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A wise guide to…

Getting a Peer to Peer Loan

It is possible to get a loan provided by a “peer”, which in this case simply refers to another person and not a firm. The loan agreement will still be managed by an authorised UK financial institution but the money you borrow will be invested by a third party. The safest way to see which lenders will accept your application is to enter your details online with Choose Wisely.

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Representative 69.9% APR (variable). Representative Example: If you borrow £1,500.00 over 24 month at a Representative rate of 69.9% APR and an annual interest rate of 54.19% (fixed), you would pay 23 monthly repayments of £103.64 and a final payment of £103.74. The total charge for credit will be £987.46 and the total amount payable will be £2,487.46.
Choose Wisely is a trading style of Choose Wisely Limited and is a free to use price comparison website. Choose Wisely Limited is authorised and regulated by the Financial Conduct Authority as a credit broker not a lender, firm reference number 730574 and is registered with the Information Commissioner’s Office number Z3106681.

A quick, easy way to get a peer to peer loan today.

  • Borrow from £300 to £10000.

  • Choose between lenders who have accepted your application.

  • Absolutely no fees, ever.

Representative 69.9% APR (variable).

How to get a peer to peer loan in 3 simple steps.

Affordability assessment.

1 form - takes 2 minutes to complete and your data is 100% secure.

Compare products.

Choose from lenders that have accepted your application.

Speedy finance.

If approved, the cash can be in your account in as little as 15 minutes.[†]

Table of contents

Written by Andrew Freelander
Read time: ~5 mins
Published: 3rd June 2016 Updated: 4th March 2020

At some point in life, most people need to borrow money. The reasons for this can vary a lot, from starting a business, consolidating loans, buying a car, or repairing a home. It’s not always easy finding this money and for some, it might be useful to look into peer to peer loans.

This page will cover some key information on peer to peer personal loans, helping you to decide if it’s an option that might work for you.

What are peer to peer loans?

Peer to peer loans in the UK allow borrowers and businesses access to money that isn’t lent by traditional banking institutions. High street and guarantor lenders can be involved as an intermediary, but the money you borrow is provided by a third party or person.

How to get peer to peer loans?

Just because the loan isn’t from a financial institution, it doesn’t mean anyone can get one. Borrowers still have to go through credit checks and they are scored by the amount of risk they pose. If you’re interested in peer to peer loans, UK citizens can begin an application with a lender.

You usually have to answer questions and provide details about yourself, including what you plan to do with the money. Sometimes there could be different loan purposes, like home improvements, debt consolidation, buying a car, and paying for a wedding or holiday. Your credit will then be checked, if it passes the tests, your loan will be agreed.

The money can be in your account very quickly, but it’s not uncommon for there to be a wait. Expect anytime from the next working day to a few weeks. The money will be paid into your account electronically and you’ll repay it automatically in the same way. It depends on your loan, but most repayment periods are between three and five years.

Get the right guarantor loan

Need someone's help to apply for a loan but you don't want a peer to peer loan? Get guarantor loan info then apply.

How do peer to peer loans work?

P2P lenders work as the middle men between borrowers and individual lenders. People with money to invest ask the P2P lender to find people who are looking to borrow. These borrowers will repay the money over a period of time with interest added on top. The benefits are that borrowers can get better rates compared to more traditional loans and lenders usually get a solid return on their money.

How do peer to peer loans make money?

When a borrower repays the money, the lender gets back the original amount they lent, with an interest fee on top.

Are peer to peer loans a Good Idea?

Before taking out a loan, you should always carefully consider if it’s a good idea and understand the risks involved. You might benefit from discussing your plans with a financial adviser first.

That being said, P2P loans are a good solution for some people. They are not always better than traditional lenders, but they can usually at least compete. Some things to consider before taking out a peer to peer loan in the UK are:

  • Low rates: without the overheads of a bank or credit union, rates can sometimes be lower. Compare these rates with credit card options as well, to make sure you get the best deal.
  • Speed and access: getting a loan can take a long time and be complicated. Peer to peer personal loans are often easy to apply for.

Peer to peer loans FAQs

How do peer to peer loans affect your credit?

Applying for a peer to peer loan on Choose Wisely does not impact your credit score as you will be subjected to an initial soft credit check. This doesn’t show on your report when lenders check it and does not affect your overall score. When you complete an application with your chosen lender they will most likely run a hard check and these can impact your creditworthiness. Which is why we think it pays to check with us first as we can give you a better indication of which lenders are likely to accept your application.

If you get refused a loan and make multiple applications this will damage your credit score.

If you get approved for a loan and are not able to repay it or make late repayments, this will impact your credit rating negatively.

What is the best peer to peer lending site?

Some of the most recognised peer to peer lenders in the UK are:

• Lending Club

• Funding Circle

• RateSetter

• Guarantor My Loan

• Lending Works

• Zopa

How do I become a peer to peer lender?

You will need to complete the three main steps below. But before that, you should look around the market and find a lender you trust and understand exactly the terms of the contract.

• Open an account with a registered lender and provide details about yourself.

• Agree on terms of the contract such as interest rates.

• Provide the lender with your money and monitor it over the repayment term.

As with all investments your capital is at risk which may mean you do not fully recoup the money you lend. Check with your chosen P2P lender what the terms are around this.

Written by
Andrew Freelander
Brand & Content Manager at Choose Wisely

Andrew joined Choose Wisely 5 years ago, originally working in a design capacity to make sure the website was simple to use. Most notably he worked with the Consumer Finance Association to design the comparison table of choice for High-Cost Short Term Finance products.

The quickest way to find the best peer to peer loan for you.

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Important Information.

All of the information in this guide is correct at the time of writing.

Rates shown are quotes based on your personal circumstances, are subject to status and are available to those aged 18 and over. Rates available range from a minimum of 3.9%APR to a maximum of 1575%APR Representative and loan repayment periods range from 3 to 60 months.

[*][†] Once accepted, your loan can be transferred to you in as little as 15 minutes. The time that it takes for the loan to show in your bank account will depend on your lender and your bank.

If you need financial advice you can visit stepchange, speak to citizens advice, call the national debtline or speak to moneyadviceservice.org.uk.

If you've been declined, please refer to your credit report to gain an understanding of why before making further applications.
Your score can be accessed for free via any of the main credit reference agencies such as Credit Karma, Clearscore or Experian.

Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk