Peer to Peer lending is a process that allows people to invest in loans by lending to other people. The process is made possible via state-of-the-art, online, secure technology which is administered by a specific entity. In the Caribbean, Carilend is the first such site and will begin operation shortly. The following are a few common/popular questions from a lending perspective and the respective responses.
What information do you require before I can become a Lender?
We require basic personal information such as name, address, nationality, contact information and date of birth. Please note that you can only become a Lender if you are over 21 years old. We also require your banking details so that the money can be transferred to/from your bank account to Carilend in a easy, safe and secure way. Along with this information, we require copies of a government issued picture identification document and your banking information. The registration process is very straightforward and simple.
Using this information, we are obliged to perform all the normal verification checks as well as those required under the Anti-Money Laundering regulations.
How much can I invest/lend?
The recommended minimum investment is BDS$2,500, and there is no upper limit on this activity. Essentially, Lenders’ money is split into small chunks and spread over many loans, which diversifies the risk for Lenders. It is best practice to split the total invested amount into at least 100 small chunks. In other words, your funds would be lent to at least 100 different loans. Each small chunk is paired with other small chunks in order to fully fund each individual loan. For example for an investment of $5,000 which has been split into 200 small chunks, there would be $25 lent to 200 people. The allocation of each chunk is done automatically via Carilend’s online, secure system and does not involve manual intervention. This is one of the prominent and positive features of Peer to Peer lending.
“Peer to Peer lending is a process that allows people to invest in loans by lending to other people. The process is made possible via state-of-the-art, online, secure technology. In the Caribbean, Carilend is the first such site and will begin operation shortly.”
How do I get my money lent out?
First, you need to set your Lending Preferences. Your Lending Preferences allow you to choose how much you want to lend, how long you want to lend it for and which Risk Grades you would like to lend to. We provide tools and advice to help you decide on the Enhance Your Returns page. For more information on how Lenders select their Lending Preferences, please see Flexible Investing and our blog post Putting Your Money to Work with Carilend.
After you have set your Lending Preferences, they become available for Borrowers’ use. Loans are automatically matched with Lenders' money by comparing the Borrower’s loan parameters and Risk Grade to the Lenders’ Lending Preferences. If the two are compatible, then a match is made! You will get an email every time your money is matched with a Borrower.
Over what term can I spread my lending?
You can lend on loans which have terms or durations from 12 to 60 months in six month increments. Repayment instalments, including interest, are paid monthly. You should set your Lending Preferences to match the terms over which you wish to invest. Details of the loan terms currently available are set out on the Enhance Your Returns page and the Flexible Investing page.
What interest rate will I receive for my investment?
The interest rate that you receive depends on the loan requests available and what Lending Preferences you select. The current rates available are set out on the Enhance Your Returns page.
Your overall return will depend on which options you choose and the profiles of the Borrowers that submit loan requests.
How will I receive my interest and principal repayment instalments ?
Borrowers make monthly repayments to their loans, and hence you will receive monthly payments. If you have chosen to reinvest your principal and interest, then the payments will be applied back to the category where they originally came from (e.g. Risk Grade B, 12 - 36 Months), where they will be available for lending again. If you have not chosen to reinvest your principal or interest, then the payments will be paid into your Available Funds, where they will be available for withdrawal.
The repayment instalment schedule is calculated on the outstanding loan principal at the instalment payment date. The intention is to have equal monthly instalments. With each instalment, a small amount of the loan principal is repaid and this reduces the interest charge for the next month. Because each monthly repayment is fixed, the amount of principal that is repaid will increase slightly each month and the interest amount that is paid will decrease. Under My Loan Book, you can view the detailed repayment schedule for each loan that you are matched with.
For more responses to common questions, please visit the Help Centre section of our website. Also follow us on Facebook and LinkedIn to get updates on our launch and other related matters.