Last Updated on January 21, 2022

Gone were the days when you could easily borrow money from a bank. Granted, you can still find personal loans with low-interest rates, but the abundance and availability have grown scarce. The red-tapism in banks has crossed its threshold and it is not an easy task to prove the collateral. You also need to stand in a queue, make unnecessary rounds of the bank, and still, you don’t get the loan. But with the advent of mobile applications and technology, now you can get a loan instantly with peer to peer loan lending mobile applications.

A Peer-to-Peer loan lending app idea lets you lend money without the involvement of a traditional bank or credit union. You just can lend money sitting in your armchair. They have become amongst the most trending tech in the Fintech world.

It has been estimated that the valuation of the P2P industry will reach a valuation of $150 billion by 2025.

What is a P2P Loan Lending app?peer 2 peer lending

P2P lending is a money lending method, in which the borrowers and money lenders are equal parties such as companies or individuals. There is no participation of intermediaries such as loan brokers, banks, or any other financial institution. As there are no intermediaries, the interest rate is not as high and investors gain more profit.

This complete mechanism of money lending and borrowing is performed on an app that is termed as a P2P loan lending app, where the uses can be both money lenders and borrowers.

There are several expenses while maintaining a bank such as renting premises, staff fees, computers, software, etc. However, there is no such requirement in a P2P money lending app, you just need a reliable mobile app development company that can meet all your demands.

How does a P2P Loan Lending mobile app works?

peer to peer lending app features

For Borrowers:

Sign Up

First, you need to sign as a borrower in the app. You should have management information available and have a financial account that should be at least a year old. Probably, you would be asked to describe your business so that the lenders know why you’re safe to lend to.

Crediting

After you will finish up the sign-up the functionality of the p2p apps from the admin side will let the lenders know the risks and rewards of lending to your business.

Loan Market

There is a loan market on the app on which your loan will go live, once your business is approved. Here, the lenders will bid to fill your loan, competing against each other to provide the most competitive rate. In the end, the lowest interest rate bid would be accepted, hence you have to pay the lowest interest for your loan.

Accept the loan

After your loan gets 100% funds, you need to accept the terms & conditions of the loan. The app can charge you very little fees while transferring the money into your account.

Repayment

There would be a suitable date to make the repayments of your loan, these will be fixed each month so you will know the dates of your repayments in advance.

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For Lenders:

Sign-up

Alike borrowers, you have to sign-up as money lenders with a quick investor classification and appropriateness.

Choose Account

There can be different types of accounts for the lenders such as Growth accounts who want a quick and simple method of creating a diversified portfolio of business loans, income account for those seeking to generate a consistent level of income from a lump sum without eating into their capital, or a self-select account in which the lenders can hand-pick which businesses they want to lend to.

Add your funds

Whatever account you have chosen, you need to add funds to your account, by different payment methods available.

Lend to borrowers

Now you can bid for the loans the borrowers have applied.

Repayment

You’ll receive monthly repayments of capital and interest from each of the businesses you’ve lent to. You can then lend this money to other businesses to keep earning returns.

How do a Money Lending app benefit borrowers?

1. No interference of an expensive intermediary

In a P2P lending app, there are no banks or an expensive intermediary involves. So the customer neither needs to pay for the banking services nor has to convince the creditor to issue a loan since you are solvent & trustworthy. All the processes are carried on a single mobile application at the expense of minimal fees.

2. Flexible than traditional loans

Mostly, P2P loans are unsecured i.e. the borrower doesn’t need to provide any collateral, so you won’t need to tie your personal assets or property, as is the case with the traditional loans. In P2P loan lending, the application process is quick and uncomplicated. Thus, you can access funds in a short duration.

3. Lower Interest Rates

The loans that you will get on a peer-to-peer landing would charge quite less interest rate in comparison to the traditional lenders like banks and building societies. As the investors are lending their money directly to the borrowers through an application platform, there are no intermediaries, by which both parties can leverage from more favorable rates.

4. Thorough Inspection

While there is no need for collateral, still the borrower had to submit scanned copies of his passport, and other details along with his tax identification number. They have to submit documents to prove their solvency. A P2P loan app always provides users with a high level of trust.

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How a Loan Lending app benefits lenders?

p2p lending app benefits

1. Steady & Attractive Returns

The current average rate of return on a P2P loan lending app is 10%, however, it depends on the type of loan and the duration. In the current banking market, a 10% return is quite attractive, especially if it is diversified from qualified borrowers.

2. Lenders Choose

As a money lender, you can categorize the borrowers and can check their identification. You will get all the details of a borrower along with its credit score, and other related factors in the funding algorithm. You can choose to invest in the borrowers who match your preferences.

3. Fraud Prevention

The saddest thing for money lenders is not getting their money back. However, a P2P app implements a Fraud Prevention System in order to maintain a zero-tolerance policy on fraud. The best P2P app should follow procedures that are the strictest and most rigorous within the industry.

Why you should invest in a P2P Loan Lending mobile application?

The loan lending industry is evolving a lot. The alternative lending segment is witnessing 10 fold increase in the past decade. The global peer-to-peer (P2P) lending market size was valued at $67.93 billion in 2019 and is projected to reach $558.91 billion by 2027, growing at a CAGR of 29.7% from 2020 to 2027. Mostly, the borrowers are taking money for consumer credit loans, small business loans, student loans, or real-estate loans. According to the European Union, about 53% of various small- & medium-sized organizations in Germany and the UK applied for an online loan in 2019, which was significantly higher as compared to the previous year 2018.

Top P2P Loan Lending Mobile Applications

Here are some of the best P2P loan lending mobile applications and the takeaways for your business venture:

1. Prosper

Prosper personal loanOn the Prosper P2P app, you can borrow as little as $2,000 or as much as $40,000. It comes with many types of loans such as debt consolidation, home renovation, healthcare, etc. The interest rate is also of varying range with a maximum of 35.99%, which could be a con of this app. You can also jointly apply with another borrower, which makes you more credible assuming the other person has better credit.

2. LendingClub

Lending-ClubLendingClub comes among the best apps if you require a loan of a very small amount. It is one of the oldest and best-known P2P mobile lending applications. The lenders are given more security as when borrowers do the repayment late then there is a late fee of 5%. The loans can be costly for borrowers with thin credit including the origination fees of 2% to 6%. Joint applicants are allowed in this app also. Its rate is quite in comparison to Prosper.

3. Peerform

PeerformIf you are a borrower with a thin credit score and require a loan, then Peerform is the right platform for you. It uses a proprietary algorithm to determine applicants who may be more creditworthy than their traditional credit scores. There are no outrageous rates over 30% plus the loans come with extra-low APR for borrowers with great credit. However, you can’t borrow loans for more than 3 years and there is no joint application functionality. It also charges a fee of 1-5% origination fees and 5% late fees.

4. Upstart

UpstartUpstart is an unusual P2P loan credit app that checks the academic & employment credentials to look borrowers with true potential regardless they have thin credit scores.

Their motto is “You are more than your credit score”. It is accessible if you have a fair or thin credit history, also you can get better APRs even with low credit scores, and there is no origination fee for some borrowers. However, there are no loans under $5,000 and no co-signers are allowed.

5. Payoff

PayoffOn Payoff, you should have a credit history of at least 3 years and two trade lines to borrow a loan. You can get the most competitive rates among all P2P lending platforms. Its average APR is just 15.49%, and you can get a loan between $5,000 to $35,000. There are various repayment periods with no late fees and no origination fees. However, inexperienced or light borrowers may even not qualify for this platform and there are no loans under $5,000. Joint applicants are also not allowed.

Things to be considered before developing a Loan Lending platform

Mind Government Rules & Regulations

A P2P app needs to be regulated by the government rules & regulations so as to ensure players play by the rule. It will encompass only permitted activities, regulations on capital, governance, business continuity plan, and customer interface.

Find a banking partner

You will require a banking partner who will take care of your all banking financial transactions. You may be able to negotiate some special features for your business within the app, it is more likely that you will need to adapt to the company’s app’s features and updates.

Borrower Verification Process

You should have a reliable borrower verification process for fraud prevention. You can implement:

  • A government identification proof
  • Income verification process
  • Tax return proof
  • Bank Account Information
  • Verification of phone number

Assessing Risk and Setting Interest Rates

You will require to use an advanced algorithm for pricing loans, which should be constantly updated and perfected. For getting a loan, the borrowers must have:

  • Minimum 600 FICO score
  • A debt-to-income ratio below 40%
  • A credit profile with any delinquencies
  • Minimum one open bank account

GDPR Compliance

General Data Protection Regulation (GDPR) provide basic rights to the users such as the right to be informed, right to access, right to rectification, right to erasure, right to restrict processing, right to data portability, right to object, and rights related to automated decision making and profiling.

CCPA Compliance

CCPA provides California residents with the ability to control how businesses process their personal information. Businesses would be able to honor requests from residents of California to access, delete, and opt out of sharing or selling their information.

Interactive UX & UI

Regardless of how many features, and security you gave a user on an app. The users would use it if it has an interactive UX and captivating UI.

General Features of the P2P Loan Lending app

peer to peer landing app features and benefits

1. Document Management

The lenders could manage all the documents of their leads in one place. The borrowers should also be able to store their documents in one place and revise them easily.

2. Loan/EMI Calculator

A loan calculator will help the borrowers to easily calculate their installments and the total amount by entering tenure, loan amount, interest.

3. Lead Management

The lenders should manage leads who have borrowed money. They could create leads, track leads, and get details like taken, tenure, next payment, balance, and other details.

4. KYC/AML Automated verification

Anti-money laundering (AML) verification prevents the practice of generating income through illegal actions, while KYC gives the admin complete details of the user through government identifications.

5. Refinance Management

Refinance feature means when the borrower has paid half of the loan, the borrower can refinance from other lenders for the loan based on his profile.

6. Credit Score Calculation

A credit score calculator determines how much you own on loans, length of your credit history, types of accounts, and other parameters.

7. Payment Schedule

The repayment scheduler will help the borrowers and lenders to get notifications about the upcoming installments.

8. Interest for used amount only

You can implement the functionality in which the interest would be applied to that amount which has been used by the borrower.

9. Repay options

There should be varied repay options which suit both borrower and lender.

10. In-app Camera, Call & Chat

These three C’s are always necessary for any mobile application nowadays. A camera is used for uploading images of documents, while call & chat features can connect the lenders to borrowers.

11. Document Scanner

A document scanner can upload the files in the portable device format (PDF).

12. Chatbot Support

Chatbot support will help you to resolve any queries arise for the features & functionalities.

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Admin Specific P2P Loan Lending mobile app Features

1. Lender Management

Lender Management helps lenders in investing money by selecting borrowers of their choice within the application. A lender can check the details such as the amount required, loan tenure, and profile for KYC.

2. Borrower Management

It helps the borrowers for submission of details like KYC, E-sign, and other information on profile tags. The borrower need to upload documents, their credit history, and business accounts, for getting loans

3. Push Notifications

If a user agrees to allow push notifications, then he will receive timely alerts or notifications about his order, any new offer, policy, etc. It will increase user engagement, conversion rates, and target more audience.

4. Real-time analytics

Real-time analytics helps you to get insights and act on data immediately or soon after the data enters their system. Real-time app analytics answer queries within seconds.

5. KYC Approval

KYC approval helps both lenders and buyers for their verification on the platform. The admin would approve the KYC if all documents are correct.

6. CRM integration

Customer Relationship Management (CRM) tool integration can help your platform to build better customer relationships, increase retention rates.

7. Real-time analytics

Real-time analytics helps you to get insights and act on data immediately or soon after the data enters their system. Real-time app analytics answer queries within seconds.

8. Bank Partner Management

You will require an effective system that will manage all the bank related policies, transactions, and other issues.

9. Loan Management

Loan management will keep all the records of the loan, amount, transactions, histories, lender, and borrower details, and other data.

Required Tech Stack & Team

It depends on whether you want to develop a mobile application for Android, or iOS, or both. You can either hire a Java developer or Swift developer or both. If you are having not so a high budget, then the best way to go is for a hybrid platform by which you can get apps for both platforms written on a single code.

The other team members you would be required are the project manager (for managing all aspects of app development), UI & UX designers for taking responsibility for the app design interface, backend experts for APIs, Plugin, and Admin.

Tech Stack For Developing A Mobile App

The cost of developing an app like P2P depends on the features and functionalities of the app. You can directly contact our sales team to get a quote.

Author

CTO at Emizentech and a member of the Forbes technology council, Amit Samsukha, is acknowledged by the Indian tech world as an innovator and community builder. He has a well-established vocation with 12+ years of progressive experience in the technology industry. He directs all product initiatives, worldwide sales and marketing, and business enablement. He has spearheaded the journey in the e-commerce landscape for various businesses in India and the U.S.