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Finding a personal loan with favourable terms can be difficult no matter what you're borrowing for. If you're looking for a competitive personal or business loan, consider the benefits peer-to-peer lending has to offer.
Taking out a peer-to-peer loan involves borrowing money from individual investors, where the "lender" simply acts as a facilitator for the loan. By lending their money, the investors gain access to an attractive fixed income asset class that can yield better returns than other investment options. Borrowers can also take advantage of lower rates that are based on their credit scores. All this is facilitated by a peer-to-peer lending platform that connects the people looking to borrow with people looking to invest.
Peer-to-peer (P2P) providers do not match individual lenders directly with a borrower. Rather, they enable the lender to invest in a portfolio of consumer loans. In other words, the P2P provider facilitates a platform where investors can finance a portfolio of loans and earn interest on what they lend, while borrowers are given an individual rate based on their credit score.
Various lenders offer peer-to-peer loans in Australia, each with its own product offering and rate. The table below is a quick guide to Australia's P2P lending landscape:
|Peer-to-peer lender||Type of loans offered||Loan amount||Loan term|
|Marketlend||Business loans||$2,000 up to $1,000,000||3 to 5 years|
|MoneyPlace||Personal loans||$5,000 to $45,000||3 to 7 years|
|RateSetter||Personal loans||$2,001 to $45,000||6 months to 5 years|
|SocietyOne||Personal loans||$5,000 to $50,000||2 to 5 years|
|ThinCats||Business loans||$50,000 to $300,000||2 years and 5 years|
|TruePillars||Business loans||$30,000 to $500,000||1 to 5 years|
|Bigstone||Business loans||$10,000 to $5,000,000||12 to 60 months|
|Wisr||Personal loans||$5,000 to $50,000||3 to 5 years|
The Government Backed Guarantee on Deposits was set up to protect investments up to $250,000. They do not apply to funds in peer-to-peer lending as it only applies to institutions authorised by the Australian Prudential Regulation Authority (APRA).
When peer-to-peer personal loans launched in Australia, one new aspect about these loans was that the interest rate was personalised to the borrower. Now, banks and other non-P2P lenders have been embracing this. You can now find many risk-based personal loans from major banks as well as smaller standalone lenders and credit unions.
Many banks and lenders are also offering more competitive rates and embracing innovative technology in order to remain competitive.
Peer-to-peer lending is an alternative credit option to consider. With competitive rates, quick approval times, and not to mention a way for investors to diversify their portfolio, peer-to-peer lending is making its mark on the credit industry.
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.
You'll receive a fixed rate between 6.99% p.a. and 28.69% p.a. based on your risk profile.
Apply for a loan up to $70,000 and repay your loan over 3 or 5 years terms.
You'll receive a fixed rate between 10.69% p.a. and 18.69% p.a. ( 11.58% p.a. to 19.53% p.a. comparison rate) based on your risk profile
An unsecured loan up to $55,000 you can use for a range of purposes and pay off over up to 7 years. Note: Majority of customers will get the headline rate of 12.69% p.a. (13.56% p.a. comparison rate) or less. See Comparison rate warning in (i) above.
You'll receive a fixed rate between 7.5% p.a. and 20.49% p.a. based on your risk profile
A loan from $5,000 to use for a range of purposes. Benefit from no ongoing fees and no early repayment fee.
You'll receive a fixed rate between 8.95% p.a. and 16.95% p.a. based on your risk profile
A loan from $5,000 to use for a range of purposes. Make additional repayments or pay off the loan early, penalty-free.
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