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SoLo Funds is a crowdsourced lending and borrowing platform which is gaining in popularity both to earn higher than average interest on your loaned cash and as a means to borrow for less than a bank or credit card would charge. For both borrowers and lenders, SoLo Funds could be the right platform but there are several factors you should be aware of before signing up.
What is SoLo Funds?
SoLo Funds is a P2P lending marketplace which allows users to borrow up to $500 or lend up to this amount directly to one another. Currently, SoLo Funds is only available to use as an iPhone app through the App Store.
SoLo Funds is an intriguing investment opportunity for potential investors as you can make far higher interest in a shorter period of time than equivalent platforms like LendingClub and especially more than high-yield savings accounts.
For borrowers, SoLo Funds is a great opportunity to borrow cash on a short-term basis because you can be funded the same day you request an amount and you select how much interest you want to pay as a ‘tip.’
What are SoLo Scores?
SoLo Scores are SoLo Funds’ equivalent of a credit score for borrowers. The more you borrow and pay off, the higher your SoLo Score will rise. You can also increase your score before borrowing by adding a profile picture to your profile.
SoLo Scores won’t affect your credit score unless you default on a loan, in which case your debt will be sent to a collection agency and be reported to credit agencies.
Should You Lend Through SoLo Funds?
SoLo Funds is a great choice for investors as it will enable you to earn higher interest than nearly any other passive investment. There is risk with SoLo Funds lending as a borrower could choose not to repay you. When reviewing investment opportunities, you should carefully review borrowers’ lending history and SoLo Score, and consider choosing Lender Protection insurance to decrease your downside risk.
By choosing Lender Protection, you sacrifice some upside profit from your loan for the chance to receive your full principal back as credit in case a borrower defaults. With this protection and the high tips that borrowers often offer, SoLo Funds is certainly worth a look in your investment portfolio but you should be aware of the risk of full loss of principal if you choose not to opt for Lender Protection.
How Much Can You Make as a SoLo Lender?
As a SoLo Funds lender, you could make up to 12% on your principal within just 15 days. This is a high amount and may represent borrowers with lower SoLo Scores or less borrowing history. You should expect to make 2% to 5% in tips with more conservative loans, once again within 15 days.
In addition, when you lend, you’ll often have a percentage added to your total loan as a SoLo donation which will be reimbursed when the loan is repaid. If a borrower defaults and you selected Lender Protection insurance, you may lose your donation while retaining the principal.
Regardless, 2% – 5% within half a month is a high interest rate but you should be careful not to overextend yourself or your risk tolerance when lending.
Should You Borrow With SoLo Funds?
SoLo Funds could be a good opportunity for you as a borrower depending on your credit history and need for cash. When starting out as a borrower on SoLo Funds, you may need to offer a higher tip than you will later to entice investors to lend to you. As you develop a higher SoLo Score and are seen as reliable, you can offer a lower percentage of your loan request as a tip.
If you have good credit and can repay a credit card on time, this may be a better opportunity for you than SoLo Funds. But if you have poor credit and need funds very soon, SoLo Funds may be a better choice. SoLo Funds’ tips are often less interest than equivalent borrowed funds from payday loans.
Are SoLo Funds Legit?
Yes, SoLo Funds is a legitimate lending and borrowing platform you should consider whether you’re a borrower interested in short-term loans or an investor interested in earning higher interest in exchange for increased risk.
How long does SoLo Funds take?
SoLo Funds loans offer payback periods from 5 to 15 days. Borrowers can designate how long they’d like to borrow cash up to 15 days. Once this period is up, they must pay back their loans or their loan will be designated ‘Late’ and they can incur an additional fee to the lender and a decreased SoLo score.
Final Takeaway: Is Solo Funds Right for You?
SoLo Funds is an enticing investment opportunity for lenders but they should be aware of the high risk of default with borrowers with less borrowing history. There is the potential for you to lose your full principal and SoLo donation as well as the upside of earning 2% – 5% on your loan if it’s repaid on time.
Borrowers likewise should consider their financial situation and credit history before borrowing through SoLo Funds. This app marketplace could be the right place for you to borrow if you need cash the same day and expect to be able to repay the amount within the allotted time frame. If you’re able to purchase items on credit using a credit card and repay the amount on time, SoLo Funds could be a less ideal opportunity for you. If your only other option is a payday loan which charges higher interest, SoLo Funds could be a more ideal opportunity.