While P2P lending can be advantageous, it also comes with certain risks:
- Credit Risk: Borrowers with lower credit scores may face higher interest rates, reflecting the increased risk for lenders. - Regulatory Risk: The regulatory environment for P2P lending is still evolving, and changes in regulations could impact the industry. - Platform Risk: The financial stability and operational integrity of the P2P platform itself are crucial, as platform failures can affect both borrowers and lenders. - Limited Recourse: In the event of default, recovery options may be limited compared to traditional bank loans.