What is Peer to Peer Lending? The ultimate guide to Peer to Peer Lending

Nov 8, 2017

If you’ve been following the news lately, Peer to Peer lending in India is creating a huge buzz among retail investors and institutional investors. If you’re wondering what exactly is this Peer to Peer lending and how will it benefit you, you’ve come to the right place!

As the name suggests, peer to Peer or P2P refers to person-to-person. Peer to Peer Lending, in layman’s terms, means lending and borrowing money between two or more people without any intermediaries. Usually, a person who has excess money (Lender) lends it to another person (Borrower) who requires money urgently for a period of time which will be repaid with some interest. So where do Peer to Peer platforms come into the picture?

Peer to Peer platforms like LenDenClub connect such lenders & borrowers and provide help and support to both parties by charging a small amount for the services rendered, some of them being borrower assessment, collection of dues, timely disbursal, etc.

How are Peer to Peer platforms different than traditional financial institutions like Banks and NBFCs?

Peer to Peer platforms worldwide are taking the banking model and revamping it entirely to create a favorable lending and borrowing climate.

P2P platforms are a cooler version of banks!

Getting an instant personal loan from a Peer to Peer platform is faster, easier, and hassle-free plus you get a better interest rate when compared with banks because they have massive overheads, which include salaries, swanky offices, ATMs, etc. Think about it, FD rates are around 6%, and the interest that bank charges is upwards of 12%.

Peer to Peer platforms, on the other hand, don’t have such overheads hence the lenders make more money on their investments and the borrowers can get a better interest rate. A win–win for both!

However, unlike FDs, P2P lending does not come with principal protection. Despite all the odds, investments in P2P lending go to creditworthy borrowers who have been profiled on a par with banks’ end borrowers.

Here’s why you should be using P2P platforms like LenDenClub to borrow or lend money


1.     Quick and hassle-free loan application process

2.     Fast loan approval and disbursal

3.     Cheap interest rates


1.     Earn great returns on investment within a short span of time

2.     Bypass the volatility of the stock market

3.     Watch your money grow every month

As per the trends shown in countries like UK & US, the majority of the people are turning towards P2P platforms to fulfill their credit needs. Although at a very nascent stage in India, the P2P industry is projected to be $4 – $5 Billion by 2020, as per a report published by KPMG & NASSCOM. Everything said, Peer to Peer lending is here to stay and if you haven’t been a part of this financial disruption then now is the best time for the RBI to support P2P lending and promoting it.

Want to know how to start lending in Peer to Peer platforms? Read this article.

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