What are the risks for the private landers and the borrowers?
Following the article, I’d like some guidance to understand what are the exact risks for both parties and how it is dealt with, as we have seen in the article that the borrowing rates are calculated in order to minimize the risks.
Thank you for the time you spend reading and answering my question, I really appreciate.
On the lender’s part, if the loan is secured, it is less risky than an unsecured loan. If unsecured, the lender has little recourse in the event of default.
The borrower only has repayment to think about, and if the loan is going to be worth the cost. There isn’t really any other risk to the borrower, unless there is a personal guarantee involved. Anybody guaranteeing a note personally is at risk.