What Is a Peer-to-Peer Loan?

A peer-to-peer (P2P) loan is a personal loan funded by individual investors through an online platform rather than a bank or credit union. Platforms like LendingClub, Prosper, and Funding Circle match borrowers with investors willing to fund their loans in exchange for interest payments.

P2P Loans vs Traditional Bank Loans

P2P loans typically have higher interest rates (8%–36%) than bank personal loans (6%–15%), but offer faster approval, more flexible credit requirements, and a simpler application process. The trade-off is clear: easier access comes at a higher cost. Always compare the total cost including origination fees.

Understanding the True Cost

The stated interest rate doesn't tell the full story. An origination fee of 3% on a $10,000 loan means you receive $9,700 but repay interest on $10,000 — effectively raising your APR. Our calculator computes both the monthly payment and the estimated APR to give you the complete picture.