As with any investment, there are some risks. The biggest risk is associated with possible credit losses from investments. The following measures have been taken by Mintos and loan originators to mitigate the risk:
1. All loans are issued according to the established policies of the loan originators, which take into account the borrower's ability to repay the loan;
2. For certain types of loans (e.g. mortgage loans or vehicle loans), the client has offered collateral to be used to recover the loan in the case of default, thereby lowering credit loss risk;
3. For certain loans (e.g. business loans), other credit enhancements are obtained, such as a personal guarantee;
4. For certain loans, the loan originator has provided a buyback obligation, which means that if the loan is delayed by more than 60 days, the loan originator repurchases the investment for the nominal value of the principal and the accrued interest till the date of repurchase.
Investors can mitigate risks by diversifying - making fractional investments in several loans across different borrowers, loan types, loan originators, and geographies.