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What is the Best P2P Lending Site in South Africa? Risks and Benefits

 Getting involved in a loan with a bank has some great advantages but also, there may be some drawbacks. As you are leaving everything in hand of an entity, you’re charged some fees you could avoid. How? By taking another direction with a P2P (Peer to Peer lending). If you don’t know much about it, don’t worry because in this article you’ll get the information you need. I’ll refer to one of the best P2P lending sites in South Africa and how it works. Also, I’ll make reference to the risks and benefits of P2P.

What does Peer to Peer Lending mean?

    In simple words, peer to peer lending means to borrow money from an investor instead of dealing with it through a bank or another lending company. In the following lines, you’ll find all the information you need about P2P lending loans expanded.

How does P2P lending work?

    Among other aspects, loans are settled taking into account the borrower’s credit history. For those who don’t enjoy a high credit history may be a little difficult to get approved on a loan request. In addition, rates are decided by the entity and can, sometimes, get really high. As a consequence of this, the total cost of the loan increases. This is when peer to peer lending comes in as a fine alternative as, this is about going on with the contract but, directly with the investor. This means that instead of having a bank as intermediate, the borrower and the lender negotiate a rate that works for both parties.

What are the risks of peer to peer lending?

    Referring to the risks peer to peer lending may present, we can easily note that as this type of borrowing money avoids working with specialized lending entities, the negotiation must be dealt with completely by the lender and the borrower. That is to say, the terms, quotes and rates are decided by the parties and, also, the compliance of such terms. As a consequence, in case of falling on one of those terms, there would probably not be a guarantee for any of the parties.

    So, if you are thinking about get involved in a P2P lending, it is of paramount importance that you know who you’re working with. What you can do is to look for lending sites like, for example PeerFiN in South Africa. They offer lower rates to the borrower in exchange for collateral, which works as security for that money until is repaid. At the same time, it gives the lender certain calm that the money they invested is safe.

What is the interest rate on a P2P loan?

    One of the reasons why peer to peer lending is getting more and more popular is that there’s high chances everyone gets what they are looking for, as much for the lender as for the borrower. What I mean by this is that, the borrowers can state the maximum rate they’ll agree to get and, the lenders decide whether to work with that borrower or not. But, as all parties involved share the platform, there will appear the lender who accepts that rate. What’s more, just because banks are not in charge of the transaction, the rate that both parties will get for sure will be better.

If you wonder how it is that a lending club makes money, making everything works smoothly, you’ll be surprised by the answer:

    The method is as simple as charging fees not only to the borrowers but also, to the investors. In this way, they can gather enough money to be profitable for them but still, being possible for them to keep offering lower rates. The outcome of this can be divided in two as regards each party:

  • On one hand, the investor receives higher rates for the money lent and,

  • On the other hand, the borrower pays a lower rate for the loan.

What is a lending bank?

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    In contrast to Peer to Peer Lending Sites, there’s the lending bank, which is the lending company who lends money to their applicants. This entity makes profit out of the rates applicants pay for the service of borrowing money. Next, I’ll detail some factors you must keep an eye on before deciding to work with a bank.

Is it a bad idea to get a Personal Loan?

Getting involved in a loan contract is not something you can decide overnight. You must make sure you won’t fail on your payments and, you won’t incur on debt. So, if you are hesitating about taking a personal loan, watch closely at these following points before making a decision.

            1. Banks will ask for certain requirements in order to be eligible for a loan. The most significant are related to employment and credit history. If you don’t have a regular income or, your credit history isn’t perfect, you don’t have high chances to be approved.

            2. Rates tend to be higher with lending companies than with peer to peer sites.

            3. A positive side of banks is that the parties can rely on the fulfilment of the terms settled. If there appears a problem, the entity will make the best to solve it.

            4. On the other hand, P2P offers freedom. When we refer to the terms, rates and fees, we know all this is on the hands of both parties, which means the total cost of your loan will be lower.

            5. Requirements are also simpler for peer to peer loans. If you don’t earn a salary high enough to apply with a bank, you can find an alternative in P2P.

To close, if you don’t feel comfortable when working with lending companies, peer to peer lending loans can be the solution you were waiting for. You have to know this is a practical way to work out monetary support getting, at the same time, the best outcome. 

Leave your questions or comments


Questions and Answers

How much money can I borrow from a peer to peer lending site?
There isn’t a maximum quote for P2P Lending. When you apply on the platform, you must specify the loan you are looking for and, the investors will analyse it to decide if they want to work with you.
What’s PeerFin phone number?
PeerFin contact number is 08 78 02 53 89.
Is it mandatory to present a security with a P2P lending?
No, some P2P Lending sites request collateral but, others don’t.
I need to borrow r200.000. I do have an offshore account with secure trust bank/uk to pay back the loan. Many thanks, keith
Hi, Keith. If you enter Peerfin’s site, you’ll find how to apply for one of their loans easily. When you send your loan request, Peerfin uploads it to the platform after approving it and then, the investors will check it to see if they want to make you an offer. Finally, you can accept the offer you think best suits you.
I’m pensioner, can I get 3000/4000 loan?
As you would have to pay the instalment through a bank account, as long as you have one, you can try to get a loan. This is one of the great advantages a peer to peer lending company offers. Anyone having sufficient monthly income and credit score will have the opportunity to obtain a loan.
Can I get a 4000 loan with Peerfin? How much will I pay?
As regards Peerfin’s loan simulator, these are the terms you may get for that quote. To start, the option may be 3, 6 or 12 months to repay. Taking a 6 months’ term and, supposing a rate of 23.40 %, you should pay R822.89 rands each month. Just to compare a shorter term, you would have to pay R1534.34 per month over 6 months.
Do you assist permanently employed foreigners with valid wok permits in South Africa?
There are plenty of lending companies accepting granting loans to foreigners as long, of course, the foreigner applicants have the valid documents to work in the country. As you are among that group because you have your SA work permit, you can find a loan in South Africa. Apart from that and, being permanently employed, your credit profile will be the final factor to decide if you qualify.

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(3,75) / 4 Ratings

Rating: 4
Comment: I always try to work with P2P because of the freedom they offer.
Rating: 4
Comment: I always get the lowest rates with P2P.
Rating: 3
Comment: Basic requirements help anyone get closer to their loan.

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