The everyday Aussie is increasingly choosing a peer to peer personal loan - here’s why

By Ben Tosi · · 2 min read
Fact Checked
Advertiser disclosure

Marketplace or peer to peer lending is being increasingly embraced by Aussie investors and borrowers alike, according to survey results released by ASIC last month.

ASIC’s second marketplace lending survey revealed that $300 million worth of personal and business loans were written by peer to peer lenders during the last financial year - almost double the amount commissioned during the 2015/2016 financial year.

Speaking about the data, ASIC Commissioner John Price said that the survey results indicated the continuing growth of the marketplace lending industry as Aussies look for the best deals and rates on their loans.

“This survey helps ASIC to better understand and regulate these businesses, and to identify areas to monitor in future,” said Price.

RELATED: How comprehensive credit reporting will affect your personal loan

The snowballing popularity of these types of loans is measured by the fact that, as of June 2017, the industry had 7,768 investors and a further 18,746 borrowers - numbers that had doubled over the preceding 12 months and are only set to grow in the new year.

ASIC also noted that, at this stage, complaints against peer to peer lenders remain relatively low.

What is P2P lending?

Peer to peer lending cuts out the middleman (the banks) allowing everyday Aussies to both invest and borrow from each other through a regulated platform.

For borrowers, peer to peer lending presents the opportunity to nab a personal or business loan, often at better rates than a traditional lender with low fees and faster online application process.

At the same time, this form of lending offers investors the opportunity to put their spare cash to use with potentially higher returns than other fixed income investments.

RELATED: SocietyOne hits lending record, but brides-to-be are snubbing personal loans

Why is P2P lending so popular?

Aside from the ease of access, peer to peer lenders can offer a cheaper alternative to a major bank or credit union, for the everyday Aussie in the market for a personal loan.

According to the Mozo database, the average personal loan rate on offer from a big four bank (across both secured and unsecured loans) sits at 11.97% with Mozo’s personal loan repayment calculator revealing you would pay $10,013 over the life of a five-year, $30,000 loan.

Comparatively, at the lowest peer to peer rate in the Mozo database of 6.99% (on offer from Harmoney), the average Aussie borrower would pay just $5,634 in interest on the same loan - saving more than $4,000 in the process.

While there are a range of peer to peer lenders offering great rates on personal loan products, you can also shop around if you’re a small business owner using the non-bank lender tab of Mozo’s business loan comparison table.