Risks

Where there is reward there is also risk.
In general the higher the reward the higher the risk. If you have questions, call us.

uLoan Club seeks to foster a fair playing field for borrowers and lenders.

We also back our business by investing our own funds in loan deals and feel this is one of the best, safest ways to generate wealth.

The risks in lending include:

Credit Risk

1. borrower's inability to repay
2. decline in borrower's ability to repay in due course
3. ill intention on the part of the borrower

Operational Risk

1. That the p2p platform may not able to raise sufficient capital to fund the borrowing required.
2. Though it sounds difficult, yet not impossible that the banking fraternity realises the threat it has from p2p, it may work towards reducing the interest rate spread which is the basic principal the p2p industry hinges on.

Liquidity Risk

1. This comes from the fact that in times of need an investor may not be able to liquidate his investment before the maturity of the loan.

Risk Mitigation

Credit risk can be mitigated to a large extent by investing in several different and diversified borrowing proposals. Another way is to select Borrowers with higher credit grades. However, it is possible that this may result in lower rates of interest resulting in lower returns on the overall investment.

As for the remaining sources of risk, the business volumes and the rate of growth with the p2p platform around Australia reasonably suggests that risks other than the Market risk will wane off sooner than later.

Borrower Risks

uLoan will conduct a credit search with Veda as an 'access seeker'. This request will be visible to you and other access seekers, but will not be visible to the investors, and will not affect your Veda bureau credit score.

If you proceed to apply for a loan, uLoan Club will request your full credit file, similar to when you apply for a loan from a bank. This will be recorded on your credit file as a credit enquiry, and could affect your Veda bureau credit score.

It is also possible that the requested loan amount may not be raised through the p2p platform and the application is never filled.

For borrowers, the main risks arise from the consequences of being unable to meet loan repayments. P2P operators will respond to delinquencies by borrowers in a similar manner to banks.

Lender Risks

Peer-to-peer lending platforms are not covered by any Federal Government Compensation Scheme. This means investors could lose their entire investment if a borrower defaults or the platform goes bust. Investors can spread their investments among a number of borrowers to mitigate the risk of default. Your investment is not a deposit and does not have the benefit of any depositor protection laws.

Borrower late payment or default
A borrower or series of borrowers to whom your funds are lent may delay or stop payment on a loan or default on a loan. In such circumstances there is no guarantee or warranty that you may not suffer financial loss.

In the event of any financial loss, you may benefit from a number of debt collection or recovery processes that uLoan Club may undertake. As all loans are secured, these processes may include the relevant security interest being exercised and the secured asset being repossessed or sold and action against any borrower personal guarantees given to secure the original loan.

You are only able to withdraw (or reinvest) your funds at the end of the indicative term of the lending market in which they are invested, except where:

1. 1) The funds are repaid to you through scheduled repayments,
2. 2) The funds are repaid to you by borrower as a result of the borrower making an additional payment or repaying their loan early.

In the event of a borrower late payment or default, you may only be able to withdraw your funds relating to that loan when any collections or recoveries have been made against that loan.

We assess a borrower’s creditworthiness at the date of loan application, and our assessment reflects their creditworthiness at that point in time. We do not commit to evaluating a borrower’s creditworthiness on an ongoing basis, although we may do so periodically. Your investment may be impacted should the creditworthiness of that borrower change over time. In circumstances where your funds are matched to a secured loan and in the event of a default your investment may be impacted by the realisable value of the property over which a security interest is held. It is possible that the realisable value of the secured property is not sufficient to cover the full repayment of the loan. In other words, if a loan is secured, its repayment is not guaranteed.

Your investment may be impacted by differences in the creditworthiness of borrowers to whom your funds are matched. uLoan Club performs comprehensive borrower risk assessment and lends only to creditworthy Australian borrowers, however, there may be differences between the creditworthiness of borrowers to whom your funds are matched.