Income co-operates with non-bank lenders (loan originators). It enables investing in the loans originated by them. Through the cooperation, the investors can easily earn passive income through Investing in loans, and the non-bank lenders gain access to flexible liquidity, enabling them to grow. We have put together a simple guide to make understanding your investments easier.
Issuing a loan means lending money by individuals, businesses, or other entities to other individuals or companies. These borrowers are liable to pay back the principal and interest on the principal amount borrowed.
The non-bank lenders on Income list two main types of loans: short-term and installment loans
Short-term loans are unsecured quick cash infusions, usually with a 35-day term and characterized by high-interest rates. On Income, the loans called “Short-term” are issued to borrowers typically for a few months and have extensions allowed, which are often part of the business model of the loan originator.
Payday loans are a type of short-term loan used by danabijak and Danarupiah currently on Income. The term “payday” has traditionally referred to a type of loan where a borrower writes a postdated check to the lender for the payday salary but receives part of that payday sum in immediate cash from the lender.
While these concise loans do not involve writing checks, nor do they necessarily have anything to do with the borrower’s payday, the name has stuck to mean loans of usually max 30 days in duration.
Installment loans are loans that have multiple payments. In most common cases, installment loans have a term range of 2-72 months. Meaning borrowers will be making numerous installment payments during the loan. Therefore, investors will also get paid multiple payments during the loan term. So if you invest in an installment loan that has a duration of 10 months, you´ll receive your principal + earned interest back in 10 monthly installments.
Secured loans are usually defined as loans where the borrower pledges some asset as collateral. The collateral then secures against the debt. If the borrower defaults, the creditor takes possession of the asset used as collateral and may sell it to regain some or all of the amount initially loaned to the borrower. On Income, secured loans are business loans secured by other consumer loans from the same non-bank lender that borrowers pay in multiple payments. ClickCash currently lists secured loans.
Finto Capital offers car leases for investing in Income. Car leasing is the leasing (or the use) of a motor vehicle for a fixed period at an agreed amount of money for the lease. Dealers commonly offer it as an alternative to vehicle purchases.
Even when you are unsure which type of loan you should invest in, your investments will be protected by Income’s unique security features. No matter the loan type, borrower APR or origination country, all loans on Income are secured with Buyback Obligation and Cashflow Buffer. Buyback obligation protects investors against borrower defaults, and the cashflow buffer uses non-bank lenders’ loan portfolios as security.
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