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. 
• The “Yes” and “No” checkboxes determine if your funds will be reinvested. 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.

As a Lender, you don't have the ability to choose which Risk Grade you are matched to. Once you have funds available to lend in a loan category (either short-term or medium-term), you will be matched to the loan regardless of Risk Grade. The majority of our Borrowers fall in the C category (about 90-95%). Probably about 1% are As and the remaining are Bs. No matter the Risk Grade, all loans are covered equally by the Reserve Fund.

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 42 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. 

Currently, only about 5% of our loan demand is for short-term (12 to 36 months) loans, and the other 95% is for medium-term (42 to 60 months) loans. Therefore, we would recommend putting all of the funds into the medium-term category so that they are lent out as quickly as possible. Of course, the choice is up to you. If there are any funds left over in Available Funds, they will not be loaned out and not earn you a return.

Our goal is to get your funds lent out as quickly as possible. Therefore, you may notice that your funds are invested in larger pieces initially. However, as you reinvest your repayments, your funds will become more and more diversified. Regardless of the amount that you are matched, the Reserve Fund is well-funded to cover the expected defaults should the need arise. 

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!

How can I get my money back after it has been loaned out?

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. 

If you don't have a specific timeline in mind, then you can reinvest your repayments continually until your plans change. Once you know that you are going to need some of your funds back, then you can turn off the feature to reinvest your principal and interest repayments. By doing so, all the repayments accumulate on the Carilend account and you can withdraw them at any time without penalty or delay. Using this way, the funds will be naturally repaid over time (up to 5 years) as Borrowers make payments on their loans.

Sometimes unexpected events occur and you may need a lump sum payment quickly (faster than the loans can be repaid naturally). In that case, you would have to sell your loans. You can only sell loans that have had at least one repayment, are in good standing (not late/arrears/defaults), and have more than 12 months left on the term of the loan. There is a 1% fee for selling loans (1% of the amount you want to sell). In addition, selling loans is dependent on the availability of other Lenders willing to take your place in the loans and who have money waiting to be lent out. Currently, you can sell up to $10,000 at a time.

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!

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