The primary way you earn by investing in loans is through the interest that the borrower pays for the capital that you have loaned. The interest payment is determined by the interest rate of the loan and the term of the loan.
Besides interest payments, there are 3 other complementary earning mechanisms in loan investing:
- Secondary market discounts - another investor can list his investment for a sale on the secondary market for a discount. You can, theoretically, earn money by buying such a loan for a price lower than its original principal.
- Cashback campaigns
- Other bonuses