What Is the Average Return of a P2P Lending

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Peer-to-peer lending companies are incrementally becoming the go-to lending service for everyday people. Traditional financial lending services such as banks, credit unions, and private lending businesses are not obsolete. However, they are not automatically what people think of when the phrase “peer-to-peer lending” is uttered either.

What is peer-to-peer or P2P lending? P2P lending is an online process through which a borrower and a lender are matched via a third-party facilitation service.

An investor, also known as the lender, can lend money to people based on their online registration profile. So, a P2P lender can invest in P2P lending almost as if they were investing in a diversified portfolio.

However, this is not like investing in stocks. A P2P investor lends money to strangers online with the promise that they will pay back the loan in a predetermined time period with interest.

P2P lending is big, global business now. In 2019, the global P2P lending industry was worth almost $68 billion.

And by 2027, the global P2P lending industry will be worth over $559 billion. In other words, between 2020 and 2027, the global P2P lending industry will grow by 30% and be worth over half a trillion.

The P2P lending business is not going anywhere and is projected to thrive. Are you interested in becoming a P2P lender?

Average P2P Lending Return

The average return for a P2P loan ranges between 7% to 12%. However, the P2P lending return can average a little more than that depending on the P2P platform you use.

Additionally, your odds of a high P2P lending return increase if you are strategically discerning relative to choosing borrowers to lend money to on such platforms.

If you are considering becoming a P2P lender, here are three things you should consider for augmenting the size of your return.

More People Apply for P2P Loans Over Traditional Loans

Before the 2008 global financial crisis, it was a bureaucratic nightmare trying to obtain a personal loan. For one thing, applying for a traditional bank loan was a long process, paperwork intensive, and offered no guarantee of success.

And after 2008, it became virtually impossible for everyday people to get a traditional loan. That reality helps to propel the ubiquity and popularity of P2P loans.

P2P lending platforms vet every borrower who apply on their sites. And in this economic environment, there are always numerous borrower profiles to look through.

You Choose Your Borrower

Yes, there are a lot of aspiring P2P borrowers out there, but not all are alike. As a P2P lender, you should take your time perusing through as many borrower profiles as necessary before investing.

You don’t need to lend money to every borrower profile you come across.

P2P third-party facilitation sites require borrowers to submit personal data like credit scores, their work status and income data, debt-to-income ratios, and loan purpose information.

As a P2P lender, you can cherry-pick which borrowers you lend to and maximize a healthy return.

Extreme Portfolio Diversification

As a P2P lender, you don’t have to loan money to one borrower. You can lend small amounts of money to hundreds or thousands of people after strategically cherry-picking applicants that match your lending criteria.

If you choose the right borrowers based on their creditworthiness and loan aspirations, you could almost guarantee yourself a healthy return.

Proper P2P Lending

Are you interested in learning about international P2P lending companies offering returns up to 15%? Check out to get an overview of your options.

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