Which Institutions Provide Peer-to-Peer Lending in Australia?

Peer to peer loans are flexible, offer standout rates, low fees and fast access to funds - sometimes, within hours. Start comparing Australian P2P lenders and loans today!

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About peer-to-peer personal loans

If you're looking to borrow from a non-traditional lender, a peer-to-peer provider might be the personal loan choice for you. If the idea of peer-to-peer (P2P) lending has sparked your interest, you might have a lot of questions about it.

So, what exactly is peer-to-peer lending, and is it the right option for you? Let’s answer some of your budding peer-to-peer questions to help you decide:

What is peer-to-peer lending?

Peer-to-peer lending is essentially what happens when you remove banks from the borrowing equation and connect investors directly with borrowers. 

According to the peer-to-peer movement, they tend to offer more competitive personal loan deals with lower rates and fees.

Understanding the ‘peer-to-peer’ concept:

Peer-to-peer platforms aren't just limited to the personal loan world. The peer-to-peer lending concept applies to a whole heap of different services, including car-sharing (think Uber), house swaps, clothes swaps and more.

A well-known example is the house-swapping platform Airbnb, which lets homeowners rent out their property to holiday-goers for a short stint. The homeowner gets some extra cash and the holiday-goer benefits from cheaper accommodation.

Traditional peer-to-peer lending and borrowing works in the same way, as an individual investor uses the P2P lending platform to loan money directly to a borrower. 

The investor benefits from earning a profit through interest charges whilst the borrower receives a more competitive rate, lower fees, and often a faster approval process than those by the big banks.

Who offers peer-to-peer loans in Australia?

While peer-to-peer lending is still relatively new in Australia, more and more options continue to pop up.

Here are some of the more prominent peer-to-peer lenders in Australia:

  • SocietyOne: Launched in Australia back in 2011, SocietyOne has a slightly different lending model than the traditional peer-to-peer platforms overseas. Instead of connecting individual investors with strangers, the platform connects wholesale investors with borrowers. 

  • Plenti: Originating in the UK, Plenti hit Australian shores in 2014 and was the first peer-to-peer platform to offer investment opportunities to everyday Aussies. It’s also known for introducing the concept of a provision fund, aimed at protecting lenders if the borrower defaults on the personal loan.

  • MoneyPlace: Newer to the Australian market is Melbourne start-up MoneyPlace. Like SocietyOne and Plenti, this P2P provider offers competitive rates to creditworthy borrowers. In 2015, MoneyPlace entered into a five-year $60 million strategic partnership with Auswide Bank, which will support the P2P lender during its initial growth stage.

You can compare peer-to-peer providers side by side in the comparison table at the top of this page by interest rate, comparison rate (this rate factors in the main interest rate plus any other fees) and features.

Why do peer-to-peer lenders have competitive rates?

By removing the banks from the borrowing equation, peer-to-peer lenders have vastly lower overhead costs, as they don't have to pay dividends back to shareholders. 

They’re also run entirely online, so peer-to-peer lenders don't have branch or manager costs. Cutting all of these extra cost cuts translates into savings for borrowers.

Note: Peer-to-peer loans do tend to come with other fees, though, so remember to do your research first to determine whether the loan suits your lifestyle.

What's the difference between a peer-to-peer lender and a credit union?

Credit unions are generally completely customer-owned and run by the philosophy of passing profits back to customers, not to shareholders.

While peer-to-peer lenders and credit unions share a few similarities, there is a distinct difference between the two. Credit unions don't offer the option of becoming an investor like peer-to-peer lenders do.

As a borrower, your experience should be more or less the same whether you opt for a P2P lender or credit union. You apply for the personal loan, and once approved, you pay it back in set instalments over an agreed timeframe (usually between 1 and 5 years), plus interest and any fees.

If you're trying to choose between a P2P lender or a credit union, go with whichever is best suited to your financial situation and can give you the best deal.

Am I eligible for a peer-to-peer loan?

Like with any financial service, each peer-to-peer lender will have their own set of loan conditions, which you’ll need to meet to be eligible for the loan. The most common requirement will likely be that you’re over 18 years old and are an Australian resident. 

Your credit score can determine your interest rate:

Be aware that if you have a poor credit rating, you'll have to pay more in interest, as peer-to-peer lenders generally use a tier-based pricing system and reserve their best interest rates for borrowers with excellent credit.

Example: For instance, Plenti’s unsecured personal loan offers a variable rate starting at 7.99% p.a. to 8.99% p.a. (7.99% p.a. to 10.65% p.a. comparison rate*) for borrowers with “excellent” credit. The same loan for borrowers with “good” credit on that tiered system has a variable rate starting at 12.49% p.a. to 14.99% p.a. (14.19% p.a. to 16.71% p.a. comparison rate*). 

Likewise, with SocietyOne’s unsecured personal loan, fixed rates on offer start at Tier 1 Credit at 9.20% p.a. to 14.19% p.a. (9.20% p.a. to 17.42% p.a. comparison rate*). The same rate for Tier 4 Credit sits at 20.39% p.a. to 22.89% p.a. (23.75% p.a. to 26.31% p.a. comparison rate*).

Is a peer-to-peer loan right for me?

Depending on your specific financial situation, a peer-to-peer loan might be suited to the following borrowers:

  • Borrowers with a good credit score: If you're a creditworthy borrower looking for a loan under $35,000 with a 1 to 5-year loan term, then a peer-to-peer loan might be for you. Peer-to-peer providers generally have smaller borrowing amounts and shorter timeframes than the major banks, which can lend up to $100,000+ and have longer loan terms.

  • Borrowers with no security assets: Most peer-to-peer loans are unsecured, so it might suit borrowers who don't have a car, house or other asset to secure a loan with. 

  • Borrowers on a strict budget: Peer-to-peer lenders typically offer fixed interest rates, which can be useful if you're on a strict budget as you can lock your rate in for the life of the loan.

Not sure whether a peer-to-peer loan is right for you? You can compare other personal loan options here to find one that better suits your needs.

Features to look for in a peer-to-peer loan

As with any other personal loan, it's good to look for a loan with flexible features to suit your specific needs. Here are some peer-to-peer loan features to keep an eye out for:

  • Extra repayments facility: If you come into some extra money, you might want to make extra repayments on your loan – so it’s good to look for one that allows extra repayments. A little extra can go a long way and save you a bunch of interest over time. Say you take out a $30,000 loan with a 5-year loan term and a 9% interest rate. If you make an extra repayment of $200 each month, you’ll save $2,187 in interest and cut 1 year and 5 months off your loan term.

  • Redraw facility: While paying off your loan early is a great goal to have, sometimes unexpected bills and expenses pop up. If you suddenly need some extra money, you might want to dip into that pool of extra loan repayments you’ve made. If so, you’ll want to look for a loan that offers a redraw facility. 

  • Flexible repayment frequency: Another feature that can help you pay down your loan sooner is setting up your repayments over a fortnightly cycle rather than monthly. With 26 fortnights in the year compared to 12 months, you’ll pay an extra month off every year of the loan's life. For example, if your fortnightly repayments are $500, you’ll pay off $13,000 in a year, whereas monthly repayments of $1,000 would result in an annual repayment of $12,000.

Does a peer-to-peer provider sound like the right match for your borrowing needs? Some great options are compared at the top of the page to start your search. Alternatively, use our personal loan comparison tool to search Mozo's database, which covers over 100 loans in the market today.

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JP Pelosi
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Managing editor

Jean-Paul (JP) Pelosi is an experienced journalist and editor who has contributed to many of Australia's leading media outlets including The Guardian, News.com.au, Domain.com.au, Investment Magazine and ANZ's Bluenotes. He has also edited news and communications for large financial services companies such as CommBank, Suncorp, Allianz and Amex. He loves a well told story and applying his editorial experience to content that readers both care about and enjoy. JP heads up our writing team.

More FAQ about peer to peer loans

Do peer to peer loans have fixed or variable interest rates?

The majority of major peer to peer (P2P) players in Australia only offer unsecured fixed interest rates, but there are variable rate options available in the market.

How do interest rates work on P2P loans? 

Generally, peer to peer lenders use a risk-based tier system, which means the interest rate is scalable depending on your credit profile. The best interest rate will be offered to those with a squeaky clean credit rating.

Do peer to peer loans have fees?

Yes, however, peer to peer borrowing fees are generally lower than those attached to personal loans from the big banks, with some P2P providers offering no application, ongoing fees or exit fees.

How do I apply for a peer to peer loan?

Peer to peer providers will have an online application page and you'll need regular information on hand like income details, bank and ID requirements. The benefit of a P2P loan is the fast online approval process, which in some cases means the funds will be in your account on the same day.

How is peer to peer lending different from crowdfunding?

Both peer to peer lending and crowdfunding provide you with funds. The critical difference between the two is that P2P lending gives you a loan that must be repaid with interest, while crowdfunding gives you a sum of money with no expectation of repayment.

Is peer to peer lending safe for borrowers?

As a borrower, a P2P loan is a regular loan. The difference is that it comes from investors rather than a large financial institution. 

That said, you want to be a savvy borrower, so do your homework. You should always check out the investor requirements of the P2P platform you are using before taking out a loan.

You also want to make sure you are informed of your financial position, so you can make the best decisions when it comes to signing off on your loan. Visit our Mozo personal loans hub as a jumping-off point.

Is peer to peer lending good for investors?

Compared to other types of investments peer to peer loans may offer lenders a higher rate of return. Also, a simple P2P platform might make transacting relatively easy and accessible.

Many investors also enjoy the idea of their money going to an individual in need of a loan while also making money themselves. 

Is peer to peer lending a safe investment?

Like all investments, it is important to decide if peer to peer lending is right for you, as it does come with risks. There is no government guarantee of peer to peer lending, like most investments, so it is solely on the lender if the borrower cannot pay. Most P2P loans are also unsecured

To protect yourself as an investor, it is essential to make sure the P2P platform is reputable - operating with an Australian financial services license and registered with the Australian Securities and Investments Commission.

Is peer to peer lending good for people with good credit?

In short: Yes. P2P lending operates on a risk-based tier interest rate system, which means that your rate is customised to you, so If you have good credit, you will be rewarded with a low rate.

Is peer to peer lending good for people with bad credit?

Borrowers with poor credit can benefit from peer to peer lending. As it is a customised market, although you will be paying more than those with good credit, you may have options that would not be presented to you otherwise.


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