{"visibility":"visibilityMasthead","ctaLabel":"Calculate","tableCode":"AUFPL_COMPARISON_V2_TABLE","nicheCode":"AUFPL","fields":[{"name":"LOAN_AMOUNT","value":"20000","options":"","label":"Loan amount","suffix":"$","useSuffixAsPrefix":false,"useDropDownOption":false,"tooltip":""},{"name":"PERIOD","value":"3","options":"","label":"Loan term","suffix":"years","useSuffixAsPrefix":false,"useDropDownOption":false,"tooltip":""}]}
Finder makes money from featured partners, but editorial opinions are our own.

Peer-to-Peer Personal Loans

Peer-to-peer lenders can offer competitive, personalised interest rates with fast applications.

{"visibility":"visibilityMasthead","ctaLabel":"Calculate","tableCode":"AUFPL_COMPARISON_V2_TABLE","nicheCode":"AUFPL","fields":[{"name":"LOAN_AMOUNT","value":"20000","options":"","label":"Loan amount","suffix":"$","useSuffixAsPrefix":false,"useDropDownOption":false,"tooltip":""},{"name":"PERIOD","value":"3","options":"","label":"Loan term","suffix":"years","useSuffixAsPrefix":false,"useDropDownOption":false,"tooltip":""}]}
Name Interest Rate (p.a.) Comp. Rate (p.a.) Application Fee Monthly Fee Monthly Repayment
Harmoney Unsecured Personal Loan
Finder award winnerFixed3 - 7 Years $2,000 - $70,000
Interest Rate (p.a.)
5.76%
to 24.03%
Comp. Rate (p.a.)
6.55%
to 24.98%
Application Fee
$275 - $575
Monthly Fee
$0
Monthly Repayment
$623.70
Go to siteMore Info
Wisr Personal Loan
Fixed3 - 7 Years $5,000 - $62,000
Interest Rate (p.a.)
8.49%
to 23.29%
Comp. Rate (p.a.)
9.33%
to 24.05%
Application Fee
$595
Monthly Fee
$0
Monthly Repayment
$650.04
More Info
Plenti Personal Loan
Fixed3 - 7 Years $5,000 - $50,000
Interest Rate (p.a.)
6.57%
to 24.09%
Comp. Rate (p.a.)
6.57%
to 26.65%
Application Fee
$0 - $595
Monthly Fee
$0
Monthly Repayment
$631.87
More Info
SocietyOne Part of MoneyMe Unsecured Personal Loan
Fixed2 - 5 Years $5,000 - $50,000
Interest Rate (p.a.)
9.20%
to 25.89%
Comp. Rate (p.a.)
9.20%
to 26.31%
Application Fee
$0 - $595
Monthly Fee
$0
Monthly Repayment
$656.83
More Info
loading
Showing 4 of 4 results

Peer-to-peer (P2P) lending is also known as marketplace lending. It is when loans are financed by multiple investors. It cuts out middlemen like banks, building societies and credit unions and takes you directly to the investor. P2P loans feature access to potentially lower rates and comparatively relaxed lending criteria. Some P2P lenders even offer personal loans.

What is a P2P loan?

A P2P loan is when you borrow money from individual investors. P2P lending sites match investors to borrowers.

The "lender" acts as a facilitator for the loan and operates the online platform where the applications are made and the matching takes place. It acts as the intermediary between the borrower and investor. The lender charges fees both from the borrower and the investor.

In return for lending money, the investors may get higher returns compared to what they get from other investments. Borrowers can get lower-interest loans.

Unlike traditional lenders, P2P lending has a more flexible lending criteria. This means that lenders are more open to funding loans for borrowers with less than perfect credit scores. They do this by offering interest rates personalised to the borrower and their risk profile. Excellent credit borrowers can receive lower rates and average credit borrowers will have access to finance but at a higher interest rate.

How does P2P lending work?

P2P or marketplace lending takes place on an online platform. Loan requests are made online, and these requests may be matched to investors.

While P2P lenders match borrowers to investors, they don't match individual lenders to individual borrowers. Most often, the investor invests in a portfolio of consumer loans facilitated by the lender.

It is basically an investment or managed fund, with the lender acting as the fund manager. Investors can choose to invest in certain types of loans, for example, personal or business loans, or they are matched to loans that meet their criteria. For instance, loans within a certain interest rate range or loan term.

P2P lending offers personalised or risk-based loans. At the time P2P lending was introduced in Australia, this form of lending was a novelty. To remain competitive, traditional lenders have responded with their own risk-based loans. They are increasingly offering more competitive rates and innovative technology.

💲 If you're looking to borrow, you'll first have to submit an application to the lender. The lender will evaluate your eligibility by verifying your identity, credit history, employment and financial details.

Based on your risk profile, the lender will then give you a personalised interest rate. The lower the risk of lending, the better your rate will be.

After approval, your loan will be funded by one or several investors that choose to take you on. The P2P lender will usually deduct an application fee from the amount transferred.

💵 If you're looking to invest, you may be able to choose how your money is used. You could choose to invest in a portfolio of loans or you could fund an individual loan.

You'll be able to review applications on the website and identify the loans you'd like to fund. You can choose to provide partial or full funding. However, you will not be able to see the borrower's personal information.

Once you've agreed to fund a loan, the money will be transferred to the borrower. Repayments will be made based on how much of the loan you've funded.

The ins and outs of P2P loans

Government Guarantee

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).

What are the benefits and drawbacks of P2P loans?

Like all loans, P2P loans have benefits and drawbacks you need to consider.

For borrowers:

  • You may be able to get a loan at a rate lower than those offered by traditional lenders.
  • The application process is speedy and entirely online.
  • Most lenders offer lower loan amounts than banks. It is usually up to $35,000 for a personal loan.
  • The loan may come with fewer features than traditional personal loans.
For investors:
  • A higher return on funds compared to other forms of investments.
  • The opportunity to diversify your investments. You can also spread your funds over several loans to minimise your risks.
  • There is no government-backed guarantee on the funds you invest.
  • It can be a risky investment.

Which lenders offer P2P loans in Australia?

There are a number of P2P lenders in Australia. They offer their own unique product 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

$100,000 up to $10,000,000 3 to 5 years

MoneyPlace

Personal loans

$5,000 to $80,000 3 to 7 years

Plenti

Personal loans

$5,000 to $50,000 12 to 84 months

SocietyOne

Personal loans

$5,000 to $50,000 to

ThinCats

Business loans

$50,000 to $300,000 1 year and 5 years

TruePillars

Business loans

$30,000 to $250,000 1 to 5 years

Bigstone

Business loans

$10,000 to $5,000,000 12 to 60 months

Wisr

Personal loans

$5,000 to $62,000 3 to 7 years

How do I compare my options?

Whether you're a lender or a borrower, there are a number of factors to keep in mind when comparing lenders. We've listed them below:

Compliance

✔️ Before either borrowing or investing, you should check the credibility of the lender.
They are generally required to hold an Australian financial services (AFS) licence. For consumer loans, like personal loans, they should also hold a credit licence.
These details should be listed on the site. They may also be affiliated with banks or services.
You can check if they have an AFS and credit licence here.

Rates

✔️ P2P lenders generally offer rates lower than those offered by banks.
With risk-based pricing, your good borrowing history will be rewarded with a lower rate. If your credit history isn't up to scratch, you'll either receive a higher rate or have your application rejected.
You can receive a rate estimate without affecting your credit score.

✔️ You should look into how the interest rate is set and who decides the rate.
You should also look into whether your return on investment is higher and worth the risk.
If it isn't higher than other forms of investment, then you may be better off considering another lender.

Fees

✔️ Apart from paying interest, you will also have to pay fees. This can include establishment and monthly fees. These fees should be included in the comparison rate. The comparison rate is the total cost of the loan, interest and fees included. You should make yourself aware of all fees involved as this will increase the cost of the loan.

✔️ While you're receiving a return on investment, you will also have to pay the operator fees. You should look into whether they charge for you to invest, for handling repayments and for you to access your money early.

Loan terms and amounts

✔️ How long do you have to repay the loan? Are these terms adequate for you? You should check if you're able to borrow for as long as you need it.
P2P lenders may not offer loan amounts as high as traditional lenders. You should consider if the amounts they offer are adequate for your needs.

Reputation

✔️ The lender's reputation should form part of your comparison.
You may want to read online customer reviews.
You should also look into how easy it is to contact the lender. This is useful in case of emergencies.
You should also check how transparent the lender is with its fee and rate information.

✔️ You should consider the lender's track record, including how it assesses borrower risk.
How lenders assess this risk can vary from platform to platform.
If a lender has a high number of defaults or late repayments, this could mean it has a poor credit-assessment process.

Features

✔️ What features are you looking for with a personal loan? Do you want a secured or unsecured loan?
Are you looking for a fixed rate or variable rate loan?
Are there any other additional features you would like, for instance, the option to make early repayments?

✔️ You should take the time to read the product disclosure agreement to understand what you're getting into.
Some of the features you may want to consider include the following:
Cooling-off period if you change your mind. If you do, can you get your money back?Investment recovery. If the borrower defaults, how will the lender recover your investment? Who pays for the expense of the recovery?Does the lender have adequate mechanisms in place if the platform fails? Will you be able to recover your money, and if so, how much of it?

Repayments

✔️ The first thing you need to consider is whether you can afford the loan. To know this, you'll have to look into how much your repayments cost.
You can use a personal loan calculator to figure out the cost.
You'll also have to consider how often the repayments will have to be made (e.g. fortnightly, weekly or monthly).
Ask yourself if it fits your budget or if it will cause financial difficulty.

✔️ How long will it take for a return on investment? Are the terms too long for you?
If you invest in multiple loans with varying lengths, it may be difficult to track and predict returns. You will have to account for this complexity.

Requirements

✔️ As a borrower, you will have to look into whether you're eligible to apply for the loan.
✔️You also want to make sure the lender has guidelines to ensure unscrupulous investors aren't part of the network.
Check the lender's investor requirements to see what type of people you'll be borrowing from.

✔️ All lenders are required to perform background checks on borrowers.
That said, you should look into whether the lender's criteria is too loose. This could increase the risk of your investment.

Risk

✔️ You should look into whether the lender is too relaxed about borrower eligibility.
There have been instances where overseas lenders have failed due to a high number of defaulted loans. They failed because they started lending to high-risk borrowers.
You want to make sure you go with a lender that doesn't engage in high-risk borrowing behaviour.

Which P2P loan is the best?

There isn't a single loan that can be considered the "best" personal loan. What's best for one borrower may not be the best for another. The best P2P loan for you will depend on your needs and circumstances. For instance, you may prioritise some aspects of the loan, such as cost, over other aspects, such as features. In instances where your score isn't perfect, you'll have to look for the best loan from the options available to you.

We've created a list of things to consider when looking for the best personal loan:

  • Does this loan fit my budget? Look at the interest rate, but also the comparison rate to determine the true cost of the loan. If it fits comfortably within your budget, the loan may be worth considering. A loan with low rates and fees would be a good find.
  • Do the loan features meet my needs? Consider whether the loan is secured or unsecured. Look whether the interest is fixed or variable. Are there any other additional features? Once you understand the features, you can determine whether the loan is suitable.
  • Do the loan terms meet my requirements? Is the loan term too long or too short? Will a longer term make the loan more expensive? Will you have difficulty meeting repayments if the term is too short?
  • Is the loan amount enough? Does the loan amount cover your needs or will you need a larger loan?
  • Can I comfortably make my repayments? Is the repayment cycle aligned with your pay cheque? Will you be left out of pocket or scrambling to make your repayments?
  • Does the loan require an asset as security? Do you have an asset to offer as security? Are you comfortable with the risk of a secured loan? Would you like lower rates by offering security? If you don't have an asset to offer, you should consider an unsecured loan.

Should I apply for a P2P loan with bad credit?

Before you apply for a loan, you need to know what your credit score is. You can get a free credit check with Finder. This will give you an idea of where you stand on the credit scale. You could have a few negative marks, but there may be a chance you'll fall into one of the lender's brackets.

That said, you need to thoroughly research your lenders. Some lenders offer loans based on a "best", "good" and "average" scale. Other lenders have tiers ranging from 1 to 5. This can range from exceptional to excellent, very good, good and average.

Lenders ultimately rely on information supplied by credit reporting agencies. In Australia, there are 3 main agencies: Experian, Equifax Australia and illion. The scores can range from 0 to 1,000 for Experian and illion, and from 0 to 1,200 for Equifax Australia. Because of the difference in scales, your score could differ between credit score providers. Lenders like SocietyOne base their calculations on scores provided by Experian. If you know where you stand on Experian's scale, and if you fall into one of the lender's tiers, you could be eligible even if you have some negative listings.

Checking your score before applying can help you determine whether you're eligible. If you don't fall into the lender's eligibility categories, you shouldn't apply. All credit applications are listed on your credit report. If a lender rejects you, this can affect your credit score, which will make it harder to apply for credit in the future.

If you have bad credit and need a personal loan, you should work towards improving your score. Your credit score is updated every month. What you do to improve it now will have an impact in the long run. Some of the steps you can take to improve your credit score include the following:

  • Paying all your bills on time
  • Paying off your debt
  • Lowering your credit card limit

By demonstrating that you're willing to engage in positive credit behaviours, you can increase the lender's confidence in you.

Why compare personal loans with Finder?

freeYou pay nothing. Finder is free to use. And you pay the same as going direct. No markups, no hidden fees. Guaranteed.
expert adviceYou save time. We spend 100s of hours researching personal loans so you can sort the gold from the junk faster.
independentYou compare more. Our comparison tools bring you more personal loans from across the market.

Frequently asked questions

More guides on Finder

  • Finder Personal and Car Loan Awards 2024

    Check out the Finder Personal and Car Loan Awards winners and finalists for 2024.

  • Laptop loans and finance options

    Find out everything you need to know about getting a loan for your laptop purchase, including what's available, if you're eligible and how to compare.

  • Loan and finance options for weight loss surgery in Australia

    Planning on getting weight loss surgery? Learn your options and compare medical loans today.

  • Wisr Personal Loan

    Wisr’s Personal Loan comes with fixed personalised interest rates.

  • How much can I borrow with a personal loan?

    Personal loans offer a range of loan amounts to suit different purposes and budgets. Here's how to get the loan amount you need.

  • Engagement Ring Finance

    If you're considering an engagement ring loan, find out your options here and get the perfect ring for your spouse-to-be.

  • Apprentice loans

    If you're thinking about getting an apprentice loan, explore the possibility of government-sponsored loans as well as loans offered by banks. Find out everything you need to know to compare your options.

  • Swimming Pool Finance

    Swimming pools are a great way to spend your summer while increasing the value of your property. If you're looking to invest in a swimming pool, find out about your personal loan options here.

  • Same Day Personal Loans

    We’ve written about how you can get a same day personal loan and how to speed up the process.

  • A guide to interest rates

    Compare your options and know what to look for with the highest or lowest interest rate.

Ask a Question

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms Of Service and Finder Group Privacy & Cookies Policy.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
Go to site