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Peer to peer lending

Decide whether investing via peer to peer lending is right for you

Page reading time: 5 minutes

Peer to peer (P2P) lending matches people with money to invest and people looking for a loan.

Make sure you understand how the investment works. Consider whether it suits your needs and goals before you invest.

How peer to peer (P2P) lending works

P2P (or marketplace) lending lets someone needing a personal or business loan borrow money from an investor. Instead of going through a lender such as a bank, building society or credit union.

The borrower takes out a loan — and repays it over time, with interest.

When you invest via P2P lending, you buy a financial product. This is typically a managed fund.

P2P lending platform

A P2P lender operates an online platform. The platform operator acts as intermediary between investor and borrower. It makes money by charging fees to both.

Interest rate

As an investor, P2P lending may offer you an attractive interest rate. The rate, and how the platform operator calculates it, can vary.

How to invest

You decide how much money you want to invest.

Depending on the lending platform, you may be able to decide how your money is used. For example, you could choose to fund a particular loan. Or invest in a portfolio of loans. You may also be able to choose the minimum interest rate, and a loan period to suit.

Alternatively, the platform operator or fund manager may make the investment decisions.

Return of capital

The platform operator collects borrower repayments and passes them on to investors at set intervals. You may get your capital back via repayments, or at the end of the loan period.

Lending risk

When a borrower applies for a loan, the platform operator does a credit history check. The platform operator assesses lending risk and repayment capacity.


The platform operator looks after the privacy of platform user information.

Pros and cons of P2P lending

To decide if investing in P2P lending is right for you, consider the following:



What to check before you invest in P2P lending

Check the platform operator is licensed

Make sure the platform operator has an Australian financial services (AFS) licence.

Search the following two lists on ASIC Connect's Professional Registers:

To search, choose the list name in the 'Select Register' drop-down menu.

If the operator isn't on one of these lists, it could be operating illegally.

Check the managed fund is registered

A P2P lending platform is typically a managed fund (managed investment scheme).

Check the fund is registered with ASIC. Search 'Organisation and Business Names' on ASIC Connect's Professional Registers. To search, choose the list name in the 'Search Within' drop-down menu.

An unregistered managed fund offers fewer protections than a registered fund.

Read the product disclosure statement

Get the fund's product disclosure statement (PDS) before you invest. This sets out the features, benefits, costs and risks of the fund. Make sure you understand the investment.

Check the fund's features

Use these questions to check the features of the fund:

Consider whether the fund suits your needs and objectives before you invest.

Get advice if you need it

P2P lending platforms vary. Talk to a financial adviser if you need help deciding if this investment is right for you.

Problems with a P2P platform

If you're unhappy with the financial service you've received or fees you've paid, there are steps you can take.

Talk to the platform operator

First, contact the platform operator. Explain the problem and how you'd like it fixed.

Make a complaint

If the operator doesn't fix the problem, make a complaint to their business in writing. See how to complain for help with this.

If you can't reach an agreement, contact the Australian Financial Complaints Authority (AFCA) to make a complaint and get free, independent dispute resolution.