Choosing An Online Legal Money Lender



Jun 23, 2022

Conventionally, money used to be managed by banks and financial institutions. So, to invest your money in fixed interest securities, you had to visit your bank and create a fixed deposit. Similarly, you had to manually apply to a bank or financial institution to get a loan. 

But over time, it became difficult to cater to the fund requirements through conventional methods. The solution to this problem emerged from the technological advancement that brought forth the concept of online money lenders and lending platforms.

Online lending platforms provide a marketplace for those who want to invest their surplus funds and those who want to borrow money. Contrary to the notion, these online lending platforms offer a low-risk investment option. 

This blog discusses the parameters you should use to choose a legitimate online money lender. It also provides information about the services, features, and signup process for LenDenClub, one of the best online lending platforms in India.

What is an Online Legal Money Lender?

An online money lender facilitates direct lending between individuals, i.e., peer-to-peer lending. Investors can register on the P2P website and find suitable investment options to generate a fixed monthly income. 

These platforms pick borrowers based on various credibility parameters. Investors can lend money online to creditworthy borrowers through these websites. Hence, P2P lending acts as alternative finance. 

Unlike stocks or Mutual Funds that carry high volatility risk, P2P lending can be the best opportunity for investors who want stable returns with low volatility risk. 

Although it sounds very lucrative because of higher interest earnings, finding a legal online money lender can be tricky for investors. At the same time, websites can be prone to fraud.

A P2P website should be legally registered. It should follow all the protocols and precautions to facilitate smooth and safe online transactions. 

So, how can you choose a legitimate online money lender? What are the factors that you should consider before you start lending money online?

Parameters to Recognize a Legal Money Lender Online

For any investor, the safety of funds is always one of the major concerns. Hence, they turn towards less risky investment options compared to equity or mutual funds. Online money lenders can address both these investor concerns. Along with exceptional interest earnings, they can also provide security for your capital.

But how can you check the genuineness of an online money lender? Here are some of the parameters that you can check to be sure about a P2P platform.


1.1 “https” instead of “http”

You should have seen the URL for websites starting with either “https” or “http.” The inclusion of ‘s’ indicates that the website has acquired proper security certification. 

This protects your sensitive information from being accessed by a third party without authorization. If the website URL of an online money lender starts with “https,” it is a legal money lender.

1.2 Lock Symbol

If the data transfer between the website and the web browser is properly encrypted, a lock symbol is added to the left of the URL. 

This means the information provided by you on the website is protected through encryption. As a result, all your transactions and sensitive investment-related information are secured.


1.3 Check whether it is an RBI Registered NBFC-P2P

Every P2P platform in India has to get an NBFC-P2P license from the RBI. Without this license, it cannot carry out legitimate online money lending in India.


1.4 Mandatory disclosures on a P2P lender’s website

  1. Credit assessment and scoring method
  2. Factors considered during the credit assessment
  3. Disclosure about the protection and usage of client data
  4. Grievance redressal mechanism for the customers
  5. Past performance of the investment portfolio
  6. Details of the Non-performing assets

A legitimate money lender will always disclose these details on its website to meet the regulatory requirements.


1.5 Check the Investor testimonials

P2P lenders host investor testimonials on their websites. By going through these testimonials, you can understand more about the legitimacy of the website. 

At the same time, you can check the genuineness of the platform by comparing the actual returns & default figures with the promised ones.


Reasons for Growth of P2P Lending in India 

Even though the traditional banking system is flourishing, online P2P lenders are finding their footing rather quickly in India. So, what are the reasons for the growth of P2P lending, and why should you invest using an online lending website? 


2.1 Removal of Manual Paperwork

One of the biggest problems with offline lending is the task of preparing tedious paperwork and meeting all the compliance requirements.

Not only does it slow down the process, but it also increases the overall processing cost of a loan. On the other hand, online money lending doesn’t require any manual paperwork, and meeting compliance requirements is often easy, quick, and seamless.

From setting up your investor account to making your first investment, you can get started within just a few clicks. Hence, direct lending websites ensure convenience and save time for investors.


2.2 Easy Investing Process

Compared to traditional methods, the process of onboarding and investment is much easier with online money lending platforms. 

You simply need to register through the website or a mobile app and fill in your personal information, including PAN and Aadhaar details. Once this is complete, you are all set to start investing within just a few clicks.


2.3 Higher Income for Investors

Banks or financial institutions tend to have low interest on deposits as they have high operational costs and commission charges. On the other hand, an online money lending platform eliminates the middlemen and provides higher returns to the investors. 

P2P platforms pass on the majority of benefits to investors against a nominal charge for operating the website. As a result, investors can expect much higher returns from P2P lending platforms.


LenDenClub – One of the Top Online Money Lenders in India

LenDenClub is one of the fastest-growing online money lending platforms in India. With a community of over 20 Lakh investors, it is also one of the most trusted P2P lending platforms in India. 

LenDenClub provides the best investment plans with high returns to investors. What are the services that LenDenClub provides, and why is it beneficial for you to choose LenDenClub? This section discusses all the points that you need to know.


3.1 RBI Registered NBFC-P2P

As discussed earlier in the blog, a legal online money lender in India must hold an NBFC-P2P license from the RBI. 

LenDenClub is an RBI-registered NBFC-P2P and has been operating in India since 2014. Thus, you can be sufficiently assured about the genuineness of the LenDenClub website.


3.2 Secured Website

LenDenClub has obtained a security certificate for encryption of all the data used by the website. Consequently, it hosts a secured website whose URL starts with “https.” You can also find the lock icon on the URL box. 


3.3 Maximum Diversification

While all investments carry a certain degree of risk, diversification can help you reduce it. LenDenClub allows you to split your funds and invest in multiple borrowers. As a result of this diversification, the risk of borrower defaults is reduced considerably. 


3.4 High Transparency

You can find the correct data about past performance and default rates on the LenDenClub website. Instead of promising impractical numbers, LenDenClub tries to provide prudent estimates about the expected returns. Hence, it maintains a high degree of transparency with its customers.


3.5 High Returns up to 12% p.a.

With LenDenClub, you can earn almost double compared to Fixed Deposits. With stable returns of up to 10-12% p.a., investing in the LenDenclub platform can give your portfolio the much-needed boost. 


3.6 No Market Risk

Market risk refers to the risk caused due to fluctuation in market prices of a security. Such a risk exists for market-based investments like stocks and Mutual Funds. On the other hand, your investments through LenDenClub are completely debt-based. 

As a result, there is no risk of market fluctuations in your capital. Although P2P investments carry default risk, the income from online money lending is free from market volatility. 


3.7 Low Default Rates Between 3-4%

To maintain transparency, LenDenClub discloses the default rate on online loans on its website. As per the data available on the website for Q2 of FY 2022, the default rates were as low as 3.48%. Not only does it help investors, but it also gives them confidence about the genuineness of LenDenClub.


3.8 Anybody Can Invest

Whether you are a resident Indian or a non-resident Indian, you can easily invest with the LenDenClub website and enjoy a high fixed interest income. 

Even institutions can invest their surplus funds through the LenDenClub website. In this way, LenDenClub caters to a broader customer base and isn’t restricted only to individuals.


3.9 AI-Powered Investment

Once you register as an investor on the LenDenClub platform, you are ready to invest. But do you need to select the borrowers manually? No! 

The AI assistant of LenDenClub allows you to auto-invests your funds to the best options. 

Whenever a new borrower applies for a loan, auto-invest helps you to access it on priority. As a result, you gain more control over the type of investments you want to make without bothering to find the best investment options yourself.


3.10 The Security Blanket of Escrow Account


LenDenClub appoints a trustee to operate an Escrow Account. All the investments made by the customers through the LenDenClub website are managed using this Escrow Account. 

The Escrow mechanism allows only authorized transactions, and any risk of fraud is removed. It provides another safety net to the investors and helps maintain their privacy.


3.11 Thorough Screening of the Borrowers


Before allowing a borrower onto the platform, LenDenClub carries out a thorough screening based on 200+ unique data points for each borrower. 

This thorough frisking of the borrower profiles makes it very difficult for low-quality borrowers to get listed on the website. It helps in achieving lower default rates and provides safety to the investor’s capital.


3.12 Accessible Across Platforms

You can easily register and start investing with LenDenClub through their online website or the mobile app available on both Android & iOS. Hence, you can access your LenDenClub account across platforms at your convenience. 


3.13 Trusted by 2 Million + Users

The biggest achievement of LenDenClub is the trust that it has been able to build among investors. As of today, over 2 Million users are registered with LenDenClub and are benefitting from its trustworthy services. This user trust is helping the website grow and is making LenDenClub one of the largest peer-to-peer lending platforms in India.


How to Sign Up with LenDenClub?

You can register on LenDenClub through their official website as well as the LenDenClub mobile app available on Android or iOS. The process is fairly simple within 3 easy steps:

Step-1: Setup Your Account by filling in the necessary details 

* You need to be 18+ years of age, holding a Bank Account and a PAN Card in your name to register

Step-2: Add the amount that you want to invest through the LenDenClub online money lending platform

Step-3: Allow AI to invest and diversify your funds among multiple borrowers

With this, you are ready to start your investment journey with LenDenClub. The AI-powered interface creates a list of suitable borrower profiles according to your preferences and auto-invests to the best options available. Using this facility, you can sit back comfortably and see your wealth growing!


While higher returns are a driving factor for investment, investors always want to ensure the safety of their capital. Hence, it is important to invest through an online money lender that takes utmost security measures to safeguard your investments and maintains transparency throughout the process. We hope that this blog gives you a better perspective on P2P lending.

LenDenClub is one of the safest and most trustworthy options for you. So, Sign up now and start investing!