Peer To Peer Lending – Monzi’s Simple Guide

Peer to peer lending: is it the next big thing in the online credit marketplace. You can potentially be involved as both a borrower or an investor. Keen to know more? Read on as Monzi breaks down all the details you need to know. Let’s go.

Please note, certain ideas and products presented in this article may not be offered by Monzi nor the lenders we work with. This article presents only general information. Consider seeking professional financial, taxation, legal or other advice to check how the information and ideas presented on this website relate to your unique circumstances.

What is peer to peer lending?

With peer to peer lending (P2P), rather than borrowing money from a lender, you’ll be borrowing it straight from an investor. This is facilitated via an online lending platform in which borrowers are matched with investors based on their risk profiles and the investor’s preferred level of risk.

If you are successfully matched with an investor or borrower then your lending platform will then handle the contracts, assessments and repayments for your personal loans. As a result, there is usually minimal contact between the two parties.

From an investor’s perspective, peer to peer lending is an attractive investment opportunity that provides diversification benefits and the potential for high returns. For borrowers, it’s possible to access more competitive interest rates and a range of different cash loan products.

Where does the money come from?

P2P lending facilitates lending between two parties, neither of which are lenders. As a result, the money simply comes from a number of investors prepared to lend you the cash you need to borrow in return for repayments with interest.

The exact way this occurs though does vary. In some cases, an investor may lend you the money directly, with the P2P platform drawing up the contracts and handling the repayments. Alternatively, others provide investors with the option to invest in managed funds.

In short, managed funds pool the resources of a range of different investors to invest in a range of different assets, securities or, in this case, quick cash loans. The money is then lent out to a series of borrowers and investors receive a return tied to their initial investment stake.

Who uses peer to peer lending?

P2P lending is an option for a range of investors and borrowers.

On the investment side, it is typically used by investors looking to diversify their holdings to thereby minimise their overall portfolio risk. The potential for above market average returns however do provide an additional incentive.

On the borrowing side, P2P lending platforms may offer a range of different quick loans online. This includes not only personal loans but also car loans and loans for your business too. Moreover, so long as you meet necessary qualifying criteria, you may be able to borrow amounts ranging into the tens of thousands.

How do I apply for a peer to peer loan?

In order to apply for a P2P loan you will need to register and make an account with one of the many P2P lending platforms. In short, it’s up to you which one you choose. However, shop around and compare the loans on offer to determine which one is right for you.

As part of creating your account, you must pass a few checks. Most notably, you will need to verify your identity by providing a number of documents.

From there, the process for applying for a loan is similar to with most other lenders. You will need to select your loan amount and you may have the option to select your repayment term too.

However, keep in mind that lending platforms will assess all applications to determine if the loan is right for your circumstances.

How are borrowers and lenders matched in peer to peer lending?

The matching process does vary between platforms. While some will allow for direct interaction between investors and borrowers, in most cases it will be handled through technology.

Via algorithms, platforms will be able to match suitable borrowers with investors based on their risk profile and the investor’s risk preference.

As an investor, you’ll get to set your preferred risk level (e.g. low or high). While high risk may come with higher returns (e.g. higher interest), there’s also a great chance of default. In other words, as with all investments, there is a risk-return trade-off that must be considered.

Finally, in some cases, there will simply be no matching at all. Investors place their funds into a pool which is then used for lending. With this, you will still have the option to define your risk preference.

Can I get a peer to peer loan with bad credit?

Yes, potentially.

Peer to peer lending platforms may offer loans for bad credit. However, keep in mind that approval is not certain. Moreover, all applications will undergo an assessment.

In order to assess your application, lenders will look at both your credit report and financial situation. If your credit is not the best then you must show that you are in a secure financial position and will have the ability to meet your repayment obligations.

As a result, if you are earning sufficient income and your loan repayments would fit comfortably with your existing expenses then you may be able to access loans in spite of your bad credit. However, again, approval is not certain.

Can I get a peer to peer loan with no credit check?

All P2P loan applications are subject to an assessment. Typically, these assessments will include a credit check.

In short, it’s simply a way for lenders to get an idea of your history as a borrower. In other words, have you consistently made your repayments on time or do you have a series of late payments or defaults in your past? From this, lenders can determine whether or not you should be offered a loan.

Having said all this though, it may be possible to be offered a loan with no credit check. In this case, your assessment would focus on your income and expenses to determine the repayments that could potentially suit your budget.

However, we cannot guarantee if you will be offered a quick loan with no credit check. Moreover, typically, it is wise to expect that a credit check will be included in almost all loan assessments.

Peer to peer centrelink loans: are they available?

Do Centrelink payments account for some or all of your income? That’s okay. There are still potentially P2P lending options available to you.

However, it’s worth understanding that benefit payments may be viewed differently by different lenders. In short, while some may consider them to be a legitimate income source, others may not. As a result, approval and eligibility may depend on the platform that you are registered with.

Alternatively, if you are unable to access P2P centrelink loans, you could consider applying with Monzi. Through our lender-finder service, we could potentially match you with an available lender who may be willing to consider applicants who receive benefit payments. However, approval is not certain.

Peer to peer loans for unemployed?

Unfortunately, unemployed loans are often hard to come by. After all, if you are borrowing money then your lender must be certain that you will have the capacity to repay it.

Having said this though, it may not be impossible. In other words, there may be credit options for unemployed individuals. However, this comes with a condition.

In order to even be considered, you must prove that you are earning some form of consistent income (e.g. benefit payments). Without this, you will be ineligible and will not be able to borrow money.

Even with this, approval is never certain. You must still meet the lender’s requirements and they must be sure that the loan is suitable for your needs and financial situation.

Can I get peer to peer loans on the weekend?

Weekend loans may be possible, however, availability may vary.

While during regular business hours it may be possible to receive an outcome within hours, applications on the weekend may encounter delays. However, as we are not a P2P lending platform, we cannot provide specific advice about whether or not these products will be available.

Finally, one thing to keep in mind is that banks may not process transfers on weekends or outside of standard operating hours. As a result, even if your loan application is approved, you may still need to wait until the following business day to access your weekend cash loans.

What about fast loans online?

The best thing about P2P lending is that it exists solely online. That means that it couldn’t be easier.

You can apply and receive an outcome all from the comfort of your own home. Moreover, there’s no paperwork required either. With fast outcomes and intelligent algorithms, you might be matched with a peer before you know it. Best of all, P2P may be able to offer a wide-range of online personal loan products meaning that there may be one that suits your needs.

However, keep in mind that an assessment will always take place. As a result, processing times may vary. While these online platforms may endeavour to provide you with your cash on the same day that you apply, it’s often wise to anticipate a waiting period of up to one business day.

How much can I borrow with P2P lending?

In most cases, one of the benefits of P2P lending is that you can often access personal loans for larger cash amounts than those offered by other online lenders. In other words, you may be able to apply for quick money loans from just a few thousands all the way up to tens of thousands of dollars.

However, keep in mind, that the amount that you may be able to borrow can vary based on your financial situation. That is, based on your income and budget, your lending platform may limit the amount that you can borrow. After all, they must only offer credit that you can repay without financial hardship.

P2P lending for borrowers

P2P lending has two sides: borrowers and investors. To help you out, we’ve assembled a quick breakdown covering the key information for both sides. That way, you might be able to decide if P2P lending is the right option for you.

So, let’s look first at P2P lending for borrowers.

Why should I consider borrowing from a P2P lender?

There are a number of benefits that you might experience when you apply for a P2P loan. These may include:

  • Better personal loan rates that may be based on your credit history and financial situation.
  • A range of loan products including personal loans, used car loans and loans for your business too.
  • May offer larger cash amounts than those offered by other online lenders.
  • Easy applications, intuitive matching technology and fast outcomes.

What are the potential issues?

While there are a number of possible benefits, there are a few drawbacks that should be noted too.

Firstly, lending platforms often charge a number of fees on your loan. As a result, not only does this add to your total loan charges, it can make it difficult to compare lending platforms as fee structures can vary significantly.

In addition to this, while P2P lenders may offer a range of products, they’re often considered a short-term option. As a result, you may not be able to access a term that suits you. If this is the case, you may need to borrow from a bank.

Man and woman discussing peer to peer lending

Peer to peer lending: the investor’s perspective

The investor’s perspective is the other side of the story. Not only are there a number of pros and cons, you consider a range of factors before you invest too. See below for more details.

How do I invest in peer to peer lending?

You may be able to invest directly in P2P lending by registering with one of the many online lending platforms designed specifically for this purpose. Alternatively, you may be able to invest a managed fund that specialises in investing in these loans. With this, you may be able to select your preferred risk level.

What should I consider before investing in peer to peer lending?

As with all investments, you must do your research beforehand to ensure that you know exactly what you’re getting into. With this, picking the right lending platform is crucial. To do this, key considerations include:

  • Are they a licenced credit provider?
  • Are there safeguards in place to protect your investment? For instance, some platforms will establish a pool of funds paid for by borrowing fees that may be accessed in the event that your loan is not repaid.
  • Are they transparent and clear in all aspects of the lending process?
  • Are there user reviews positive or do they have a history of unhappy customers?

What are the benefits?

Potential benefits for lenders include:

  • A new investment opportunity outside of traditional asset classes.
  • The potential for higher returns than what you may receive via traditional investments.
  • Investors can select their preferred level of risk.

What are the drawbacks?

Potential drawbacks that investors must consider include:

  • It may take time to find the right loan applicant.
  • Deposits made with P2P lenders are not covered by the government’s deposit guarantee.
  • If it is not a secured loan then there is the potential for losses to occur.

P2P payday loans

Payday loans typically refer to small cash loans from $300 to $2,000 with repayment terms of up to 12 months. Best of all, lenders won’t waste any time so that you can potentially receive an outcome ASAP.

Through P2P lending, these loans products may be available. However, you will need to consult with your lending platform to be sure. In many cases, P2P lending platforms look to offer large cash loans however, small loans may be possible too.

Easy peer to peer loans

Do you have bad credit or earn a low-income? With easy loans, lenders may offer credit with qualifying criteria that aren’t quite as strict as those offered by other credit providers. As a result, they may be accessible for individuals with a range of different circumstances.

When it comes to P2P loans, some lending platforms and investors may offer these products. However, keep in mind that these loans are usually risk-based. In other words, lenders may tag you as a high-risk borrower. As a result, you may need to pay higher rates or fees to compensate for the additional risk of lending you money.

Finally, keep in mind that approval is not certain. While lending criteria will differ between platforms, your application will still be assessed to ensure that any credit you are offered is affordable for your financial situation.

Are peer to peer loans safe?


As long as you only deal with a licenced lending platform then there should be no reason to worry about issues related to fraud. After all, these platforms are governed by a range of regulations meaning that there are a number of protections in place for both borrowers and investors.

One thing to keep in mind though is that, as an investor, you will be taking on a level of risk. In Australia, deposits made with authorised deposit taking institutions are guaranteed up to $250,000. However, this does not cover peer to peer lending. As a result, it is possible that you may incur losses. So, do you research and make sure that you are comfortable making the investment.

P2P and responsible lending

As we mentioned, there are protections in place for borrowers applying with P2P lenders. In short, this relates to the National Consumer Credit Protection Act 2009.

More specifically, lenders must act in a responsible manner. As part of this, lenders will assess all applications to ensure that the credit that you are applying for is suitable for your needs and objectives. In other words, lenders should not offer you a loan that you cannot afford.

To do this, lenders must meet three obligations that will inform their decision:

  1. The lender must make reasonable inquiries into a borrower’s financial situation and loan objectives.
  2. The lender must take steps to verify their findings.
  3. Based on this information, your lender must then reach a final decision as to whether the credit is suitable for you.

For further details, check out the ASIC’s responsible lending breakdown.

Finally, keep in mind that as an investor, you would not be involved in this process. It would be handled directly by the marketplace platform.

What should I consider before applying for a loan?

For most people, instant cash loans and other such products should be a last resort. After all, you must always repay more than you borrow due to the interest rates and fees applied. As a result, the costs may be considerable.

However, in some situations, a small cash loan may be one of the few options that you have, particularly if you have an immediate expense that just can’t wait.

If this is the case, it’s still important to not rush into applying. Take your time and consider your financial situation to ensure that you can apply for the right loan for your circumstances.

As a guide, ask yourself the following:

  • What’s my income?
  • What are my current regular expenses (e.g. food and rent)?
  • Do I have any outstanding debt obligations or up-coming expenses?
  • How much do I need to borrow?
  • What repayments would suit my budget?
  • Is there any way that I can reduce my loan amount (e.g. cutting costs)?

What features should I use to compare loans?

Not all loans are created equal. That’s why it’s important to compare products to try and find the right deal for you. If you’re lucky, you might even be able to save yourself money.

Key features to compare include:

  • Personal loan rate: your interest rate determines that amount you must repay on top of your principal loan amount. A slightly lower rate can potentially save you a ton over the course of your loan. So, shop around.
  • Fees and charges: additional costs on top of your principal and interest payment. Aim to minimise fees where possible.
  • Comparison rate: looking to compare two or more loans? The comparison rate is your best friend. It combines your rates and fees into one simple annual rate reflecting your total loan costs.
  • The terms: how long do you have to repay your loan? Is there flexibility to make additional repayments or even pay your loan off early?
  • Your lending platform: some will be better than others. The best way to compare lenders is to check out their reviews online.

Am I eligible for a P2P loan?

In short, Monzi cannot say.

Eligibility requirements will vary between peer to peer lending platforms. As a result, it may depend on your personal circumstances and financial situation. These requirements should be listed on each platform’s website so ensure you do your research before applying.

Having said this, there are a number of criteria that may be common across a number of platforms. As an example, you will almost certainly need be over the age of 18 and an Australian citizen or permanent resident too. Moreover, you must hold stable employment and be earning a consistent income. However, exact income requirements may vary.

What is the best peer to peer lending site?

Monzi is unable to provide an opinion as to which peer to peer lending platform may be the best. As a result, you must do your own research to determine which one is right for you.

As a guide, there are plenty of options for you to choose from. While SocietyOne was one of the first platforms to be established in Australia, others such as Harmoney and MoneyPlace have since joined the party.

To help you make a choice, consider the products on offer. Assess the range of loan amounts that you can apply for as well as other key features (e.g. secured or unsecured). Finally, read user reviews online to get an idea of past borrower experiences.

Can you lose money on peer to peer lending as an investor?


P2P is an investment. As with all investments, there is no guarantee that you will see a positive return and losses are always a possibility.

As an example, losses could result if your borrower fails to make their repayments on an unsecured loan. Moreover, market downturns can lead to losses or lower returns if there is not sufficient demand for credit.

Having said all this though, P2P lending may still be an attractive investment opportunity. Not only can it potentially provide competitive returns but the diversification benefits that come from investing in a non-traditional asset may be right for your portfolio. In addition to this, you have the option to select your risk preferences which provides one potential safeguard.

Peer to peer lending and Monzi

While that covers Monzi’s comprehensive P2P lending guide, it’s worth understanding that Monzi is not a platform that can offer these products. Instead, we’re a lender-finder service that can help you access personal loans when you need them.

In short, all you need to do is scroll up and use our loan slider. From there, you can potentially apply for cash loans for bad credit from $300 to $10,000 with a range of repayment terms on offer too.

Best of all, it’s as easy as can be. Just select your preferred loan and then provide the necessary personal details. From there, our automated system will aim to match you with an available lender from our network. This could take as little as 60 minutes.

Apply today!

Finally, to learn more about investing and how you can make your money work for you, check out Monzi’s guide covering how to buy shares for beginners.

Factor In


Two credit cards
Two credit cards

You won't use a penny to apply for our lender-finding service, but here's some costs you could expect from a lender

Loan amount

$300 - $2,000


12 months (minimum)

12 months (maximum)


20% upfront establishment fee

+ 4% monthly fee


Loan Amount of $1,000 over 6 months repayable weekly (25 weekly repayments). $1,000 (Principal Amount) + $200 (20% Establishment Fee) + $240 (fees based on 4% per month over 25 weeks) = $1,440 total repayable in 25 weekly installments of $57.60.

Under the current legislation, most small personal loan providers don’t charge an annual interest rate (you’ll know this as an APR) %. The maximum you will be charged is a flat 20% Establishment Fee and a flat 4% Monthly Fee. The maximum comparison rate on loans between $300 and $2000 is 199.43%. The minimum and maximum loan term is 12 months. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

Loan amount

$2,001 - $4,600


13 months (minimum)

24 months (maximum)


48% Annual Percentage Rate (APR)

67.41% Comparison Rate p.a.


Loan Amount of $3,000 over 18 months repayable weekly (78 weekly repayments). $3,000 (Principal Amount) + $400 (Establishment Fee) + $1,379.06 (reducing interest) = $4,779.06 total repayable over 18 months with weekly installments of $61.27.

The Annual Percentage Rate (APR) for Secured Medium Loans is 48%. The Typical Comparison Rate is 67.41% p.a. The minimum loan term is 13 months and the maximum loan term is 24 months. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate with the lender that finances your loan. Click here to see a worked example.

Loan amount

$5,000 - $10,000


13 months (minimum)

24 months (maximum)


21.24% Annual Percentage Rate (APR)

48% Comparison Rate p.a.


Loan Amount of $10,000 over 24 months repayable weekly (104 weekly repayments). $10,000 (Principal Amount) + $5,577.12 (Interest) = $15,577.12 total repayable over 24 months with weekly installments of $149.78.

The Annual Percentage Rate (APR) for Secured Large Amount Loans is 48%. Maximum Comparison Rate is 48% p.a. The minimum loan term is 13 months and the maximum loan term is 24 months. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate with the lender that finances your loan. Click here to see a worked example.