How to Lend Money Online (and Make a Profit)

Have you ever considered lending money online for profit?

As interest rates remain stuck at 0.01%, it’s likely you’re looking at places to put your money that actually beat inflation and grow your hard-earned savings.

Lending money for profit is an investment strategy that’s been around for a while (it’s pretty much what banks do) but didn’t really take off online until the financial crisis in 2008 when banks shut the door on businesses and individuals who needed loans.

The internet came along and produced a marketplace so people could loan money to each other, and skip the banks – hence, peer to peer lending. Thanks to the internet, you can now act as a bank, loan your money to strangers, and make a decent profit on it.

Over 10 years later, lending money online to others is a strategy that is still going strong.

At Swaper, we offer a platform that allows you to invest by lending money online to other individuals securely and make a profit.

What does “lend money online” mean?

When you’re lending money online, you are essentially taking up the role of a bank or lender. These days, many businesses and individuals don’t want to go to banks to take out a loan because the requirements are too stringent or the fees are not worth it.

(Especially during periods of recessions, banks don’t like taking on too much risk, forcing people to go elsewhere).

Let us present you, an investor.

You are happy to lend your money to those people and businesses as long as they meet certain requirements and can pay an interest rate. The borrower is happy because they are charged fewer fees and are much more likely to be approved; you’re happy because that interest rate is your profit.

However, if you wanted to lend money to thousands of strangers, you would need to meet stringent financial requirements, follow specific country rules and might even be licensed. It’s a process that is a big hassle and requires a lot of upfront capital – you essentially need to set up a company in the financial sector.

And that’s where we come in: at Swaper, we went through all the hassle and set up a compliant and secure lending company. We’ve created the platform, secured the loans and collect the interest earned. As an investor, you just need to open an account and you can start investing immediately.

When you invest with Swaper, you’ll be lending your money to hundreds of people and we’ll act as the middle-man to make sure you get your money back along with profit.

By lending money online with us, you’ll get an expected annual return of 14% on your investment (although legally we cannot guarantee this). That’s not a bad deal when compared to the 0.01% you’re currently getting on your savings account…

Still interested? Here’s how you can get started.

How do I start lending money online?

At Swaper, we’ve made it incredibly easy to start lending money online.

Here’s a recommended step by step path to follow:

1. Learn about P2P investing

If you are new to the P2P investing world, it’s worth reading up on how the industry works, what the risks are and the essentials to getting started. As is the case with all types of investing, lending money online doesn’t come risk-free. We’ve put together a few resources to help you understand what p2p investing is all about. To quickly summarise, here are the main types of risk you must be aware of when you start lending money online:

Credit default risk

We offer loans through a “loan originator” called Wandoo Finance Group. A loan originator is a company that acquires borrowers looking for a loan. Wandoo manages the loans with the borrowers from Poland, Denmark and Spain, and then “sells” those loans to us, Swaper.

There is always a risk that a borrower defaults on their loan – meaning they don’t repay on time. If the borrower does not repay on time, our buyback loan scheme kicks in and we refund the missing payments ourselves. You won’t lose your money, but there is a risk that it will take longer to reach your account.

Currency risk

At Swaper, we offer investors the opportunity to invest with both GBP and EUR accounts. There is less risk and fewer fluctuations if you stick to one currency as you’ll keep costs low. If you’re investing in a different currency, we offer the cheapest currency conversion rates with TransferWise.

Platform risk

What happens if Swaper goes bankrupt? The good news is that when you lend your money online with us, you are buying claim rights against the borrower based on an agreement. These agreements are not affected by Swaper, which means that they will still remain in place even if we go bankrupt – which is highly unlikely (but we understand your concerns).

These are three main types of risk you need to be aware of when you lend money to people online. With Swaper, we are one of the few p2p investing platforms that offer buyback on both the invested principal and interest accrued. You can learn more about p2p investing on our Swaper blog.

2. Set up a p2p investing account with Swaper

Once you understand the risks of lending money online and how p2p investing works, you’ll be ready to set up an account!

At Swaper, we’ve made it as simple as possible to get started. You’ll just need to click on “Open Investor Account” or “Sign Up” and then follow the steps. We’ll ask you for personal details and need to verify your identity with a passport and utility bill. We accept investors from all European countries, and you’ll be able to start investing with just 10€!

3. Start investing in loans

There are two main ways to invest in loans and lend money for profit: using the auto-invest function and manually picking the loans to invest in.

At Swaper, the auto-invest function makes it very easy to start lending and is our most popular feature. You just need to create an “auto-invest” portfolio and we will automatically invest in loans based on specific criteria. What do we mean by criteria? There are a few aspects of the loans you invest in which you can tweak and adjust:

  1. Annual interest rate – your annual return, a standard of 14%
  2. Maximum investment in one loan
  3. Loan term in months
  4. Countries
  5. And more

If you don’t select any of the criteria, it will simply use the default criteria which are automatically set to maximise your return on your investments. You can also choose to invest in loans manually, which means picking the loans that you specifically want to invest in. This will require some research and more work on your part.

4. Track your progress

Once you start investing, you’re good to go! You can keep adding money to your Swaper account every month or add it as a lump sum whenever you want.

Want to sell and withdraw? You’ll get all your money back within 30 days, and an additional 30 days if there are any loans under the buyback guarantee.

Once everything has been sold, you can withdraw your money from Swaper and receive it all in your bank account within 2 business days.

It’s good practice to check your account and track your performance over time to see how your earnings accumulate.

We also recommend checking the Swaper blog every now and then so you know if we’re releasing any new features or bonuses. You can also download the Swaper app so the loans you’re investing in are literally at your fingertips.

Thanks to Swaper, it’s now incredibly easy to lend money online for profit.

Forget about 0.01% interest rates – you can now make a decent return through a P2P investing platform and actually save, plan and invest in your future. At the end of the day, this is what is most important. So why not try it out?