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Almost every receivable is associated with some level of risk. As an user, it is essential for you to take it into account so your receivable decisions can be most informed once. We believe that what each user should focus on is the risk-to-profit ratio. Find out the risks you are taking by purchasing of receivables in a p2p purchasing of receivables portal:
Default of the loan you purchased in
As an user, you earn when the part of a loan you buy is paid off. If the borrower ceases to pay his/hers installments, the credit defaults. At iuvo, we reduce the risk for your receivable to a minimum with our buy-back guarantee. A buy-back guarantee is a contract between you and the loan originator, who is obliged to buy back your initial receivable in a loan that didn’t receive installment for 60 days. Nevertheless, the risk of loan default still exists, and you need to take into account because when the buy-back guarantee is activated, you will not receive a return. This event may affect your receivable strategy.
Poorly diversified portfolio
The best way to minimize the risk of losing is to diversify your portfolio. It means allocating a small amount of money among many credits instead of purchasing of receivables one larger amount into a small number of credits. By purchasing of receivables small amounts in a large number of credits, you guarantee that even some of them will deflate, this will not seriously affect your total receivable and its return.
Bankruptcy of the P2P portal
Although unlikely, it is still possible. Portals that have no originators but lend themselves develop their backup plans in the event of bankruptcy. As iuvo works with originators – well-established non-bank financial institutions, the purchased funds are distributed in separate bank accounts, and each purchase agreement to buy a part of a loan is concluded between the user and the respective originator and is not influenced by the portal.
Regulatory changes
P2P purchasing of receivables is a relatively new industry and as such is not yet regulated harmoniously. Potential interference could bring changes in the way portals work in different countries and in the return they offer, but there are currently no indications that this could happen soon.
The annual return that iuvo offers can reach up to 12%, and you can start earning money as soon as you’ve add fundsed funds into your account and created your portfolio!
