Main risks in lending

Default risk

If the person or business you lend money to is not be able to pay you back (this is called ‘defaulting’). Unlike bank and building society savings, the money you lend via a P2P platform is not covered by the Financial Services Compensation Scheme (FSCS). This means you may not be able full value money in cases of default.

Early or late repayment

If your loan is repaid early or late, you could make less profit than you’d expected. If a loan is repaid early, you can simply lend out the money again. But there is a chance that you might not be able to lend out at the same interest rate.
If a loan is paid late you may lose on some interest from the delay in payment.

How you can manage your risk

Diversification:

Spread your investment across different borrowers i.e. do not put all your eggs in one basket. You reduce any losses if a particular borrower defaults.
You can achieve diversification by investing via some of the managed funds. This allows you to pool you money with other investors to invest in many different loans chosen by our in-house team. Find out more
Our autobid tool can also help you diversify you portfolio. The autobid makes it easier for you to choose loans that meet your criteria. Find out more

Review information

Go through the information provided before making a decision to invest. Review information is updated regularly for any updates.

Financial Advice

Creditmonga provide a rating guidance based on set criteria. Read about our rating criteria here. This information is to help you make your your investment decision and should not be taken as advice.

What we do to manage risks:

Lending responsibly

At Creditmonga we are committed to lending responsibly. This is important to protect our both our lenders and our borrowers. We therefore best to ensure products meets borrowers their needs

Underwriting loans

We apply checks on all loan applications and only applications that meet our criteria are passed on to investors in the market. Our checks include:

• Credit history, financial details, affordability checks, income and expenditure
• Identity verification for all borrowers
• Director checks Company borrowers
• Company check – accounts, industry, and more

Based on this information we provide a rating guidance. For more details on our underwriting and rating criteria here.

Default recovery

In case of default: While we try to provide the loans that – there are cases when the borrower can run into financial difficulty. In such cases we try to get best out come by

• Continuously engaging with borrower
• Keep investors concerned informed

We try to recover the most an minimize loss. We have partnered specialist in debt recovery who adhere to industry best practice and regulations. For more details on the debt recovery processes click here.