{"menuItems":[{"label":"Invest with a peer to peer lender","anchorName":"#invest-with-a-peer-to-peer-lender"},{"label":"How does P2P investing work?","anchorName":"#how-does-p2p-investing-work"},{"label":"How do I choose a P2P lender to invest in?","anchorName":"#how-do-i-choose-a-p2p-lender-to-invest-in"},{"label":"What are the biggest risks of P2P investing?","anchorName":"#what-are-the-biggest-risks-of-p2p-investing"},{"label":"Can peer to peer operators protect you?","anchorName":"#can-peer-to-peer-operators-protect-you"},{"label":"Peer to peer investing checklist","anchorName":"#peer-to-peer-investing-checklist"},{"label":"How do I apply for peer to peer investing?","anchorName":"#how-do-i-apply-for-peer-to-peer-investing"},{"label":"\r\nInvestments made through a P2P lending platform are not protected and are subject to risks including credit risk (defaults) and liquidity risk. These investments are not subject to review by the Australian Financial Complaints Authority. Actual returns may vary from the Expected Returns declared by the Providers. Read the PDS for details before investing and consider your own circumstances, or get advice, before investing.","anchorName":"#investments-made-through-a-p2p-lending-platform-are-not-protected-and-are-subject-to-risks-including-credit-risk-defaults-and-liquidity-risk-these-investments-are-not-subject-to-review-by-the-australian-financial-complaints-authority-actual-returns-may-vary-from-the-expected-returns-declared-by-the-providers-read-the-pds-for-details-before-investing-and-consider-your-own-circumstances-or-get-advice-before-investing"}]}
Peer to peer (P2P) lending platforms help to link everyday borrowers with investors without getting the banks involved. While borrowers sign up to receive loans, investors become lenders in order to receive a higher return than what they'd normally get from savings accounts, term deposits and other investments.
Here are some of the main benefits of P2P investing:
Investors can get higher returns than they could elsewhere along with a great deal of flexibility and choice. Some P2P lenders claim that investors are making as much as 12% p.a., compared to around 3% with safer options. The downside is that investors take on a higher level of risk and there's no guarantee of a return.
Borrowers can get lower-interest loans, or avoid some of the more onerous requirements that banks or traditional lenders might place on them.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
Disclaimer: Investments made through a P2P lending platform are not protected and are subject to risks including credit risk (defaults) and liquidity risk. These investments are not subject to review by the Australian Financial Complaints Authority. Actual returns may vary from the Expected Returns declared by the Providers. Read the PDS for details before investing and consider your own circumstances, or get advice, before investing.
How does P2P investing work?
As an investor, your money forms part of a loan which is offered to borrowers, and your returns come from loan repayments plus the interest charged. A single loan is typically made up of money from many investors to help diversify portfolios and reduce the risk of borrower default.
Conversely, some P2P lenders let you loan out larger amounts to an individual borrower or put up the entire amount for a single loan if you think you can get a larger return on investment that way.
P2P lenders usually offer a number of different investment options, with various estimated interest rates, risk levels and loan terms from a few weeks to several years. You may also have the option of investing in different types of loans, and understanding them is an important part of P2P investing.
While borrowers are required to be pre-screened for financial stability and loan repayment ability, the possibility that you will either get no return or even lose money makes this a riskier option than keeping your money in a term deposit or savings account.
How do I choose a P2P lender to invest in?
There are a variety of peer to peer investment sites to choose from, offering a diverse range of features for investors. You'll want to take note of the operator's minimum investment, which can range from $10 to $500,000, the historical interest rate, investment term and the risk level. You can pick one with benefits that suits your needs.
Potential advantages
High returns. The biggest draw card is the potential to earn a higher return on your investment than you might with other banking products, such as term deposits or savings accounts.
Diversify risk. You can lend small amounts across a broad portfolio of loans and diversify your risk if you choose.
Risk and reward control. If you're willing to take on the additional risk, you may have the ability to invest a large amount into a single loan or a business if you believe you can get a higher return.
Streamlined. Many P2P sites have made it very simple to invest by handling the paperwork, legal documentation and credit records as well as automated monitoring of loans in your portfolio.
Security. P2Ps operating in Australia are required to hold Australian financial services licences (AFSL) (always check first) – it means they're legally obliged to lend responsibly and conduct safety and security checks on borrowers.
Access to a variety of options. Investors usually get a broad range of options to suit your personal appetite for risk and financial goals, including secured and unsecured loans, and different repayment terms.
Potential downsides
No return. Despite the advertised interest rate, there is no guarantee that you will actually get any return on your investment.
You could lose money. Some or all of your investment may be unrecoverable in the event of borrower default, even if the provider offers a guarantee.
Loan terms. Investing in multiple loans of varying lengths can make it difficult to track and predict your returns.
Economic downturns. Although it might seem like a term deposit, your returns could be dramatically affected by economic downturns in the future.
Interest rate rise. An increase in interest rates means you might be committed to an under-performing investment.
Interest rate fall. Dropping interest rates means a loan might be repaid ahead of time, reducing anticipated returns.
Credit ratings are inconsistent. The credit ratings given by the P2P operator to loans may be misleading because there's no standard across operators or external rating agencies. You should check how they assess ratings.
What are the biggest risks of P2P investing?
Borrower default or late payment
This is one of the biggest risks posed to investors. If a borrower doesn’t repay their loan, it means the investing lenders’ capital is at risk. If a loan cannot be repaid, the amount you may be able to recover depends on the type of loan. Some P2P borrowing sites may offer certain protections for investors in the event of this occurring.
Interest rate risk
As with any fixed term loan or bank term deposit, there's some risk of interest rates rising before the term finishes, which means you can't move your capital into a higher-interest-bearing loan until its maturity. While this is not necessarily a risk to your capital and interest, it’s an issue that you should consider before committing your funds.
Can peer to peer operators protect you?
It's important to remember that although peer to peer operators are required to follow certain rules to better protect customers, there's never a guarantee that your money is safe.
At a minimal level, peer to peer operators in Australia are required by ASIC to conduct background checks on all borrowers before offering them a loan. This may include checking bank statements and government verification services.
However, some operators, such as Plenti, have additional securities in places, such as a protection fund which is used to compensate investors. In the case of Plenti, part of the interest charged to borrowers is transferred to its Provision Fund, while riskier borrowers will pay a higher fee which also goes into the fund. If borrowers default, investors will be compensated for all or some of their losses. Of course, an investor could still lose money in the case of heavy losses, but the impact will be minimised.
Peer to peer investing checklist
Prior to investing, you need to check with the Australian Securities & Investments Commission (ASIC) to see if the P2P platform holds an AFSL.
Know what you are investing in, and read the product disclosure statement (PDS) and Financial Services Guide (FSG) first where relevant. Look for information about:
Security: Look at the loan's security status and determine if it is unsecured or secured.
Minimum investment: The minimum amount you can invest ranges from around $10 to over $500,000 depending on which operator you choose.
Interest rate: Who calculates the interest rate and what factors determine the rate?
Choice of loans: Are you able to choose who you borrow from or lend to? Can your investment be spread over multiple loans? (This may reduce the risk of losing all your money.)
Repayments: When will you start to reap the benefits?
Getting your money back: Do you have the flexibility to change your mind and still retain cooling off rights? If you pull out, can you get your money back? What would you do if the borrower pulls out? What steps will the company take to recover your investment?
What if the platform fails?: Be prepared in all scenarios. If the company does go under, do you know the steps you'll take to recover your money?
Fees: You need to know if any fees go to the operator of the platform and if fees exist for investments and repayments.
Like all providers that offer consumer loans, P2P platforms must lend responsibly to ensure the investor doesn't lose money. As an investor, you should conduct your due diligence before signing up and compare different options to find the right one for your needs.
Depending on your area of expertise, you might choose to invest mostly in business loans, mostly in personal loans, or across both.
If you want to be more discerning, you can even focus specifically on borrowers you believe have a smart business plan and a bright future, and invest similarly to how you would with a share trading account.
Investments made through a P2P lending platform are not protected and are subject to risks including credit risk (defaults) and liquidity risk. These investments are not subject to review by the Australian Financial Complaints Authority. Actual returns may vary from the Expected Returns declared by the Providers. Read the PDS for details before investing and consider your own circumstances, or get advice, before investing.
{"menuItems":[{"label":"Invest with a peer to peer lender","anchorName":"#invest-with-a-peer-to-peer-lender"},{"label":"How does P2P investing work?","anchorName":"#how-does-p2p-investing-work"},{"label":"How do I choose a P2P lender to invest in?","anchorName":"#how-do-i-choose-a-p2p-lender-to-invest-in"},{"label":"What are the biggest risks of P2P investing?","anchorName":"#what-are-the-biggest-risks-of-p2p-investing"},{"label":"Can peer to peer operators protect you?","anchorName":"#can-peer-to-peer-operators-protect-you"},{"label":"Peer to peer investing checklist","anchorName":"#peer-to-peer-investing-checklist"},{"label":"How do I apply for peer to peer investing?","anchorName":"#how-do-i-apply-for-peer-to-peer-investing"},{"label":"\r\nInvestments made through a P2P lending platform are not protected and are subject to risks including credit risk (defaults) and liquidity risk. These investments are not subject to review by the Australian Financial Complaints Authority. Actual returns may vary from the Expected Returns declared by the Providers. Read the PDS for details before investing and consider your own circumstances, or get advice, before investing.","anchorName":"#investments-made-through-a-p2p-lending-platform-are-not-protected-and-are-subject-to-risks-including-credit-risk-defaults-and-liquidity-risk-these-investments-are-not-subject-to-review-by-the-australian-financial-complaints-authority-actual-returns-may-vary-from-the-expected-returns-declared-by-the-providers-read-the-pds-for-details-before-investing-and-consider-your-own-circumstances-or-get-advice-before-investing"}]}
Interest rates for savings are at record highs, and we're not shy about hunting them down.
{"menuItems":[{"label":"Invest with a peer to peer lender","anchorName":"#invest-with-a-peer-to-peer-lender"},{"label":"How does P2P investing work?","anchorName":"#how-does-p2p-investing-work"},{"label":"How do I choose a P2P lender to invest in?","anchorName":"#how-do-i-choose-a-p2p-lender-to-invest-in"},{"label":"What are the biggest risks of P2P investing?","anchorName":"#what-are-the-biggest-risks-of-p2p-investing"},{"label":"Can peer to peer operators protect you?","anchorName":"#can-peer-to-peer-operators-protect-you"},{"label":"Peer to peer investing checklist","anchorName":"#peer-to-peer-investing-checklist"},{"label":"How do I apply for peer to peer investing?","anchorName":"#how-do-i-apply-for-peer-to-peer-investing"},{"label":"\r\nInvestments made through a P2P lending platform are not protected and are subject to risks including credit risk (defaults) and liquidity risk. These investments are not subject to review by the Australian Financial Complaints Authority. Actual returns may vary from the Expected Returns declared by the Providers. Read the PDS for details before investing and consider your own circumstances, or get advice, before investing.","anchorName":"#investments-made-through-a-p2p-lending-platform-are-not-protected-and-are-subject-to-risks-including-credit-risk-defaults-and-liquidity-risk-these-investments-are-not-subject-to-review-by-the-australian-financial-complaints-authority-actual-returns-may-vary-from-the-expected-returns-declared-by-the-providers-read-the-pds-for-details-before-investing-and-consider-your-own-circumstances-or-get-advice-before-investing"}]}
The average Australian had $40,617 in savings in October, according to Finder’s Consumer Sentiment Tracker.
{"menuItems":[{"label":"Invest with a peer to peer lender","anchorName":"#invest-with-a-peer-to-peer-lender"},{"label":"How does P2P investing work?","anchorName":"#how-does-p2p-investing-work"},{"label":"How do I choose a P2P lender to invest in?","anchorName":"#how-do-i-choose-a-p2p-lender-to-invest-in"},{"label":"What are the biggest risks of P2P investing?","anchorName":"#what-are-the-biggest-risks-of-p2p-investing"},{"label":"Can peer to peer operators protect you?","anchorName":"#can-peer-to-peer-operators-protect-you"},{"label":"Peer to peer investing checklist","anchorName":"#peer-to-peer-investing-checklist"},{"label":"How do I apply for peer to peer investing?","anchorName":"#how-do-i-apply-for-peer-to-peer-investing"},{"label":"\r\nInvestments made through a P2P lending platform are not protected and are subject to risks including credit risk (defaults) and liquidity risk. These investments are not subject to review by the Australian Financial Complaints Authority. Actual returns may vary from the Expected Returns declared by the Providers. Read the PDS for details before investing and consider your own circumstances, or get advice, before investing.","anchorName":"#investments-made-through-a-p2p-lending-platform-are-not-protected-and-are-subject-to-risks-including-credit-risk-defaults-and-liquidity-risk-these-investments-are-not-subject-to-review-by-the-australian-financial-complaints-authority-actual-returns-may-vary-from-the-expected-returns-declared-by-the-providers-read-the-pds-for-details-before-investing-and-consider-your-own-circumstances-or-get-advice-before-investing"}]}
Would you be better off with a high-interest option instead? I've crunched the numbers.
{"menuItems":[{"label":"Invest with a peer to peer lender","anchorName":"#invest-with-a-peer-to-peer-lender"},{"label":"How does P2P investing work?","anchorName":"#how-does-p2p-investing-work"},{"label":"How do I choose a P2P lender to invest in?","anchorName":"#how-do-i-choose-a-p2p-lender-to-invest-in"},{"label":"What are the biggest risks of P2P investing?","anchorName":"#what-are-the-biggest-risks-of-p2p-investing"},{"label":"Can peer to peer operators protect you?","anchorName":"#can-peer-to-peer-operators-protect-you"},{"label":"Peer to peer investing checklist","anchorName":"#peer-to-peer-investing-checklist"},{"label":"How do I apply for peer to peer investing?","anchorName":"#how-do-i-apply-for-peer-to-peer-investing"},{"label":"\r\nInvestments made through a P2P lending platform are not protected and are subject to risks including credit risk (defaults) and liquidity risk. These investments are not subject to review by the Australian Financial Complaints Authority. Actual returns may vary from the Expected Returns declared by the Providers. Read the PDS for details before investing and consider your own circumstances, or get advice, before investing.","anchorName":"#investments-made-through-a-p2p-lending-platform-are-not-protected-and-are-subject-to-risks-including-credit-risk-defaults-and-liquidity-risk-these-investments-are-not-subject-to-review-by-the-australian-financial-complaints-authority-actual-returns-may-vary-from-the-expected-returns-declared-by-the-providers-read-the-pds-for-details-before-investing-and-consider-your-own-circumstances-or-get-advice-before-investing"}]}
Trust in traditional banks is growing with more Aussies saying they bank with the big four, according to new research by Finder.
{"menuItems":[{"label":"Invest with a peer to peer lender","anchorName":"#invest-with-a-peer-to-peer-lender"},{"label":"How does P2P investing work?","anchorName":"#how-does-p2p-investing-work"},{"label":"How do I choose a P2P lender to invest in?","anchorName":"#how-do-i-choose-a-p2p-lender-to-invest-in"},{"label":"What are the biggest risks of P2P investing?","anchorName":"#what-are-the-biggest-risks-of-p2p-investing"},{"label":"Can peer to peer operators protect you?","anchorName":"#can-peer-to-peer-operators-protect-you"},{"label":"Peer to peer investing checklist","anchorName":"#peer-to-peer-investing-checklist"},{"label":"How do I apply for peer to peer investing?","anchorName":"#how-do-i-apply-for-peer-to-peer-investing"},{"label":"\r\nInvestments made through a P2P lending platform are not protected and are subject to risks including credit risk (defaults) and liquidity risk. These investments are not subject to review by the Australian Financial Complaints Authority. Actual returns may vary from the Expected Returns declared by the Providers. Read the PDS for details before investing and consider your own circumstances, or get advice, before investing.","anchorName":"#investments-made-through-a-p2p-lending-platform-are-not-protected-and-are-subject-to-risks-including-credit-risk-defaults-and-liquidity-risk-these-investments-are-not-subject-to-review-by-the-australian-financial-complaints-authority-actual-returns-may-vary-from-the-expected-returns-declared-by-the-providers-read-the-pds-for-details-before-investing-and-consider-your-own-circumstances-or-get-advice-before-investing"}]}
Australians are hoping to accelerate their savings by getting the best rates, according to new research by Finder.
{"menuItems":[{"label":"Invest with a peer to peer lender","anchorName":"#invest-with-a-peer-to-peer-lender"},{"label":"How does P2P investing work?","anchorName":"#how-does-p2p-investing-work"},{"label":"How do I choose a P2P lender to invest in?","anchorName":"#how-do-i-choose-a-p2p-lender-to-invest-in"},{"label":"What are the biggest risks of P2P investing?","anchorName":"#what-are-the-biggest-risks-of-p2p-investing"},{"label":"Can peer to peer operators protect you?","anchorName":"#can-peer-to-peer-operators-protect-you"},{"label":"Peer to peer investing checklist","anchorName":"#peer-to-peer-investing-checklist"},{"label":"How do I apply for peer to peer investing?","anchorName":"#how-do-i-apply-for-peer-to-peer-investing"},{"label":"\r\nInvestments made through a P2P lending platform are not protected and are subject to risks including credit risk (defaults) and liquidity risk. These investments are not subject to review by the Australian Financial Complaints Authority. Actual returns may vary from the Expected Returns declared by the Providers. Read the PDS for details before investing and consider your own circumstances, or get advice, before investing.","anchorName":"#investments-made-through-a-p2p-lending-platform-are-not-protected-and-are-subject-to-risks-including-credit-risk-defaults-and-liquidity-risk-these-investments-are-not-subject-to-review-by-the-australian-financial-complaints-authority-actual-returns-may-vary-from-the-expected-returns-declared-by-the-providers-read-the-pds-for-details-before-investing-and-consider-your-own-circumstances-or-get-advice-before-investing"}]}
Here's where you can get a decent return on your hard-earned cash.
Kylie Purcell is the senior investments editor and analyst at Finder. She has completed a Certificate of Securities and Managed Investments (RG146) and specialises in investment products including online brokers, robo-advisors, stocks and ETFs.
Try to take a look at P2PLendingSites.com. On that site, I was able to find quite a few P2P investing platforms which make a return that is higher than 10% p.a.
I use both Mintos and Crowdestate myself (as they work for Australia), but I recommend that you compare and find your own preferred platforms on the mentioned site.
Also, do yourself the favor of making your own research before investing any money!
Most investments that can suit your goal can take a high level of risks such as lending and stocks/shares.
As such, you may consult a financial adviser for a more comprehensive analysis of your goals. If you wish to learn more, please read our guide on the benefits of seeking financial advice.
Hope this helps.
How likely would you be to recommend finder to a friend or colleague?
0
1
2
3
4
5
6
7
8
9
10
Very UnlikelyExtremely Likely
Required
Thank you for your feedback.
Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.
Important information about this website
finder.com.au is one of Australia's leading comparison websites. We are committed to our readers and stands by our editorial principles
We try to take an open and transparent approach and provide a broad-based comparison service. However, you should be aware that while we are an independently owned service, our comparison service does not include all providers or all products available in the market.
Some product issuers may provide products or offer services through multiple brands, associated companies or different labeling arrangements. This can make it difficult for consumers to compare alternatives or identify the companies behind the products. However, we aim to provide information to enable consumers to understand these issues.
We make money by featuring products on our site. Compensation received from the providers featured on our site can influence which products we write about as well as where and how products appear on our page, but the order or placement of these products does not influence our assessment or opinions of them, nor is it an endorsement or recommendation for them.
Products marked as 'Top Pick', 'Promoted' or 'Advertisement' are prominently displayed either as a result of a commercial advertising arrangement or to highlight a particular product, provider or feature. Finder may receive remuneration from the Provider if you click on the related link, purchase or enquire about the product. Finder's decision to show a 'promoted' product is neither a recommendation that the product is appropriate for you nor an indication that the product is the best in its category. We encourage you to use the tools and information we provide to compare your options.
Where our site links to particular products or displays 'Go to site' buttons, we may receive a commission, referral fee or payment when you click on those buttons or apply for a product. You can learn more about how we make money.
When products are grouped in a table or list, the order in which they are initially sorted may be influenced by a range of factors including price, fees and discounts; commercial partnerships; product features; and brand popularity. We provide tools so you can sort and filter these lists to highlight features that matter to you.
Please note that the information published on our site should not be construed as personal advice and does not consider your personal needs and circumstances. While our site will provide you with factual information and general advice to help you make better decisions, it isn't a substitute for professional advice. You should consider whether the products or services featured on our site are appropriate for your needs. If you're unsure about anything, seek professional advice before you apply for any product or commit to any plan and read any disclosure documents (such as any Target Market Determination (TMD) and/or Product Disclosure Statement (PDS)) issued by the provider before making a decision.
Providing or obtaining an estimated insurance quote through us does not guarantee you can get the insurance. Acceptance by insurance companies is based on things like occupation, health and lifestyle. By providing you with the ability to apply for a credit card or loan, we are not guaranteeing that your application will be approved. Your application for credit products is subject to the Provider's terms and conditions as well as their application and lending criteria.
Please read our website terms of use and privacy policy for more information about our services and our approach to privacy.
Hey Val,
Try to take a look at P2PLendingSites.com. On that site, I was able to find quite a few P2P investing platforms which make a return that is higher than 10% p.a.
I use both Mintos and Crowdestate myself (as they work for Australia), but I recommend that you compare and find your own preferred platforms on the mentioned site.
Also, do yourself the favor of making your own research before investing any money!
Cheers,
Joey
I’m looking for investment making equal or higher 10% p.a.
Hi Val!
Thanks for your comment. :)
Most investments that can suit your goal can take a high level of risks such as lending and stocks/shares.
As such, you may consult a financial adviser for a more comprehensive analysis of your goals. If you wish to learn more, please read our guide on the benefits of seeking financial advice.
Hope this helps.
Cheers,
Jonathan