WEBVTT 00:00:00.000 --> 00:00:02.250 align:middle line:90% [MUSIC PLAYING] 00:00:02.250 --> 00:00:04.650 align:middle line:90% - It's been a desperate decade for savers 00:00:04.650 --> 00:00:07.070 align:middle line:90% after enduring record low interest rates 00:00:07.070 --> 00:00:09.180 align:middle line:90% and battles to get a decent return 00:00:09.180 --> 00:00:10.140 align:middle line:90% on their money. 00:00:10.140 --> 00:00:12.090 align:middle line:90% More and more people are turning to peer 00:00:12.090 --> 00:00:14.520 align:middle line:90% to peer lending, which works like a savings 00:00:14.520 --> 00:00:15.090 align:middle line:90% account 00:00:15.090 --> 00:00:17.593 align:middle line:90% but pays far higher rates of interest. 00:00:17.593 --> 00:00:19.900 align:middle line:90% But what is peer to peer lending, 00:00:19.900 --> 00:00:23.150 align:middle line:90% and is it's a risk-free way of saving? 00:00:23.150 --> 00:00:24.870 align:middle line:90% - Peer to peer lenders are websites that 00:00:24.870 --> 00:00:27.180 align:middle line:90% match up investors who are willing to lend 00:00:27.180 --> 00:00:29.730 align:middle line:90% with borrowers-- either individuals, property 00:00:29.730 --> 00:00:32.790 align:middle line:90% companies, or small businesses. 00:00:32.790 --> 00:00:33.990 align:middle line:90% By cutting out the middleman 00:00:33.990 --> 00:00:35.370 align:middle line:90% and not having the overheads 00:00:35.370 --> 00:00:39.360 align:middle line:90% of traditional banks, these sites often offer 00:00:39.360 --> 00:00:40.530 align:middle line:90% higher rates of interest 00:00:40.530 --> 00:00:41.860 align:middle line:90% to those willing to lend 00:00:41.860 --> 00:00:43.560 align:middle line:90% and lower rates for borrowers. 00:00:43.560 --> 00:00:45.900 align:middle line:90% This means that, unlike normal savings 00:00:45.900 --> 00:00:47.190 align:middle line:90% accounts and ISAs, 00:00:47.190 --> 00:00:49.200 align:middle line:90% you could lose money with peer to peer 00:00:49.200 --> 00:00:50.170 align:middle line:90% lending. 00:00:50.170 --> 00:00:51.730 align:middle line:90% While borrowers are credit checked, 00:00:51.730 --> 00:00:53.940 align:middle line:90% there is always the risk they could fail 00:00:53.940 --> 00:00:56.040 align:middle line:90% to repay their loan. 00:00:56.040 --> 00:00:57.930 align:middle line:90% Indeed, the highest rates on offer 00:00:57.930 --> 00:01:00.390 align:middle line:90% tend to come by lending to people who don't 00:01:00.390 --> 00:01:02.280 align:middle line:90% have the best credit record. 00:01:02.280 --> 00:01:04.290 align:middle line:90% - Some peer to peer sites try to minimise 00:01:04.290 --> 00:01:06.210 align:middle line:90% the risk of losing money by splitting 00:01:06.210 --> 00:01:08.670 align:middle line:90% your investment into chunks, which it each 00:01:08.670 --> 00:01:10.590 align:middle line:90% handed out to a different borrower. 00:01:10.590 --> 00:01:12.860 align:middle line:90% So if one fails to repay their loan, 00:01:12.860 --> 00:01:14.490 align:middle line:90% all is not lost. 00:01:14.490 --> 00:01:16.800 align:middle line:90% Others have a pot of cash set aside which 00:01:16.800 --> 00:01:18.680 align:middle line:90% is used to reimburse lenders should 00:01:18.680 --> 00:01:21.117 align:middle line:90% a borrower a fail to repay. 00:01:21.117 --> 00:01:22.950 align:middle line:90% - The good news is that peer to peer lenders 00:01:22.950 --> 00:01:24.670 align:middle line:90% are now able to offer something called 00:01:24.670 --> 00:01:27.060 align:middle line:90% an Innovative Finance ISA, which means 00:01:27.060 --> 00:01:28.570 align:middle line:90% you can invest through these sites 00:01:28.570 --> 00:01:31.050 align:middle line:90% and watch your money grow tax free. 00:01:31.050 --> 00:01:32.420 align:middle line:90% So which peer to peer lender 00:01:32.420 --> 00:01:33.902 align:middle line:90% should you choose? 00:01:33.902 --> 00:01:35.610 align:middle line:90% To read reviews of the biggest companies, 00:01:35.610 --> 00:01:39.170 align:middle line:90% visit which.co.uk/peertopeer. 00:01:39.170 --> 00:01:39.840 align:middle line:90%