Peer to peer lending – an alternative way to boost your return

Peer to peer

Looking to get more for your money? Could peer-to-peer lending be an option for you?

How exactly does peer-to-peer lending work, and what are the risks involved? Here we explain all you need to know to make the most of your money.

Product information supplied has been provided by each individual brand not MoneySuperMarket

Peer-to-peer lending accounts - Short term access to your money - Ordered by expected annualised rate after fees and bad debt

BLEND NETWORK BLEND NETWORK

Property-Secured P2P Loans

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Expected annualised rate after fees and bad debt

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Great for
  • Investors looking for 10-12% p.a. interest rate on peer-to-peer loans that are secured against property
  • You can withdraw money before the term ends if there are other investors to buy your active loans (0.6% resell fee applies)
  • No lender fee when you lend
But be aware that
  • Your capital is at risk if you lend to businesses. P2P lending is not covered by the Financial Services Compensation Scheme
  • Investments are illiquid (the inability to sell assets quickly or without substantial loss in value)
  • To invest you must be aged 18 or over
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EASYMONEY EASYMONEY

Premium Account

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Expected annualised rate after fees and bad debt

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Great for
  • There is no fixed term on your investment. You can request to sell some or all of your loans at any time - see easyMoney's “Understanding the Risks” page for the full terms
  • Money is invested in a portfolio of loans which are lent against and secured by UK property to reduce investors risk. If a borrower defaults then easyMoney can reclaim the money from the property and sell it to seek recovery of debt
  • Invest £1,000 or more and receive FREE easyMoney plus membership - giving you cashback and discounts at over 1000 of the UK's leading retail brands
But be aware that
  • Your savings are not protected by the Financial Services Compensation Scheme. As with all investments, your capital is at risk and you could lose some or all of your investment
  • To invest you must be aged 18 or over and you'll need to be a UK resident with a UK bank account
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Close
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Expected annualised rate after fees and bad debt

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Great for
  • No lender fees apply
  • Threefold protection from the Lending Works Shield. The Shield has insurance against borrower defaults, cybercrime and fraud. No other peer-to-peer lender offers this
  • Easily re-invest your earnings through the online Auto Lend tool and get instant access to your money using the Quick Withdraw tool
But be aware that
  • To invest you must be aged 18 or over and a UK resident, with a UK bank account
  • Your investments are not protected by the FSCS compensation scheme
  • A small early access fee applies
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ASSETZ CAPITAL ASSETZ CAPITAL

90-Day Access Account

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Expected annualised rate after fees and bad debt

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Great for
  • Automatic diversification across a number of secured P2P loans backed by asset security and a discretionary provision fund
  • Invest up to your annual ISA allowance of £20,000 tax free with no transfer fees
But be aware that
  • You must be 18 or over and a UK resident with a UK bank account
  • Your capital is at risk and your investment is not covered by the FSCS compensation scheme
  • Access times cannot be guaranteed. Should the account become illiquid you may need to hold your loans for the remainder of their term
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ZOPA ZOPA

Zopa Plus

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Expected annualised rate after fees and bad debt

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Great for
  • 5.2% annualised projected return
  • You can withdraw money before the term ends if there are other investors to buy your active loans.
But be aware that
  • You may lose some or all of your initial investment as it is not protected by the Financial Services Compensation Scheme
  • New investors may spend some time on a waiting list before opening their account.
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ASSETZ CAPITAL ASSETZ CAPITAL

30-Day Access Account

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Expected annualised rate after fees and bad debt

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Great for
  • Automatic diversification across a number of secured P2P loans backed by asset security and a discretionary provision fund
  • Invest up to your annual ISA allowance of £20,000 tax free with no transfer fees
But be aware that
  • You must be 18 or over and a UK resident with a UK bank account
  • Your capital is at risk and your investment is not covered by the FSCS compensation scheme
  • Access times cannot be guaranteed. Should the account become illiquid you may need to hold your loans for the remainder of their term
Show key information
Close
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Expected annualised rate after fees and bad debt

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Great for
  • Access your money early with no fees
  • Threefold protection from the Lending Works Shield. The Shield has insurance against borrower defaults, cybercrime and fraud. No other peer-to-peer lender offers this
  • Easily re-invest your earnings through the online Auto Lend tool and get instant access to your money using the Quick Withdraw tool
But be aware that
  • To invest you must be aged 18 or over and a UK resident, with a UK bank account
  • Your investments are not protected by the FSCS compensation scheme
Show key information
Close
ZOPA ZOPA

Zopa Core

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Expected annualised rate after fees and bad debt

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Great for
  • 4.5% annualised projected return
  • You can withdraw money before the term ends if there are other investors to buy your active loans
But be aware that
  • You may lose some or all of your initial investment as it is not protected by the Financial Services Compensation Scheme
  • New investors may spend some time on a waiting list before opening their account
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Close
ASSETZ CAPITAL ASSETZ CAPITAL

Quick Access Account

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Expected annualised rate after fees and bad debt

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Great for
  • Investors looking for a fair interest rate on peer to peer loans whilst having faster access to their funds in normal market conditions
  • Invest up to your annual ISA allowance of £20,000 tax free with no transfer fees
But be aware that
  • You must be 18 or over and a UK resident with a UK bank account
  • Your capital is at risk and your investment is not covered by the FSCS compensation scheme
  • Access times cannot be guaranteed. Should the account become illiquid you may need to hold your loans for the remainder of their term
Show key information
Close
EASYMONEY EASYMONEY

Classic Account

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Expected annualised rate after fees and bad debt

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Great for
  • There is no fixed term on your investment. You can request to sell some or all of your loans at any time - see easyMoney's “Understanding the Risks” page for the full terms
  • Money is invested in a portfolio of loans which are lent against and secured by UK property to reduce investors risk. If a borrower defaults then easyMoney can reclaim the money from the property and sell it to seek recovery of debt
  • Invest £1,000 or more and receive FREE easyMoney plus membership - giving you cashback and discounts at over 1000 of the UK's leading retail brands
But be aware that
  • Your savings are not protected by the Financial Services Compensation Scheme. As with all investments, your capital is at risk and you could lose some or all of your investment
  • To invest you must be aged 18 or over and you'll need to be a UK resident with a UK bank account
Show key information
Close
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Expected annualised rate after fees and bad debt

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Great for
  • No lender fees - the rate you lend at is the rate you will receive
  • Start earning interest within 24 hours of receipt of cleared funds
  • Automatic diversification across multiple buy-to-let mortgages with terms of up to 30 years
But be aware that
  • To lend, you must be 18 years or older, a UK resident with a UK bank account
  • Your investment is not covered by the FSCS compensation scheme. Your capital is at risk.
Show key information
Close
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Expected annualised rate after fees and bad debt

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Great for
  • New investor offer: £100 bonus when you invest £1,000 or more for a year. T&Cs apply
  • Simple P2P lending. RateSetter match your funds for you - just how a bank operates
  • No lender fee applies
But be aware that
  • You can access your money (called 'sell out') at any time so long as there is another lender to take your place. The rate you earn will be reduced if you sell out before the full term and a fee may apply, refer to provider for full details
  • Your investments are not protected by the FSCS compensation scheme
  • To invest with RateSetter you must be aged 18 or over and have a UK bank account
Show key information
Close
LANDBAY LANDBAY

Tracker Rate

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Expected annualised rate after fees and bad debt

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Great for
  • No lender fees - the rate you lend at is the rate you will receive
  • Start earning interest within 24 hours of receipt of cleared funds
  • Automatic diversification across multiple buy-to-let mortgages with terms of up to 30 years
But be aware that
  • To lend you must be 18 years or older and a UK resident, with a UK bank account
  • Your investment is not covered by the FSCS compensation scheme. Your capital is at risk.
Show key information
Close

Peer-to-peer lending accounts - Short Term 6 Months To 3 Years - Ordered by rate

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Expected annualised rate after fees and bad debt

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Great for
  • You can build a diversified portfolio by choosing between a balanced or conservative lending option
  • Since 2010, investors have earned stable returns by lending over £3 billion to UK businesses
  • Access your money early with no fees to sell your loans to other investors. Some loans, for example loans in default, cannot be sold
But be aware that
  • 1% annual servicing fee applies on the money you have lent
  • There is no provision fund. Instead, you lend small amounts to lots of businesses to help manage risk.
  • Your funds are not protected by the FSCS compensation scheme
Show key information
Close
ASSETZ CAPITAL ASSETZ CAPITAL

Property Secured Account

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Expected annualised rate after fees and bad debt

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Great for
  • Lending to business borrowers who provide UK property security for a loan, with modest loan to value to reduce the risk of loss
  • Invest up to your annual ISA allowance of £20,000 tax free with no transfer fees
But be aware that
  • You must be 18 or over and a UK resident with a UK bank account
  • Your capital is at risk and your investment is not covered by the FSCS compensation scheme
Show key information
Close
Go to site

Expected annualised rate after fees and bad debt

Go to site
Great for
  • New investor offer: £100 bonus when you invest £1,000 or more for a year. T&Cs apply
  • Simple P2P lending. RateSetter match your funds for you - just how a bank operates
  • No lender fee applies
But be aware that
  • You can access your money (called 'sell out') at any time so long as there is another lender to take your place. The rate you earn will be reduced if you sell out before the full term and a fee may apply, refer to provider for full details
  • Your investments are not protected by the FSCS compensation scheme
  • To invest with RateSetter you must be aged 18 or over and have a UK bank account
Show key information
Close
BRITISH PEARL BRITISH PEARL

British Pearl 3 Year Account

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Expected annualised rate after fees and bad debt

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Great for
  • An ISA eligible investment with a fixed-rate monthly income
  • Confidence in your returns and income with no surprises. British Pearl's investment returns are all indicated net of all fees. To date British Pearl have paid all investors their interest on time
  • Through the British Pearl Resale Market you can list your loans for sale at any time (subject to liquidity and a 0.5% fee). Here you will be matched with any willing buyers. The proceeds from sale can then be withdrawn
But be aware that
  • To lend you must be 18 years or older. To open an ISA you must be a UK resident with a UK bank account
  • While uninvested cash is covered by the FSCS, once invested into British Pearl's loans your capital is at risk and is no longer covered by the FSCS
  • Exit via the Resale market is subject to liquidity and incurs a 0.5% transaction fee
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Close

Peer-to-peer lending accounts - Long Term 4 Years And Over - Ordered by rate

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Expected annualised rate after fees and bad debt

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Great for
  • You can build a diversified portfolio by choosing between a balanced or conservative lending option
  • Since 2010, investors have earned stable returns by lending over £3 billion to UK businesses
  • Access your money early with no fees to sell your loans to other investors. Some loans, for example loans in default, cannot be sold
But be aware that
  • 1% annual servicing fee applies on the money you have lent
  • There is no provision fund. Instead, you lend small amounts to lots of businesses to help manage risk.
  • Your funds are not protected by the FSCS compensation scheme
Show key information
Close
ASSETZ CAPITAL ASSETZ CAPITAL

Great British Business Account

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Expected annualised rate after fees and bad debt

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Great for
  • Invest in secured SME term loans to help support British businesses in their growth
  • Automatic diversification across a number of secured P2P loans backed by asset security and a discretionary provision fund
But be aware that
  • You must be 18 or over and a UK resident with a UK bank account
  • Your capital is at risk and your investment is not covered by the FSCS compensation scheme
Show key information
Close
Go to site

Expected annualised rate after fees and bad debt

Go to site
Great for
  • New investor offer: £100 bonus when you invest £1,000 or more for a year. T&Cs apply
  • Simple P2P lending. RateSetter match your funds for you - just how a bank operates
  • No lender fee applies
But be aware that
  • You can access your money (called 'sell out') at any time so long as there is another lender to take your place. The rate you earn will be reduced if you sell out before the full term and a fee may apply, refer to provider for full details
  • Your investments are not protected by the FSCS compensation scheme
  • To invest with RateSetter you must be aged 18 or over and have a UK bank account
Show key information
Close
BRITISH PEARL BRITISH PEARL

British Pearl 5 Year Account

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Expected annualised rate after fees and bad debt

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Great for
  • An ISA eligible investment with a fixed-rate monthly income
  • Confidence in your returns and income with no surprises. British Pearl's investment returns are all indicated net of all fees. To date British Pearl have paid all investors their interest on time
  • Through the British Pearl Resale Market you can list your loans for sale at any time (subject to liquidity and a 0.5% fee). Here you will be matched with any willing buyers. The proceeds from sale can then be withdrawn
But be aware that
  • To lend you must be 18 years or older. To open an ISA you must be a UK resident with a UK bank account
  • While uninvested cash is covered by the FSCS, once invested into British Pearl's loans your capital is at risk and is no longer covered by the FSCS
  • Exit via the Resale market is subject to liquidity and incurs a 0.5% transaction fee
Show key information
Close

Peer-to-peer Innovative Finance ISA accounts - Ordered by rate

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Expected annualised rate after fees and bad debt

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Great for
  • There is no fixed term on your investment. You can request to sell some or all of your loans at any time - see easyMoney's “Understanding the Risks” page for the full terms
  • Money is invested in a portfolio of loans which are lent against and secured by UK property to reduce investors risk. If a borrower defaults then easyMoney can reclaim the money from the property and sell it to seek recovery of debt
  • Invest £1,000 or more and receive FREE easyMoney plus membership - giving you cashback and discounts at over 1000 of the UK's leading retail brands
But be aware that
  • Your savings are not protected by the Financial Services Compensation Scheme. As with all investments, your capital is at risk and you could lose some or all of your investment
  • To invest you must be aged 18 or over and you'll need to be a UK resident with a UK bank account
Show key information
Close
LENDING WORKS LENDING WORKS

Growth Lending Innovative Finance ISA

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Expected annualised rate after fees and bad debt

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Great for
  • No lender fees apply
  • Threefold protection from the Lending Works Shield. The Shield has insurance against borrower defaults, cybercrime and fraud. No other peer-to-peer lender offers this
  • Easily re-invest your earnings through the online Auto Lend tool and get instant access to your money using the Quick Withdraw tool
But be aware that
  • To invest you must be aged 18 or over and a UK resident, with a UK bank account
  • Your investments are not protected by the FSCS compensation scheme
  • A small early access fee applies
Show key information
Close
ASSETZ CAPITAL ASSETZ CAPITAL

The Assetz Capital IFISA

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Expected annualised rate after fees and bad debt

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Great for
  • Invest up to your annual ISA allowance of £20,000 tax free or transfer previous years ISAs with no fees
  • Automatic diversification across a number of secured P2P loans backed by asset security and a discretionary provision fund
But be aware that
  • You must be 18 or over and a UK resident with a UK bank account
  • Your capital is at risk and your investment is not covered by the FSCS compensation scheme
Show key information
Close
RATESETTER RATESETTER

Innovative Finance ISA

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Expected annualised rate after fees and bad debt

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Great for
  • New investor offer: £100 bonus when you invest £1,000 or more for a year. T&Cs apply
  • Tax-free earnings
  • Simple P2P lending. RateSetter match your funds for you - just how a bank operates
But be aware that
  • You can access your money (called 'sell out') at any time so long as there is another lender to take your place. The rate you earn will be reduced if you sell out before the full term and a fee may apply, refer to provider for full details
  • Your investments are not protected by the FSCS compensation scheme
  • To invest with RateSetter you must be aged 18 or over and have a UK bank account
Show key information
Close
ZOPA ZOPA

ISA Plus

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Expected annualised rate after fees and bad debt

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Great for
  • 5.2% annualised projected return
  • You can withdraw money before the term ends if there are other investors to buy your active loans.
But be aware that
  • You may lose some or all of your initial investment as it is not protected by the Financial Services Compensation Scheme
  • New investors may spend some time on a waiting list before opening their account.
Show key information
Close
LENDING WORKS LENDING WORKS

Flexible Lending Innovative Finance ISA

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Expected annualised rate after fees and bad debt

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Great for
  • Access your money early with no fees
  • Threefold protection from the Lending Works Shield. The Shield has insurance against borrower defaults, cybercrime and fraud. No other peer-to-peer lender offers this
  • Easily re-invest your earnings through the online Auto Lend tool and get instant access to your money using the Quick Withdraw tool
But be aware that
  • To invest you must be aged 18 or over and a UK resident, with a UK bank account
  • Your investments are not protected by the FSCS compensation scheme
Show key information
Close
ZOPA ZOPA

ISA Core

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Expected annualised rate after fees and bad debt

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Great for
  • 4.5% annualised projected return
  • Invest £1,000 - £20,000 (current ISA limit)
  • You can withdraw money before the term ends if there are other investors to buy your active loans.
But be aware that
  • You may lose some or all of your initial investment as it is not protected by the Financial Services Compensation Scheme
  • New investors may spend some time on a waiting list before opening their account
Show key information
Close
Go to site

Expected annualised rate after fees and bad debt

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Great for
  • Up to 4.3% annualised fixed return
  • Investment returns are all indicated net of fees
  • Invest up to your annual ISA allowance of £20,000. British Pearl will transfer existing Cash ISAs, Stocks & Shares ISAs and Innovative Finance ISAs at no charge (your existing provider may charge an exit fee so please see their T&Cs for full information).
But be aware that
  • To lend you must be 18 years or older. To open an ISA you must be a UK resident with a UK bank account
  • You may lose some or all of your initial investment as it is not protected by the Financial Services Compensation Scheme
  • Exit via the Resale market is subject to liquidity and incurs a 0.5% transaction fee
Show key information
Close
Go to site

Expected annualised rate after fees and bad debt

Go to site
Great for
  • There is no fixed term on your investment. You can request to sell some or all of your loans at any time - see easyMoney's “Understanding the Risks” page for the full terms
  • Money is invested in a portfolio of loans which are lent against and secured by UK property to reduce investors risk. If a borrower defaults then easyMoney can reclaim the money from the property and sell it to seek recovery of debt
  • Invest £1,000 or more and receive FREE easyMoney plus membership - giving you cashback and discounts at over 1000 of the UK's leading retail brands
But be aware that
  • Your savings are not protected by the Financial Services Compensation Scheme. As with all investments, your capital is at risk and you could lose some or all of your investment
  • To invest you must be aged 18 or over and you'll need to be a UK resident with a UK bank account
Show key information
Close
LANDBAY LANDBAY

Innovative Finance ISA

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Expected annualised rate after fees and bad debt

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Great for
  • No lender fees. The rate you lend at is the rate you will receive.
  • Invest up to your annual ISA allowance of £20,000 tax free with no fees to transfer in
  • Automatic diversification across multiple buy to let mortgages with terms of up to 30 years
But be aware that
  • To lend, you must be 18 years or older, a UK resident with a UK bank account
  • Your investment is not covered by the FSCS compensation scheme. Your capital is at risk.
  • £50 one-off fee if you choose to transfer your Landbay Innovative Finance ISA to another provider
Show key information
Close

What is peer-to-peer lending?

Important information about peer-to-peer lending

Investing  in a peer-to-peer lending scheme can potentially result in competitive returns. However, it should only be considered as part of a balanced investment portfolio and is not for everyone. Peer-to-peer investments are regulated by the Financial Conduct Authority but your capital will not be protected by the Financial Services Compensation Scheme should things go wrong. It’s important you understand both the advantages and disadvantages before making a decision on whether to invest, so please read this guide to help you make a more informed decision.

As the name suggests, peer-to-peer lending involves people using their investment to lend to other individuals, therefore cutting out the need for banks to be involved. The aim is that those who are willing to lend could get higher returns on their investment, and in turn the individuals they are lending to could get lower cost loans than they would if they borrowed through a bank.

Some peer-to-peer sites lend to small businesses too, which for many has proved invaluable in light of current tight bank lending restrictions.

As an investor, you can choose your rate of return based on the length of time you want to invest your money for and the level of risk you’re prepared to take. For example, if you only want to lend to those with the best credit scores you will earn less than if you are prepared to lend to a higher risk group.

There are charges and fees, but these are usually already factored in to the rate you see advertised – this is worth checking though.

Anyone aged 18 or above who is a UK resident, has a UK current account and is not lending in the course of a business can usually become a peer to peer lender.

You don’t need to lend large sums to invest either, most peer-to-peer investments start from as little as £10 or £20.

What are the advantages of using peer-to-peer lending?

In today’s low interest rate environment, peer-to-peer lending is proving increasingly popular, returns can be considerably higher than those offered on most savings accounts. In order to minimise the risks, any money you lend can usually be split over multiple credit-checked borrowers in small chunks. Therefore if one person fails to keep up with their repayments, it doesn’t mean you would lose all your money.

Some peer-to-peer lending companies run their own schemes that guarantee to return every penny to investors through a fund which borrowers contribute to by way of a credit rate fee charged at between 0.5% and 3% of the loan.

For additional protection, most peer-to-peer schemes hold Consumer Credit Licences from the Office of Fair Trading and use the same processes and fraud prevention systems as banks, but always ask what protection is in place before becoming a lender.

Since April 2016, it has been possible to hold peer-to-peer loans within an Individual Savings Account (ISA), so that returns are tax-free. This type of ISA is known as an innovative finance ISA. This tax year (2018/19), you can invest up to £20,000 in ISAs, either in stocks and shares, cash, or peer-to-peer loans, or you can invest in a combination of these.

What are the disadvantages of peer-to-peer lending?

Investing with peer-to-peer lending should only be considered as part of a balanced investment portfolio.

Peer-to-peer lending is regulated by the Financial Conduct Authority but your money will not be covered by the Financial Services Compensation Scheme as with most standard investment schemes if the lending company goes bust.

Investing your money within a peer-to-peer lending scheme is not for everyone. Interest rates vary significantly with higher returns gained through lending to higher risk borrowers. This in turn raises the risk that you may not get some or all of your money back.

If you need to withdraw your funds early, some schemes will charge a fee for doing this and some schemes don’t allow withdrawal of your capital early at all. It is sometimes possible to sell the loan on in order to get your money out early, but there is usually a fee for doing this and could take time, meaning you can’t access your cash in the interim.

If the person you have lent the money to within the scheme defaults on their loan repayments, there is a risk you could lose all or some of your money. Also, if the borrower chooses to repay their loan early, which many people do, it will have a knock on effect on your rate of return.

Compare options for investing in peer-to-peer lending

The number of peer-to-peer lending schemes available has increased dramatically in recent years, so comparing them and finding the right one to suit your needs isn’t always easy. However, you can use MoneySuperMarket to compare peer to peer investment options without having to trawl around all the different sites yourself.