How to Start Investing in P2P Loans

How to Start Investing in P2P Loans
You simply need to create an account in a P2P platform of your choice, deposit funds and look for the right loans to invest your money and collect interest.

P2P Industry Introduction: 7 out of 7

Do you want to be the boss of your own financial situation and make money by being an investor? The goal of this series of articles is to introduce you to P2P lending & crowdinvesting and to help you decide if this asset class makes sense for your investment portfolio!

How to Research a P2P Platform? was the previous post of the series.

If after considering the multiple options among different P2P platforms you are ready to invest, you now simply need to create an account with the P2P platform of your choice, deposit your funds and then look through the list of available loans before selecting where to put your money. The process really is that simple.

Be aware that even if the procedure is very simple, it will be very different from platform to platform. Please make sure to check the elements described below before making significant investments.

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How to start investing in p2p loans

Cashback & Bonus Offers

In a highly competitive industry, there are plenty of P2P platforms that offer new investors the possibility to benefit from sign-up bonuses or cashback offers. If used with careful consideration, they can contribute in a significant manner to boost your initial returns. Check the Cashback & Bonus page to learn about some of the options available for you to consider.

AML Procedures

To become an investor, you need to complete your identification process, as required by Anti-Money Laundering (AML) legislation. Find out which documents will investors normally need to register on the P2P platform and if you fit the minimal requirements to become an investor (such as age or country of residency). Make sure the process is managed respecting Privacy Laws and protecting your identity and documentation from theft or abuses.

Start Small

First, decide what is your budget for the investment and begin with a small fraction of it to check how the P2P platform works, then increase your allocation over time until your budget is reached.

Decide your Desired Term

With longer term loans you might expect higher rates, but at the same time, you’re exposed to higher risks, that you should consider before investing.

Buyback Guarantee

Some P2P platforms present additional guarantees from loan originators or the platforms themselves to pay for late loans and interest. Make sure to learn what are the risks associated with such promises and what they really mean in case of default (loan, loan originator, or P2P platform).

Minimum Return

Remember that P2P lending is a high risk investment and you should be rewarded for taking such risk. Define the interest rate that you accept as reasonable based on the risks you are willing to take with your funds.


Diversification of investments usually means spreading risk. But make sure you understand the difference between diversification within a single P2P platform, versus diversification through multiple different P2P platforms. For example, if the P2P platform you are using offers loans from different countries, currencies, types (consumer, business, etc…) it offers the possibility to diversify within the platform, but if the platform defaults… you can loose the investments anyway. Make sure your investment strategy considers such risk.

Loans Supply / Cash Drag

You are loosing money if it remains in the P2P platform not invested. A P2P platform requires a continuous supply of loans in order to have a financial sustainable business, but also to assure you have options to invest. In case there is not a large enough supply you will be competing with too many other investors, but you should also assess the robustness of the P2P platform business model.

Early Exit / Secondary Market

Liquidity is a critical aspect of any investment. Some P2P platforms don’t provide a mechanism in order to offer you the option of early exit of a particular investment, others provide such option, such as through a secondary market. On a secondary market investors can sell and buy loans to and from other investors. A secondary market does not guarantee that you will be able to sell the loans at the time you desire, so liquidity is driven by market conditions.


Make sure you know of any possible fees that the P2P platform applies to any or particular activities within the platform. Do they charge when you deposit or withdraw funds? Do they charge when you invest in a project or when you collect your payments? If yes, how much? Does it still make sense to invest with the fees presented?


When you receive interest payments, in some jurisdictions you are required to pay tax on your investment income. Find out if the platform you are investing with already pays tax on your interest income, or is it your responsibility. Make sure to respect your tax obligations.


To be confident with your investments, find out what is the procedure to withdraw your available balance and test it right at the beginning of your account history. Make sure you are always able to withdraw your funds on request.

I hope that you have enjoyed reading this information and have learned enough to confidently become a P2P investor.

Why include P2P lending to your investment portfolio was the first post of the series.

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