All You Should Know Before Borrowing Money from P2P Lenders

P2P Lenders
Karan Singh
| Updated: Jun 02, 2021 | Category: Peer to Peer lending

In the P2P platforms, individuals both borrow and lend from each other. Generally, borrowers who are unable to attain funding from a financial institute mostly due to insufficient credit score opts for such platforms. When in require of some credit, be it due to some importance or to buy the car that you were hoping to buy in the past, there are various ways to get credit, one of them is P2P lenders. Such digitally-driven platforms have emerged as a consistent financing option for those having problems in getting unsecured loans via conventional means. Their interest rate is also normal.

Vital Points You Should Know to Raise Money via a Loan from P2P Lender Platform

If you want to raise money via a loan from the P2P Lenders platform, the following are some vital points you should remember:

Loan from P2P Lender Platform
  • Guidelines on Registration: Such lending platforms are bound to adhere to the guidelines issued by the Reserve Bank of India. For instance, be it on the security front, information, privacy, collection, etc. Hence, you should look into these platforms and determine whether it has compulsory registrations and certificates at the disposal or not. These platforms also need to close higher authorities such as Experian and CIBIL regarding the details of individual loan repayment. With such individuals paying their monthly EMIs on time, they will able to score a good CIBIL score only if the P2P lender is Reserve Bank NBFC Registration-P2P.
  • Financial Credibility: Find out the financial credibility of the lender seeking into previous charges or penalties. Even though most of the P2P lenders don’t charge pre-closure, it is better to find out if there are any. Hence, go through the agreement of loan carefully and point out facts concerning charges, which you may have to bear in case of repayment of delay, change in the bank, check bounce, etc.
  • Criteria for Raising a Loan: Prior to applying for credit, the borrower should fulfil the minimum criteria for raising a loan. Hence, it becomes vital for the individual to obtain accustomed to the eligibility criteria to that platform. If you know what they provide and what their restrictions are, it becomes simple for you to avail of a loan. If you are looking for a higher credit limit, determine the same as even though RBI[1] has arranged a limit for a loan of Rs. 10 lakhs to a single individual, there are several P2P lenders who have their own upper limit.
  • Extra Fees for Loan: First, find out whether the specific loan scheme includes any extra fees. For instance, many lenders charge processing plus registration fees with the EMIs amount, which the borrower will have to bear. As per the experts, the borrowers should act intelligently in such a situation and should estimate the total spending to get a loan.
  • Basics P2P Lending: Peer to Peer lending site links borrowers to investors. Terms and Conditions, rate, and transaction mode could differ from platform to platform. Most of the websites have a broad bandwidth of interest rate depending on the creditworthiness of the candidate or applicant.

First, the investor opens the account on the Peer to Peer site and deposits some funds to be disbursed in loans. The candidate or the borrower posts a profile on the same site assigned a risk class that evaluates the interest rate the borrower will assume to pay. The applicant moreover can review the offers and pick one. The repayment and transaction concerning matters are handled on the platform itself. Even though the stage is fully automated, it permits interested parties to bargain without any issues.

  • Time-Around-Time: If you are in a state of necessity to avail of monetary help, examine the lending platform concerning the disbursement time. Usually, the platform delivers a turn-around-time, aka TAT, for two/three days which might differ if the platform lacks sufficient lenders. As per the experts, if the credit amount is higher than 10 lakhs, then it is reliable that one may not receive the amount of credit even after waiting for 2 or 3 weeks.

Key Takeaways

  • Peer to Peer lending websites is an online driver platform that permits both borrowers and lenders to connect with each other and serve their invention. The platforms set the interest rate and terms and begin the transactions;
  • Peer to Peer lending seeks options to traditional banks or a better interest rate than banks offers;
  • To get registration certificates for a Peer to Peer Lending Business, one should have a net worth of 2 crores;
  • Registered entities or NBFCs are the only eligible companies who can operate Peer to Peer lending platform in India;
  • Peer to Peer lending is considered as investors who desire to collect more benefits from their savings than a bank saving account;
  • If the organisation was already occupied with such business before the certificate of registration was made compulsory, then the organisation shall fulfil all requirements as laid down by the RBI.


A P2P Lenders proves to be beneficial when it comes to procuring a loan without collateral. This is something you won’t find at traditional banks, which makes this platform one of its kinds. The cutting edge automation & high-speed data has boost up the estimation and disbursal process, permitting such platforms to reply quickly to client’s queries.

There is no hesitation that Peer to Peer lending is the next big thing in the financial market. Just like other services, it has its credibility problems and loopholes, which might reduce the course of the times as the demand for credit surges. Despite this promising circumstance, the Peer to peer Platform still lacks the support of typical banks.

Read our article:How to get an NBFC P2P License in India?

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Karan Singh

A legal writing enthusiast, a wanderer, and a zealous reader. After gaining a lot of knowledge about the diverse legal topics and developing research skills, Karan joined the league of legal content writers to deliver quality-rich blogs.


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