Peer to Peer Lending


Lending Works is a social lending website where you can directly lend to other creditworthy people without using a bank as an intermediary. The people benefit from low-cost loans while you earn interest.


It's a concept where you put your money up to lend to people - it feels just like putting your money in normal fixed-rate savings account. You choose how much cash and how long you want to lock it away for, and you'll get a return.

Peer-to-peer lending
Is a way to invest your money through P2P websites like Lending Works. These websites are basically online financial matchmakers; matching individual borrowers with savers (AKA the lender / investor) willing to put money in, with the aim to achieve a good return. There is no middle-man, thus borrows may achieve lower rates than going to a traditional bank and the saver will get a much-improved headline rate.


Risk
Your money isn't just lent to anyone, borrowers do have to pass through rigorous application and credit checks. But, your returns (and indeed your capital) aren’t guaranteed. The primary risk is, of course, not being repaid. These websites do all the repayment chasing on your behalf - so there's no legwork.

Each P2P site has its own way to control this risk, and most work well, however, it is a crucial factor to research and consider when choosing.

Protection
Lender insurance - not all P2P sites offer this facility, but Lending Works is one website that do - designed to protect your money in the unfortunate event of your borrows defaulting on the loan you lent them.

Tax
The interest you earn is subject to income tax, thus you will have to fill out a self-assessment each financial year, and you may have to pay tax.