you have remaining funds allocated to that term. The matching email that you receive will indicate what interest rate you are earning on each loan.
It is best practice for you to diversify your money across both Loan Terms. We are currently receiving requests for about 40% short-term loans and 60% medium-term loans. Therefore, we currently recommend that you put 40% of your funds in short-term and 60% in long-term. Using this split, your funds will be put to work faster. If there are any funds left over in Available Funds, they will not be loaned out and not earn you a return.
Through Carilend, your money will be spread over many Borrowers to ensure that you don’t put all your eggs in one basket. You decide on the maximum that you want to lend to any one Borrower. You can start lending with chunks as small as B$25, and it is best practice that you don’t put more than 1% of your total money invested through Carilend to any one Borrower. The recommended minimum number of loans is 100. This approach reduces risk since your funds are diversified over many Borrowers, and the likelihood of many loans defaulting all at once is always lower. It is best practice to take the total amount invested and divide by 100. Round this amount to the nearest $25 and input the amount into the Maximum Invested per Loan box. This maximum can change over time as your investment amount changes. Keeping your maximum loan size small reduces your individual Borrower exposure and is another risk mitigation approach. That is part of the power of Peer to Peer!
How do I keep earning more?
Lastly, you need to decide what to do with the returns that you receive back from Borrowers as they make loan repayments each month. It is best practice to reinvest these monies back into new loans in order to maximize your returns using the compounding effect. To do this, simply click “Yes” to reinvest both the principal and interest payments received.
If you would like your money back rather than reinvested, simply select “No”. If “No” is selected, then each month your principal and interest payment will be applied directly to Available Funds, where you will have the option to withdraw the funds. Of course, you have the power switch from “Yes” to “No” or from “No” to “Yes” at any time in future. Either switch will only affect future payments.
One option for Lenders who want to earn an income from their invested money, without depleting their capital, is to select “Yes” to Reinvest Principal and select “No” to Reinvest Interest. This option is often attractive to retired Lenders who want to use the income from their loan portfolio as a retirement income (or like a “pension”).
To finalise the process, click “Submit” to record your selected Lending Preferences. Your money will now be put to work to earn you the great returns available from Peer to Peer Lending with Carilend!
Can I get the money that is loaned out back at any time?
Yes, you can!
We recommend that you set your Lending Preferences for Loan Terms that are in line with when you need your money back. If you are looking to invest your funds for a specific period of time and will need all of your principal returned to you at the end of the time frame, then you will need to click “No” under the reinvestment options when you first set your Lending Preferences. Since your money (principal and interest) is repaid to you each month when the Borrowers make their loan repayments, clicking “No” in the beginning is the best way to ensure that all of your funds will be available for withdrawal when you are ready.
Sometimes unexpected events occur and you may need your money back sooner than anticipated. Simply go to the Pay In & Withdraw Money menu option and submit a request for the amount of your funds you would like to receive. If you don’t have sufficient funds in Available Funds, then we will sell your loans, provided there are other Lenders willing to take your place. There will be a small fee (typically 1%) to cover the cost of us finding Lenders for your loans.
We hope this step by step guide was helpful. If you have any further questions, feel free to contact us anytime using any of the methods set out on our Contact Us page. Our Customer Service Team loves answering questions whether via email, phone or comments in our feedback box!