In this guide, we will talk about the best apps for P2p loans In Nigeria – Peer-to-Peer Lending.
In Nigeria, P2P loans are not made by banks, but by individuals and investors. Individuals looking for alternative investments offer to lend their funds to others (individuals and businesses).
A P2P loan in Nigeria is a loan or loan offer made through a Peer-to-Peer lending platform (such as a website or app) and is designed to make the process of matching willing lenders and borrowers hassle-free for everyone involved.
What Is Peer-to-Peer Lending?
Peer-to-peer (P2P) lending is a method of debt financing that enables individuals to borrow and lend money without the use of an official financial institution as an intermediary.
Peer-to-peer lending removes the middleman from the process, but it also involves more time, effort and risk than the general brick-and-mortar lending scenarios. P2P lending is also known as social lending or crowdlending.
Peer-to-peer lending is also referred to as direct lending, alternative business funding, debt crowdfunding or crowdlending.
The difference between peer-to-peer lending and other types of crowdfunding, is that P2P lending is about loans — rather than buying equity, rewards or donations.
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How Does A P2P Loan Or Peer-to-Peer Lending Work?
Peer-to-peer lending or what some might call p2p loans in Nigeria is a way for individuals and organizations to borrow and lend money other people instead of banks or online lenders.
Peer-to-peer lending has always existed one way or the other, people have always lent money to each other based on trust since communtites at the time were small.
But globalisation, technology and migration has made it harder for P2p lending to happen. Giving traditional financial institutions the mantle of providing loans to people.
But getting loans from banks in Africa is hard. And why online loan platforms or what others call digital lenders; which are also fintechs – are now popular as they are easier to get loans from than banks despite there over the top rates.
This why Peer-to-peer lending is becoming popular. People invest their money by borrowing it to other people and getting returns on the interest paid back on the loans.
These is why peer to peer lending apps in Nigeria exist. They help in removing friction for the private lenders (investors) by helping them easily invest in loans and the borrowers by matching them with suitable lenders.
Typically, P2P loan terms are between one and five years with three- or five-year terms being most common.
A few factors affect the term of your loan, but most often, the amount of your loan and your loan grade weigh mostly heavily in determining the term.
- Peer funded (individual): Individual peer support is a new type of funding alternative for both borrowers and lenders. Peer funded loans are provided by regular individuals or peers and not financial institutions.
- Peer funded (group): Similar to individually funded peer loans, many hedge funds, bank endowment funds and other large investors fund personal loans through the peer-to-peer or social lending platforms. The difference between individual and group peer funded loans is typically the amount of money lent-groups typically lend greater amounts than individuals.
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Are P2P Loans Safe?
In comparison to peer-to-peer loans, the risk lies with those who are funding the loans to earn a profit in the future — the investors.
Although you may be concerned about security, peer-to-peer lending apps in Nigeria take the same care as a bank or online lender would in protecting your personal information.
How Does Peer-to-Peer Lending Work If I Want To Lend Money And Make Money Through It?
The first step in lending money through peer-to-peer lending apps or websites in Nigeria is to create an account on the platform of your choice, review the loan options, and review the terms and conditions.
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What Can I Use A Peer-to-peer Loan For?
Since most p2p loans in Nigeria are unsecured personal loans, you can use them for almost any legal purpose, like; bills payments, home maintenance, debt consolidation, medical bills, car repair and any major expenses.
Peer-to-Peer Lending Apps In Nigeria
1. SukFin
SukFin provides a free and easy way for SMEs in Nigeria to find finance for their businesses.
They use technology and their expertise to match SMEs with a variety of lenders across Nigeria.
It’s easy to apply for a p2p loan on SukFin for your business if you provide them with the requested information.
SukFin will need you to answer questions like: How much money do you need and what it’s for? If they are satisfied with your profile they’ll link you with their lenders and your loan application will be approved and your business financed
SukFin works with numerous lenders across the whole business funding market in Nigeria.
They’ve helped their `customers find unsecured loans, invoice financing, equipment leases, startup loans and more.
2. Kiakia
Kiakia is a popular loan app in Nigeria. It is a peer-to-peer lending app is for users to earn higher returns on their idle funds while providing credit to people in need of it
With Kiakia’s app any Nigerian (investors) over the age of 18 years who have legitimate income sources, can provide money to fund secured MSME loans
This allows them the lenders (investors) to earn returns monthly, quarterly, bi-annually and annually while providing businesses with low-interest capital that can help them grow.
With Kiakia Lenders get to choose the industry or sector they want their funds to be offered as loans.
KiaKia was launched in 2016 allowing people with as little as N50,000 now to invest in loans and contribute funds for qualified borrowers and earn returns on their money. Loan Packages for investors are between N50, 000 and N10, 000,000.
Kiakia also has a Halal option where Muslims can participate in permissible earnings. This Halal option is in line with the Islamic principles governing non-interest funding. So when KiaKia gives funds to businesses under this Halal package, it is for the purpose of profit-sharing not payment of interests.
Kiakia has a safety fund where if a borrower misses any payment, the investor/lender is reimbursed from the safety fund.
Interest rates on the Kiakia app range from 12% to 40%, and span 6 to 18 months of loan tenure.
The interest/profit payout options for investors are – 3 months, 6 months, 12 months and 18 months, payments are credited automatically
3. Fint
FINT is an online peer to peer lending site in Nigeria that was founded in early 2017.
FINT allows investors to sign up to sign up to its platform, find their accounts, and finance loan requests from a pool of anonymous borrowers.
While people seeking loans can sign up and make requests for loans. Borrowers on FINT are screened using algorithms.
FINT wants to make loans more accessible and affordable to Nigerians through peer-to-peer lending. For them to have an option aside from borrowing directly from banks or online loan apps in Nigeria.
Investors can get returns as high as 39% on FINT.
Lenders on FINT can also choose the purposes or industries they want their funds to be put towards.
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Benefits Of Peer-to-Peer Lending
P2p loans in Nigeria aren’t always better than loans from a bank or loan apss in Nigeria.
However, they tend to be very competitive because of their low costs – you can borrow at relatively low rates using P2P loans in Nigeria.
You just need to pay enough interest to make your lender happy – and most of the interest you pay goes directly towards compensating your lender.
Peer to Peer loans in Nigeria aren’t always better than loans from a bank or credit union, but they have some unique features that make them competitive.
- Low costs: you can often borrow at relatively low rates using P2P loans. You just need to pay enough interest to make your lender happy – and most of the interest you pay goes directly towards compensating your lender.
- To get your loan funded with a P2P lender, expect to pay an up-front origination fee of 1% to 5% of the amount of your loan.
- Compared to a personal loan at a bank, those fees can be high. On the other hand, they can come in lower when compared to a second mortgage (and the process is easier). Of course, there are additional charges for items like late payments.
- Very accessible
- A number of different P2P platforms
- Unsecured loans available
- Simple straightforward processes
- Can raise capital very fast
- A form of debt finance — you’ll retain full control of your business
Can You Get Rich From Peer-to-peer Lending
Yes! You can expect to earn anywhere between 2% and 6% with peer-to-peer, but this will depend on how long you are happy to lock away your funds for, and who you are lending to.
You’ll earn a higher rate of interest if you invest for longer and if you take on more risk.
Wrapping Up On Best Apps For P2p Loans In Nigeria
P2p loans in Nigeria are especially great for businesses as they have access to unsecured loans through simple and straightforward processes.
They can raise capital very fast while still retaining full control of the business.
Companies or businesses that can’t or don’t want to borrow money directly from banks or online lenders may consider p2p loans in Nigeria.