Best P2P Lending Sites for Consumer Loans
There are hundreds of Peer-to-Peer lending platforms that service various different types of loans. Some P2P sites finance real estate enterprises and others might finance a couple wishing to get married.
Peer-to-Peer lending is a financial instrument by which thousands of people can invest little bits of money to help fund borrowers of their choosing. This concept of micro-finance has opened the door for millions to achieve financial freedom and independence.
One of, if not the biggest niches in Peer-to-Peer lending, is consumer loans. Consumer loans are loans which are for just about anything someone might purchase for a personal or luxurious reason. It could be a loan issued for a house renovation, a car purchase, planning a wedding or even just wanting to buy a PS5. Many Peer-to-Peer lending platforms focus solely on consumer loans as they can be an attractive investment for P2P investors. Consumer loans are often offered in smaller amounts, shorter loan cycles and without collateral.
Peerberry
Peerberry is a Latvian P2P lending platform created by loan originator, Aventus Group. Aventus Group is a highly successful and profitable lending organization that once serviced loans on Mintos' platform. After recognizing their own early success on Mintos' marketplace and future potential they decided to leave Mintos and create their own version: PeerBerry.
Peerberry has a minimum 10 EUR deposit and projected yearly returning of 9 - 12%. PeerBerry is a loan originator aggregator who can host several loan originators on their platform. The P2P lending platform deals with mainly consumer loans and auto loans. All loan originators are supplied with a buyback guarantee and conditions for early repayment.
PeerBerry is one of Europe's fastest growing P2P lending networks. In order to receive a loan, borrowers must request it from the loan originators who operate on their platform. The loan originators on PeerBerrys platform are not equally successful and profitable. There are three loan originators: Aventus Group, LitHome and GoFingo. In order to find out which LO would match your investment needs, PeerBerry takes upon itself to distribute the financial statements of all Loan originators to their investors.
Prosper
Prosper is the oldest functioning Peer-to-Peer lending platforms. They deal with mostly unsecured consumer loans and specialize in debt consolidation. In order to receive a loan it is quite simple, apply for the loan amount, submit proof of your income, credit score and identity. Borrowers can request amounts from 1,000 - 40,000. Prosper has a minimum deposit of 25 EUR and a projected yearly returning of 7 - 9%.
Prosper is regulated by the SEC and audited by E&Y, in order to lend on Prosper marketplace one has to be an accredited investor living in the US with a social security number. Prosper offers a humble return of 7 - 9 percent on yearly returns. Despite the rather low return, investors are not guaranteed with collateral or a buyback guarantee.
Prosper is the oldest functioning Peer-to-Peer lending platform in the world today having been founded in 2006. They have been able to weather two economic crises, which is very impressive and reasserts their position among top P2P lending sites. Prosper gives off the impression that it's catered for those who are in need of borrowing credit more than those wishing to make a secondary source of income.
Swaper
Swaper is an Estonoian peer-to-peer lending platform founded and owned by Wandoo Finance. They operate with unsecured consumer loans around Europe provided by loan originator and owner, Wandoo Finance. Swaper only provides investors with the option of auto-investing and they promise a fixed 14% return on investment. Swaper has a minimum deposit of 10 EUR, a projected fixed yearly return of 14% and additional 2%(16%) for investor portfolios above 5000 EUR.
Swaper's loans range from 50 EUR to 1500 EUR and span over a 30 day time period, Swaper offers a buyback guarantee for any loans that default. Swaper offers a secondary market solely for the sake of liquidity. One of Swapers greatest attributes is that there absolutely no fees at all associated with investing in Swapers platform.
In order to receive a loan from Swaper the option is easily available on their website only from 50 - 1500 EUR.
Risk, Return and Debt Consolidation
Consumer loans are more suited for investors who are interested in a slightly higher risk and higher return. Platforms that offer unsecured consumer loans should have at least some form of security or guarantee for their investors. One of the most popular guarantees as mentioned above with some of the sites is the buyback guarantee. This implies that if any loan were to default than the loan originator who provided the loan would compensate the lender with both the principal invested and interest accrued.
Something worth considering is that unsecured consumer loans, which are the majority of consumer loans, are the highest defaulting market in Peer-to-Peer lending. This is because there is no collateral to ensure the borrower will commit on his payments. In the case of a default on a secured loan, there is collateral that can protect investors. In unsecured loans the only guarantee that is given is a verbal one, which in many instances, is not enough.
In general, consumer loans are issued and requested mostly for the purpose of debt consolidation. Debt consolidation is using one loan to pay off prior liabilities.
For example, say there is a loan of 5,000 dollars you need to pay back in 5 years at 7% interest. After 2 years in, you find another the opportunity to take a loan of 3000 USD at an interest rate of 3%, this could technically save you 4% in compounding interest for the next three years. Which is doable by accepting the 3000 USD loan to finalize paying out your previous loan.
Debt consolidation works in other ways too, for wedding bills, renovation bills, credit card bills, some times bills are due and the bank account is running low. A borrower can apply for a loan to cover his outstanding debt and then pay that loan back over time. Sometimes people need just a little bit of cash to run through the system so they can get back on their feet and manage their finances.
Mintos
Mintos is the largest peer-to-peer lending platform in Europe, they function as loan originator(LO) aggregators. With a very low minimum entry of 10 euros, Mintos, is widely available to many. Mintos works with various loan originators who vet and service the loans on Mintos' marketplace.
Loan originators on Mintos' market place declare the conditions and benefits of their loan contracts. For example, whether the loan has a buyback guarantee or a penalty for early repayment. Mintos has a 10 EUR minimum deposit and projected yearly returning of 9 - 12%. Mintos is considered by many as the best Peer-to-Peer lending platform based on the size of their platform, on their projected yearly returns and their business friendly approach to fund recovery.
Mintos implements various features and tools on their platform to provide their investors with a comfortable and easy experience while investing. Mintos itself does not offer loans. While they are the biggest consumer loan platform, a loan would have to be granted through a loan originator which can be found on their website.
Market Type
Consumer Loans
Average Returns
9 - 12%
Minimum Investment
EUR 10
Signup Bonus
1%
Registered users
500,000
Total funds invested
EUR 8.9 Billion
Default rate
16%
Regulating entity
Financial & Capital Market Comission (Latvia)
Buyback guarantee
Secondary market
Payment methods
PayPal, Bank Transfer, Credit Card, TransferWise
Withdrawal methods
Wire transfer, Credit Card
Mintos is P2P loan originator aggregator whom after years of slow growth exploded and became the number one P2P lending platform in Europe. Find out why in this review. Is Mintos an investment worth considering?
Market Type
Consumer Loans
Average Returns
9 - 12%
Minimum Investment
EUR 10
Signup Bonus
0.5%
Registered users
70,000
Total funds invested
EUR 1.8 Billion
Default rate
7%
Regulating entity
Self-Regulated/EU Compliant
Buyback guarantee
Secondary market
Payment methods
Bank Transfer, Bank Card, TransferWise
Withdrawal methods
Bank Transfer, Bank Card, TransferWise
PeerBerry is an excellent P2P platform to its 100 percent successful fund recovery track record. They offer slightly below market interest rates in exchange for a guarantee users will never lose their funds.
Market Type
Consumer Loans
Average Returns
6%
Minimum Investment
USD 25
Signup Bonus
USD 50
Registered users
Undisclosed
Total funds invested
USD 23 Billion
Default rate
3%
Regulating entity
U.S. Securities and Exchange Commission
Buyback guarantee
Secondary market
Payment methods
Bank Card, Bank Transfer, Credit Card
Withdrawal methods
Bank Card, Bank Transfer, Credit Card
Prosper is the first ever P2P lending platform to come out of the US. They are second in the US only to Lending Club. Prosper specializes in consumer loans, micro finance and debt consolidation.
Market Type
Consumer Loans
Average Returns
14 - 16%
Minimum Investment
EUR 10
Signup Bonus
None
Registered users
6000
Total funds invested
EUR 400 Million
Default rate
Undisclosed
Regulating entity
Self-Regulated/EU Compliant
Buyback guarantee
Secondary market
Payment methods
Bank Transfer
Withdrawal methods
Bank Transfer
Swaper only offers auto investing in unsecured consumer loans in Poland and Spain. Swaper is a subsidiary of Wandoo Finance Group, a loan originator that also services the loans on Swaper's platform. Swaper advertises a 14% IRR and premium investors who have invested over 5000 EUR receive an IRR of 16%.
Verdict
There are various forms of loans out there which you may or may not choose to fund. Unsecured consumer loans by their nature default at a higher percentage than loans that are secured. Peer-to-Peer lending interest rates can reach as high as 36% on unsecured consumer loans. The problem is, if the money does not come back to your hands than the 36% means nothing.
Buyback guarantees are a great thing to find on loans that are unsecured, but history has shown a buyback guarantee can only protect an investor from so much. Consumer loans could definitely be a great part of a diversified portfolio, but it is difficult to suggest to our readers to solely invest in unsecured consumer loans. To be very blunt, the very idea that the loans come unsecured should be a pretty big red flag.
If you're looking for something less risky, we would advise looking to our top mortgage lending sites guide to learn more about sites that can secure your investments. But, if you are ready to get started with the best P2P platform catering to consumer loans, then PeerBerry is our top choice.