Big bank or online P2P lender

Big bank or online P2P lender – What’s the difference?

Last updated: 10 October 2019

Are you thinking of getting a personal loan or a car loan, but unsure whether to go with a bank or an online Peer to Peer (P2P) lender? We explain what you need to know about P2P lenders and what they offer to help you decide which option is right for you.


What is P2P lending?

It is essentially an online marketplace platform, connecting people who want to borrow money, with people who want to lend or invest money. The P2P lender sits in the middle as the intermediary and makes their money by charging fees to both parties. Without the traditional overheads of the big banks and other lenders, these platforms can often offer highly competitive rates.

Learn more about P2P lending basics here.


What do P2P lenders offer?

Most P2P lenders operate online and offer a fast application process with no need to book in face-to-face appointments. This allows them to cut down the approval process significantly, meaning you don’t have to wait weeks to receive approval. Again, with their low overheads, they’re able to provide more competitive interest rates than what the mainstream banks can generally offer.

These online lenders utilise credit scores as part of their credit assessment process to attract creditworthy borrowers who’re looking for competitive rates, meaning if you have an excellent credit score, you could have a higher chance of getting a lower interest rate on your loan.

Read more on how P2P lending can work for your credit score.

On top of that, some P2P lenders also offer a pre-application personalised rate check that helps check your interest rate based on the financial information you’ve provided – all without affecting your credit score, so you can confidently shop around to find a personalised rate with an online lender you’re happy with.


Haven’t checked your credit score yet? You can get yours for free at Credit Savvy.

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What don’t they offer?

Many P2P lenders only offer unsecured personal loans with maximum loan amounts lower than the banks as well as shorter loan terms too. They also don’t have a physical branch so if you prefer face-to-face communication, you might need to reassess if this type of lender is right for you.


Things to consider

As part of your research and lender selection process, it’s important to look into every aspect of the chosen P2P lender to assess how the platform operates, whether they hold an Australian Credit Licence, how transparent they are with their fee and rate information and their customer service reputation.


If you’re ready to start comparing personal loans, here are a few to get you started:



Want to learn more about personal loans? Head over to the Learning Hub and get started today.

Learn about personal loans


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