Peer-to-peer lending: borrowing from a private person via the internet

Peer-to-peer lending or P2P lending is a lending formula that emerged in the Anglo-Saxon countries in the second half of the 2000s. The peer-to-peer loan makes it possible to borrow money from private individuals via the internet. If you want to borrow money at a lower interest rate than with traditional banks, you can go to a private person. That private person then has the advantage that his money can yield a nice return thanks to the interest on the loan. How exactly does a peer-to-peer loan work and what are its advantages and disadvantages?

What is “peer-to-peer lending” or “P2P” lending?

Private person

Peer-to-peer lending is a form of lending that originated in the United States of America. The English word “peer” means “equal” and it therefore concerns a loan agreed between equals, namely private individuals . So it is not about banks or lenders who lend money, but about private individuals like you and me. One private individual lends money to another private individual who urgently needs money.


Sometimes money is also lent by a group of lenders, to spread the risk. Then one speaks of the “many-to-one” system: several people lend money to one person. The peer-to-peer loan is also called P2P loan and can be applied for via the internet. If you want to borrow money at a lower interest rate than from a traditional bank, you can take a closer look at the offers offered by peer-to-peer loans.

How “peer-to-peer” lending works

Need money

Anyone who believes that their money has too little return on their savings account can choose to get a better return through a peer-to-peer loan. If you want to lend money to someone who urgently needs money, you register on a peer-to-peer website. You indicate how much interest you want to receive and how large the amount you want to lend. The person who wants to borrow will then look at your offer and decide whether he wants to take out a loan from you.

Risk spreading

If the amount the person wants to borrow is greater than the amount you have available, there is another option. Then you can lend part of that amount and form a group of lenders together with other private individuals. Together, as a group, you can arrive at the amount that the borrower wishes to borrow. In this way, the risk of reimbursement is spread over a group of people.

Borrow money from a private person

On the internet you can visit websites where you can register to borrow money or apply for a loan. Loan providers and applicants can thus come into contact with each other and view loan options. Peer-to-peer websites charge both the loan provider and loan applicant costs to place the offers on the website. The first websites to use the peer-to-peer lending system were in the United States and in Great Britain. In the Netherlands, was a peer-to-peer website active for a while, but this site has since disappeared from the internet.

Peer-to-peer lending: benefits

Higher efficiency

For those who find the return on their savings account a bit poor, the peer-to-peer loan is a possible solution. By lending money at an interest rate, it is possible to achieve an attractive return.

Risk spread

If you as a lender cannot make the full requested amount available, you can join a group of lenders. Then your amount is part of a kind of group loan, which spreads the risk.


For the borrower, the peer-to-peer loan is a convenient way to possibly borrow at a lower interest rate than from a traditional bank. You can view the range of amounts and interest rates online and make a choice.

P2P lending: disadvantages


With peer-to-peer lending, it is not always clear how creditworthiness is checked. There is no BKR assessment for the P2P loan. As a lender you always have a risk that the borrower will not be able to repay you.

Young formula

The peer-to-peer loan is mainly present in the Anglo-Saxon countries, but it is a lending formula that is still relatively new. An example of a peer-to-peer lending platform is Lendico, which was founded in 2013. In the Netherlands you can view the possibilities of this platform on the website .