I have been actively following the P2P market in India.Having tried some of the platform with my own money I was able to short list some of the most consistent players.One big factor I consider while investing is ,how open the platform is in sharing its loan performance data .I have compiled the loan performance of my top 3 platforms.
I have caluclated the expected payoff as the determining factor to invest in a category of loan.
Expected Payoff = Average return* Probability of non default- Principal * probability of Default
basically it tells you how much you will make in the long run for a given default rate in a category:
As it is evident Category D and E have performed best with average expected payoff of 17.5%
Faircent highest performance has been in the medium risk category.The result across categories show less variation compared to I2I
Lenden Club has been a winner with great returns in the High and Unidentified Risk.Unidentified risk are generally 2 months loan given to salaried people
Some other factors need to be considered during investing apart from just returns:
- Tenor of Loan
- Type of borrower:Purpose,details of documents submitted,cibil report,gender
- Amount of investing in one loan