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Peer-to-Peer Lending: Everything you need to know

Peer -to- Peer Lending is gaining popularity as an alternative financing solution across the globe. Also known as P2P lending or crowd lending or social lending, is a revolutionary method that connects verified borrowers seeking unsecured personal loans with investors. In India, P2P is rising in popularity and becoming an attractive investment option for investors. Also, the P2P lending market is estimated to reach $705.81 billion by 2030.

In P2P Lending, verified borrowers are listed on the P2P lending platform. The investors can then see all the details before they lend money to the borrowers. With this model, investors have the option to lend a small amount to several borrowers to diversify their investments.

Brief History of P2P Lending

Previously, the P2P lending system was seen as gaining access to people who would be spurned by conventional institutions or a method to get a student loan at a lesser interest rate. However, the perception has changed in recent years.

Now, it targets consumers who want to pay off credit card debt at a lower interest rate. Also, home improvement loans and auto financing are now possible with P2P lending sites.

The websites connect borrowers directly to lenders. Every website has its own rate and terms and allows the transaction. That said, most websites have a wide range of interest rates based on the ‘credit worth’ of an individual.

An investor has to open an account and deposit a sum of money he/she wishes to be dispersed in loans. The person who wishes to borrow money has to post a financial profile that is assigned a risk category. The risk category will determine the interest rate the individual will pay. The applicant can review all the offers and select one. Some borrowers break up their requests and accept different offers. All the monthly transfers and payments are done through the platform. Interestingly, the entire process can either be automated, or lenders and borrowers can choose to negotiate.

Is P2P lending safe?

There’s no denying that P2P lending is riskier than a savings account or certificate of deposit. However, the interest rates are much higher as people who invest in peer-to-peer lending sites assume most of the risk.

How to invest in P2P lending?

To invest in P2P lending, all you need to do is create an account on a P2P lending site and start lending money to borrowers. Typically, most P2P lending websites allow lenders to choose the profile of their borrowers so they can choose between high-risk or modest returns. That said, many P2P lending sites are public companies so you can invest in them by buying their stock.


If you’re looking for P2P lending, Wisely Invest is your trusted partner. We are one of the best investment planners based in Surat, Gujrat. We offer P2P lending services in addition to our financial advising. Do get in touch with us to know more about our services and we will be delighted to help.


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