Cut out the middleman with asset-backed lending

Asset-backed lending is a relatively new product in the peer-to-peer lending marketplace. Ben Judge explains how it works.

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Don't leap into exotic waters!
(Image credit: © Gregg Vignal / Alamy Stock Photo)

Peer-to-peer (P2P) lending is an attractive idea. By bypassing traditional banks and finance houses and lending direct to individuals or businesses, you can potentially earn a much higher return. One problem with it, however, is security. How can you be sure the people you lend it to will pay it back? What if they go out of business? The risk involved with P2P lending is far higher than in a savings account. There is no guarantee the borrower will repay you. If they don't, your investment isn't covered by the Financial Services Compensation Scheme (FSCS), unlike money in the bank.

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Ben Judge

Ben studied modern languages at London University's Queen Mary College. After dabbling unhappily in local government finance for a while, he went to work for The Scotsman newspaper in Edinburgh. The launch of the paper's website, scotsman.com, in the early years of the dotcom craze, saw Ben move online to manage the Business and Motors channels before becoming deputy editor with responsibility for all aspects of online production for The Scotsman, Scotland on Sunday and the Edinburgh Evening News websites, along with the papers' Edinburgh Festivals website.

Ben joined MoneyWeek as website editor in 2008, just as the Great Financial Crisis was brewing. He has written extensively for the website and magazine, with a particular emphasis on alternative finance and fintech, including blockchain and bitcoin. 

As an early adopter of bitcoin, Ben bought when the price was under $200, but went on to spend it all on foolish fripperies.