Finance
How does peer-to-peer lending work?
Peer-to-peer lending connects people who want to borrow directly with people who want to invest, through an online platform — cutting out the bank. Lenders earn interest, borrowers often get competitive rates, and the platform manages matching and risk.
See it in motion.
Watch a 2-minute animated lesson that shows exactly how peer-to-peer lending works.
Step by step
- 1It connects borrowers and individual lenders online.
- 2It bypasses traditional banks as the middleman.
- 3Lenders earn interest; borrowers may get good rates.
- 4Platforms assess risk and handle repayments.
Frequently asked questions
- How does peer-to-peer lending work?
- An online platform matches borrowers directly with individual lenders, who earn interest on the money they lend.
- Is peer-to-peer lending safe?
- It carries risk — borrowers can default — so platforms grade risk and lenders often spread money across many loans.
- How is P2P lending different from a bank loan?
- The money comes from individual investors via a platform, not from a bank's own deposits.