P2P Lending, also known as peer to peer lending or crowdlending is the new practice of giving money to businesses or individuals on the understanding that it will be repaid back.
There are many established peer to peer lending sites in Europe that provide the service at more flexible interest rates and in a more convenient way than the conventional banks, hence preferred by many.
P2P lending industry in Europe is growing fast and it represents a direct alternative to a bank loan. The only difference is that instead of borrowing money from a single source, you can borrow as a private individual or as a company directly from other people, who are willing to lend.
This lending system was first introduced in the market in 2005 in the UK and since then has spread all over the world. Today the vast majority of P2P lending activity is focused in the UK, which accounts for over 84% of the European lending market. In order to be able to start investing, you need to find the best sources.
The practice is not only convenient to the borrower but to the lender too since they find a platform to enjoy returns on their principal amount. The alternative finance market report in the UK (2015) has it that P2P consumer lending took the highest share followed closely by P2P business lending. The traditional alternatives e.g. invoice trading and equity funding were trailing with lower percentages.
This creative form of credit transaction offers a win-win situation for all the parties involved. i.e. The borrower gets the capital, the lender gets the profit or returns from the interest charged and the P2P firm being the intermediary and platform provider, charges a fee both from the lender and the borrower hence profitable for all the parties involved.
The following are the top Peer to Peer lending sites (in Europe).
Based in the UK, Zopa offers unsecured consumer lending e.g small scale proprietor lending. It was established in 2005 and according to their website it has managed to attract about 63000 active investors with a lending base of over 1.9 billion pounds since it was established. Their major investment products for lenders include; Zopa access, classic, and Zopa plus with a projected annual interest of 3.1%, 3.9%, and 6.3% respectively. The recommended amount to be invested is 1000 pounds to help the manage the risk of default. The fee charged on each loan is 1% with Zopa access going for free of charge. The loan interest rate range from 3.4% to 34.9%.
This UK P2P lending platform offers unsecured lending to small products and unsecured lending to residential property. There is strictly no consumer lending. From their web portal www.fundingcircle.com they allow borrowers to take loans up 1 million pounds for 5 year period. The individual loans don't attract any fee and early repayment is not penalized. Loan application process is fully online with approval period of 2 days, just imagine the convenience.Lenders can earn an annual return of up to 7% and have the autonomy to bid their offer that matches the most credit-worthy borrower. The money invested is diversified to attract little or no risk hence great return on investment.
RateSetter offer products for 3 main categories of lending i.e. unsecured consumer, unsecured small business, and real estate lending. From their website, individuals can access personal loans up to 35000 pounds and approval period takes barely 24 hours. In addition, there is individual business finance of up to 2 million to be approved within 2 weeks and to be repaid for a 5 year period. There is no definite rate for both investors and borrowers as the rates are set by individuals and they bid to match the perfect and preferred lender or borrower.
It is based in Germany. According to their website smava.de. Smava has been operating since 2008. It has a great return on investment of about 6.7% and charges investor fee at 1.35% and borrowing fee ranging 2.5% - 3%
Mintos based in Latvia was established in 2015. So far it has approximately 14574 registered investors and proud to achieve a return on investment of 12.86%. All their loans must require a collateral but they are soft on bad debts. They are flexible and have a provision to buy nonperforming loans at a fee.
Based in Dusseldorf, Germany, this P2P lending site aims mainly on private loans and consumer lending. Auxmoney actually allows its private customers to take out personal loans, that can actually range between 1,000 and 25,000 euros from private investors. It's one of the biggest P2P sites in the country and has financed more than 32,000 loans since 2007.
Despite its relatively low loan volume, the leading lending site in Germany is considered to be one of the most dominant platforms in the world for both investors and borrowers. For example, investors can expect to pay around 1% as a fee of their investment to Aux Money, whereas borrowers can pay 2,50 euros per month, plus a one-time fee. Aux Money has originated more than 465 million euros worth of consumer loans until today, with 99 million euros accounting for the year 2015 alone.
Based in Tallinn, Estonia. Bondora platform focuses on investing in European personal loans. This P2P lending site was launched in the market in 2009 and it is considered to be one of the most exciting sites, because of its documented high yield returns for the more than 9,000 investors who have registered with this company. It is estimated that over 60 million euros have been lent through this P2P site with over 12 million euros being paid to its investors as interests, and also serves lending clients in Estonia, Spain, and Finland.
This lending site basically operates as a consumer P2P loans platform in Vaasa, Finland and it is one of the oldest ones in the country, It connects the best way possible borrowers with lenders. The platform has around 70,000 users and it is considered to be one of the largest P2P lenders in the Nordic countries.
Credit Gate24 is a direct lending site, which connects borrowers with a number of institutional and private lenders. It was launched on the market in 2005, in Switzerland. The company focuses on offering to its users a strict credit check, by using a number of classic assessment methods for cards. Switzerland is a very attractive market for the P2P lending system.
Lendix is a French P2P platform and is located in Paris and was launched on the market in 2014. Since then it has allowed various firms in the country to raise approximately 25 million euros worth of loans. It focuses on business loans and enables its investors to be able to lend money directly to SMEs.
Other lending platform sites include smartika with 6% ROI and about 5791 active lenders. Most of the p2p lending site offer ROI of approximately 6% with borrowing interest rates varying but on flexible terms. Here is the complete list.
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