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How to become a money lender

Updated April 17, 2017

Private money lending can help fund social projects or get you better returns than an interest-bearing savings account. Loans are not just for corporate entities anymore. The Internet has made it easy for people to lend money all around the world. You decide whether you want your money to do good, to create income for you or both. By pooling money from lenders around the globe, various groups help needy borrowers obtain cash in a tight credit market while also providing a good investment for private lenders.

Lend to family members and friends. The biggest issue with lending within families is that a defaulted loan can harm your relationship, so set clear terms for repayment.

Fund projects with social value through sites like Kiva.org, which allow you to fund social projects with small loans of as little as £16. View the borrower's stories and decide which project attracts your attention. The borrower repays the loan, and those funds return to you so you can lend them again.

Make money from lending. Find loans on peer-to-peer lending sites like Prosper.com that can generate interest on your investment. Pool your money with that of other lenders, and receive a return on the investment that can be higher than putting your money in an interest-bearing account.

Help out a needy student who doesn't qualify for financial aid and hs to look to private lending. Fund a long-term investment by providing funds for education through Fynanz.com.

Become an angel investor. Negotiate your own loan rates and terms with the business you decide is a good opportunity at Go4funding.com. Create an online profile as an investor, and browse business ideas to select one that can make money for you and the budding entrepreneur.

Tip

VirginMoneyUS.com is a social lending site customised to maintain good relationships when lending to family and friends, using contracts and payment reminders and schedules.

Warning

You can lose all your money if you lend to borrowers who default on their loans. Check credit histories and only work with reputable websites.

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About the Author

Claire Moylan has been a freelance writer since 2006. She has written for GradMoneyMatters.com, Evaluseek.com, ExquisiteWriting.com, and has ghostwritten over 30 e-books on Internet marketing and other topics. Moylan holds a Bachelor of Science in mechanical engineering from Texas A&M University and a Master of Arts in transpersonal psychology from Naropa University. Moylan also enjoys teaching computer skills online.