How often do you feel that the most profitable investment options are beyond your reach as a small investor?
For example, consider retail credit. What if you could directly lend your money to individuals in need and earn substantial returns from it?
The founders of Lendbox recognised that small investors often struggle to access profitable opportunities. With Lendbox, they aim to make retail credit more accessible by allowing smaller investments, while eliminating third-party intermediaries.
In this review we will explore every aspect of Lendbox to see if it can actually replace traditional investment channels for lending and debt investments.
Overview:
Lendbox provides a peer-to-peer (P2P) lending platform that connects investors with certified borrowers, offering a modern solution for personal loans and investment opportunities.
Founders: Atul Shinghal, Gautam Sinha, Harsh Khetan
Founding Year: 2015
Funding: Yes
Platforms: Web, Mobile
Available as an Android App: Yes
Available in iStore: Yes
Lendbox has partnered with leading financial institutions and technology firms like ICICI Bank, Yes Bank, and CRIF to ensure secure transactions, enhance credit assessment, and offer a seamless user experience.
What Are The Main Features Of Lendbox?
For Investors:
- High Returns: Earn up to 15% annually, surpassing traditional investments
- Diversified Investment Options: Spread investments across various loan categories to minimize risk
- Flexible Investment Tenures: Choose investment durations from 3 to 36 months
- Monthly Cash Flow: Receive regular monthly repayments from borrower EMIs
- Robust Risk Management: Evaluate borrowers on 200+ parameters for creditworthiness
- Auto-Investment Option: Automatically allocate funds based on risk preferences
- Dedicated Wealth Manager: Access personal guidance for portfolio diversification
- Liquidity Options: Withdraw earnings monthly, at maturity, or before maturity
- User-Friendly Platform: Simple registration with basic KYC, managed via an app
- Regulatory Compliance: Operates under RBI regulations, ensuring security and trust
For Borrowers:
- Wide Loan Range: Borrow between ₹1,000 and ₹10,00,000.
- Flexible Tenures: Loan terms range from 1 to 36 months.
- Competitive Interest Rates: Rates depend on borrower credentials and investor demand.
- No Prepayment Penalty: Repay loans early without any prepayment charges.
- Quick Approval: Fast processing and disbursal, often within 24 hours.
- Minimal Documentation: Simple KYC requirements and minimal paperwork.
- Transparent Charges: Clear, upfront information on all fees and charges.
- Comprehensive Credit Check: Thorough credit assessment to ensure reliability.
- Access to Small Loans: Ideal for those needing smaller loan amounts, often overlooked by banks.
- Online Application: Convenient online application process via the Lendbox app.
What Types Of Investment Opportunities Are Available On Lendbox?
Lendbox offers various investment opportunities that cater to different risk appetites and investment preferences. Here’s a detailed look at the types of investments available on Lendbox:
1. Manual Investments
Primary Market:
You can personally select and invest in loan requests listed by borrowers. You have the flexibility to choose based on loan amount, purpose, interest rate, and borrower creditworthiness. This way, you can control and tailor your investments according to your preferences.
Secondary Market:
This option lets you buy and sell existing loan parts from other investors. It provides additional liquidity and flexibility, allowing you to adjust your portfolio as needed and seize market opportunities.
2. Auto-Investment
If you prefer a more hands-off approach, Lendbox’s auto-investment feature is perfect for you. It uses a proprietary algorithm to allocate your funds automatically based on your risk tolerance and return expectations, ensuring your investments are continuously and optimally managed.
- Returns: 9% to 15 % per annum
- Minimum Investment: ₹25,000
- Tenure: 1 month to 36 months
3. Per Annum Product
The Per Annum is a flagship product by Lendbox that offers fixed-income opportunities with predictable returns. It focuses on non-market linked assets, making it ideal if you’re looking for stable and high returns without market volatility.
Here’s a list of different plans available on Per Annum:
Fixed-term Lite Plan:
- Returns: Up to 9.5% per annum
- Minimum Investment: ₹25,000
- Minimum Tenure: 1 month
Fixed Term Plan:
- Returns: Up to 11.57% per annum
- Minimum Investment: ₹50,000
- Minimum Tenure: 3 months
Flexi Term Plan:
- Returns: Up to 9.5% per annum
- Minimum Investment: ₹50,000
- Minimum Tenure: No Lock-in Period
4. What Happens In Case Of Default By The Borrowers?
While Lendbox strives to minimise the risk of defaults through rigorous borrower assessments, it does not guarantee the recovery of funds in case of default.
Borrowers are required to issue security cheques, which can be used to recover dues. However, the effectiveness of this measure depends on the validity and honourability of the cheques once presented to the bank. Lendbox facilitates communication between lenders and borrowers to resolve payment issues but does not bear liability for defaults.
In cases of delayed payments or defaults, Lendbox actively works to recover repayments through its experienced Collection and Recovery team. If necessary, they also facilitate legal proceedings against borrowers on behalf of lenders, ensuring that every possible step is taken to protect investors’ interests.
What Are The Loan Options On Lendbox?
1. Types Of Loans Available
Personal Loans: You can borrow amounts ranging from ₹1,000 to ₹10,00,000. These loans are perfect for covering various personal needs like medical expenses, education, or home improvements.
Small Personal Loans: You can apply for small personal loans and get up to ₹1,00,000 in just 24 hours. These loans have tenures ranging from 1 to 12 months, perfect for covering immediate financial needs. Plus, no collateral is required. You can just apply now and get the money in your account by the end of the day.
Debt Consolidation Loans: If you have multiple smaller debts, you can combine them into one loan with a single EMI. This simplifies your repayments and often reduces your overall interest burden.
Credit Card Settlement Loans: Struggling with high-interest credit card debt? You can get a loan of up to ₹1,00,000 from Lendbox to repay your credit card dues easily. This type of loan helps you consolidate multiple credit card debts into one manageable payment, reducing stress and saving on high-interest costs.
Marriage Loans: With Lendbox, you can take out a marriage loan up to ₹10,00,000 to cover a part of your wedding expenses.
Apart from these 5 types, Lendbox allows you to apply for loans for 13 different purposes including loans for home furnishing and appliance purchases.
2. Interest Rates And Terms
Interest Rates: Interest rates on Lendbox start from 11.49% per annum and can go up to 36% depending on the borrower’s credit profile and the demand from investors. Rates are mutually agreed upon by borrowers and investors.
Loan Tenures: Loan tenures range from 1 to 36 months, depending on the type of loan you are seeking.
3. Repayment Options
Flexible Repayments: You can choose from various repayment tenures and have the option to make prepayments without any penalty or pre-closure charges. Repayments can be made through multiple channels like NEFT, IMPS, cheques, and mobile wallets.
Monthly EMIs: Repayments are made through equated monthly instalments (EMIs), calculated using the reducing balance method.
4. Factors Influencing Loan Approval And Interest Rates
Credit Assessment: Lendbox evaluates borrowers based on over 250 parameters including income, credit history, and employment details.
Borrower Credentials: Factors such as the borrower’s monthly net income, employment stability, and overall financial health significantly influence loan approval and interest rates. Borrowers with a solid credit history and higher income levels are more likely to secure loans at lower interest rates.
Market Demand: Interest rates are also influenced by the demand from investors on the platform. Higher demand for loans from investors can result in more competitive rates for borrowers.
How Does the Peer-to-Peer Lending Model Work On Lendbox?
The Peer-to-Peer (P2P) lending model on Lendbox is designed to connect borrowers directly with investors, creating a more personalised and potentially profitable lending environment for both parties.
Here’s how it works:
1. Matching Borrowers and Investors
Lendbox operates as an intermediary that facilitates the connection between borrowers in need of funds and investors looking to earn returns. Borrowers list their loan requirements, including the amount, purpose, and desired tenure.
Investors browse these listings and choose which loans to fund based on their risk appetite and return expectations.
2. Proposal and Negotiation
Once an investor expresses interest in a loan, both parties can negotiate the terms, such as the interest rate and repayment schedule. This flexibility allows borrowers and investors to find mutually agreeable terms that work best for their respective needs.
3. Agreement and Disbursement
After agreeing on the terms, a formal contract is signed between the borrower and the investor. Lendbox ensures that all legal aspects are handled, and once the agreement is finalised, the funds are directly transferred from the investor’s account to the borrower’s bank account.
4. Repayment and Monitoring
Borrowers repay the loan in EMIs (Equated Monthly Installments), which are credited back to the investor’s account. Lendbox facilitates these transactions and provides tools to monitor the repayment progress.
By eliminating traditional banking intermediaries, Lendbox tries to provide a streamlined, transparent, and efficient P2P lending ecosystem, which might benefit both borrowers and investors through lower costs and higher returns.
How Can You Sign Up For Lendbox?
For Investors:
Signing up for Lendbox as an investor is a straightforward process that involves providing some basic personal details and verifying your identity.
After selecting the investor option during signup, you’ll need to enter your name, mobile number, and email address.
The platform will send an OTP to your phone for verification. Following this, you’ll be asked to upload a photo of your PAN card for identity verification, along with an address proof document, which could be your UID card, passport, or voter ID.
Once these steps are completed, your account will be set up, and you can start exploring investment opportunities on the platform.
For Borrowers:
Signing up as a borrower on Lendbox involves providing comprehensive personal and financial information to assess your loan eligibility.
You’ll have to start by specifying the loan amount, purpose, and tenure. Next, you’ll need to detail your employment type, monthly income, and how you receive your salary. Personal information, such as your name, gender, marital status, and contact details, will be required, along with your address and PAN number.
You’ll also have to provide details about your employer, education, and the number of dependents. Finally, you’ll need to upload documents including your bank statements, salary slips, PAN card, Aadhaar card, and additional address proof.
This thorough process ensures that Lendbox can accurately evaluate your loan request and connect you with potential investors.
Pro Tip: Access the signup option from the Loans menu available on the website banner so that you can apply for smaller amounts than Rs.25000 and a tenure of less than 3 months. Wondering why? Read on to know!
How User-Friendly Is The Lendbox Platform?
Investing with Lendbox is similar to a window shopping experience!
You can easily access the dashboard and view proposals from individuals seeking personal loans. Each proposal includes basic details such as the required amount and loan tenure. To make it even more convenient, you can apply filters like monthly income, loan amount, and loan purpose. These filters not only help assess the reliability of the borrower but also enhance the overall investment experience.
However, there are a few setbacks with the user experience and design.
For investors, there’s an option to choose between the secondary and primary markets. Yet, the investment opportunities listed under both categories are usually the same.
If you’re a borrower switching to marriage loans, you still get an option to choose a purpose, and oddly, you can select education or business loans as well.
Also, while Lendbox offers loans starting at Rs.1,000 with tenures as short as 1 month, the direct sign-up option doesn’t allow you to choose these specific terms. The content and information on the website can also be confusing and might even contradict itself.
These are minor flaws in the user interface design and website content, which might make the experience a bit confusing. However, these issues aren’t significant enough to overshadow the opportunities provided by Lendbox.
What Are The Fees and Pricing Structure on Lendbox?
Fees for investors on Lendbox:
Manual Investment Option:
Lendbox charges an annualised service and collection fee based on the interest rate proposed by the lender:
- Up to 15%: 3%
- 15-25%: 4%
- Above 25%: 5%
Auto-Investment Option:
If your portfolio’s yield is equal to or lower than the chosen indicative yield (XIRR), Lendbox’s fee is a minimum of 1% on an annualised basis.
If the portfolio’s yield exceeds the chosen indicative yield, Lendbox’s fee is the difference between the actual yield and the indicative yield. For example, if the chosen indicative yield is 11.50% XIRR and your portfolio achieves 14.00% XIRR, Lendbox’s fee will be 2.50% (the difference between 14.00% and 11.50%).
Fees for borrowers on Lendbox:
A fee is charged at the time of loan disbursal and varies with the interest rate:
- Up to 16%: 2% of the loan amount or ₹2,000 (whichever is higher)
- 16.25% to 21%: 3% of the loan amount or ₹3,000 (whichever is higher)
- 21.25% to 25%: 4% of the loan amount or ₹4,000 (whichever is higher)
- 25.25% to 28%: 5% of the loan amount or ₹5,000 (whichever is higher)
- Above 28%: 6% of the loan amount or ₹6,000 (whichever is higher)
Additional GST applies to these charges.
Are there any hidden charges or additional costs to be aware of?
Lendbox maintains a transparent fee structure with no hidden charges. However, there are a few additional costs to be aware of:
Delayed Payment Charges: In case of delayed payments, a penalty is levied on the borrower, ranging from 1.5% to 3% per month on the overdue amount.
Proposal Cancellation Fee: Investors are charged ₹500 plus GST for canceling initiated or accepted proposals.
Registration Fee: Borrowers pay a small registration fee of ₹500 plus GST when they sign up and submit their documents.
These fees and charges are communicated upfront to ensure transparency and help both investors and borrowers understand the costs involved in their transactions on Lendbox.
What Support And Resources Does Lendbox Provide?
Lendbox provides responsive customer support to help users with any issues or queries they may have. They can be reached via email or phone, ensuring that help is just a call or message away.
To help you make informed decisions, Lendbox offers a range of educational resources. These include detailed guides on how to get started, explanations of the peer-to-peer lending process, and tips for both investors and borrowers.
The Lendbox blog is a rich resource of information, covering topics such as P2P lending strategies, investment tips, and tax planning, which can help you make well-informed financial decisions.
Lendbox also has a transparent and structured grievance redressal process. You can report any issues, and Lendbox ensures these are addressed promptly, providing clear communication throughout the resolution process.
How Secure Is Lendbox?
Lendbox employs robust security measures to ensure the safety and integrity of its platform.
All user data and transactions are protected using 256-bit SSL encryption technology. Additionally, the platform is compliant with the Reserve Bank of India’s (RBI) guidelines for Non-Banking Financial Companies (NBFC-P2P), ensuring high standards of operational security.
Lendbox prioritises user data protection by implementing multiple security protocols. This includes encryption of sensitive information, secure storage of credit card details, and regular security audits. Lendbox also ensures that user data is not shared with third parties without consent, except as required by law for fraud prevention and compliance purposes.
To ensure the reliability of its users, Lendbox conducts thorough background checks and credit assessments. Unlike financial institutions which evaluate borrowers based on their CIBIL score, borrowers on Lendbox are evaluated on over 250 parameters, including income, employment stability, and even their social media profiles!
Additionally, investors and borrowers must comply with the terms and conditions set by Lendbox, including the submission of security cheques and adherence to anti-money laundering laws.
For more detailed information, you can visit the Lendbox Terms of Use.
What Are The Strengths And Weaknesses Of Lendbox?
If you’re considering Lendbox for your P2P investments, it’s essential to understand both its strengths and the challenges you might face. Here’s a breakdown to help you make an informed decision-
Strengths:
- Stable Returns with the Per Annum Product: If you’re looking for steady returns, the Per Annum product might be for you. It offers predictable returns through partnerships with BNPL companies, which isn’t something you’ll find on every P2P platform.
- Thorough Credit Checks: Lendbox goes beyond traditional credit checks that rely solely on CIBIL scores. Instead, it uses thousands of data points to create a more comprehensive credit profile of each borrower. Factors like net salary, spending trends, utility bills, educational background, and even online spending behaviour are all taken into account. This detailed approach allows Lendbox to serve a broader range of borrowers, including those who may not have favourable credit scores but are still creditworthy.
- Flexible Investment Options: Lendbox caters to a wide range of investors by offering both manual and auto-investment options. Whether you prefer to choose your investments yourself or let the platform do it for you, Lendbox has you covered. This flexibility makes it a great choice for both active and passive investors.
- Comprehensive Legal Support: Unlike many of its competitors, Lendbox manages all legal formalities and covers legal fees in case of borrower defaults. This added layer of protection might offer peace of mind and reduce the complexities involved in the recovery process.
- Liquidity with Secondary Market: Lendbox also offers a secondary market where you can buy and sell existing loans. This gives you the flexibility to exit your investments early, which can be a lifesaver if you need liquidity sooner than expected.
Weaknesses:
- Liquidity Challenges: While the secondary market is a nice feature, it doesn’t always guarantee quick liquidity. If you need to exit an investment before the loan term ends, finding a buyer can take time, meaning your money could be tied up longer.
- Customer Support Issues: Some investors have reported issues with customer service, particularly with delayed responses or inadequate support in handling recovery actions. This can be frustrating for users, especially when dealing with complex legal procedures involving defaulting borrowers.
- Inconsistent User Experience: Lendbox’s user experience has room for improvement. The information on the website and the sign-up options can be confusing, especially for new users. The content and navigation issues as mentioned above, might also make it difficult for you to fully take advantage of all available features.
Final Thoughts and Recommendations
Lendbox is both investor-focused and borrower-friendly.
The unique approach to credit assessment and added features, like automated as well as fixed investments by Lendbox, provide flexibility and confidence for both investors and borrowers.
If you are looking for predictable and stable returns, especially through non-market linked assets, you might find Per Annum particularly appealing. For borrowers, Lendbox offers quick approvals, flexible loan terms, and competitive rates, making it an accessible option for your personal or small business loans.
Each competitor has its strengths, but the comprehensive legal support and diverse investment opportunities with Lendbox make it a more secure and flexible option.
Overall, Lendbox is a compelling choice for both investors and borrowers looking for a transparent, flexible, and secure lending platform.
That’s it! Check out Lendbox if you want to diversify your investments with debt investing.
Leave a Reply