What is P2P Lending?
Peer-to-peer (P2P) lending, also known as crowdlending, is a form of lending that connects borrowers directly with investors through online platforms, bypassing traditional financial institutions like banks.
How It Works
- Borrowers apply for loans on P2P platforms
- Platforms assess creditworthiness and assign risk ratings
- Investors (you) choose loans to fund based on risk/return preferences
- Interest payments flow from borrowers to investors over the loan term
Key Benefits
- Higher Returns: Typically 6-12% annual returns, outperforming traditional savings accounts
- Diversification: Spread investments across hundreds of loans
- Passive Income: Regular interest payments with minimal management
- Low Minimum: Start with as little as €10-50 on most platforms
Key Risks
- Default Risk: Borrowers may fail to repay loans
- Platform Risk: The platform itself could face financial difficulties
- Liquidity Risk: Your money may be locked for the loan term
- Regulatory Risk: Changing regulations could affect returns
Choosing Your First Platform
What to Look For
- Regulation: Is the platform licensed and regulated?
- Track Record: How long has it been operating? What's the historical default rate?
- Buyback Guarantee: Does the platform offer protection against defaults?
- Diversification: Can you spread across many loans easily?
- Secondary Market: Can you sell loans if you need liquidity?
Recommended Starting Strategy
- Start Small: Begin with an amount you can afford to lose (€500-1000)
- Diversify: Spread across at least 100+ loans
- Use Auto-Invest: Let the platform automatically invest for you
- Track Everything: Use Crowdlending Hub to monitor your returns
- Be Patient: P2P lending rewards long-term investors
Your First Steps
- Research Platforms: Use our platform comparison tool to find suitable options
- Create an Account: Sign up on 2-3 platforms to diversify
- Start Tracking: Import your investments into Crowdlending Hub
- Monitor Returns: Review your performance monthly
Ready to start? Browse our platform reviews or try our demo dashboard to see how tracking works.