Get to Know How Peer-to-Peer Lending Works

Technology development is hoped to help people do everything easier and faster, including in the financial sector. This factor is what enables P2P lending platforms to thrive and grow in numbers. As of October 25, 2021, there are 104 P2P lenders registered at the Financial Service Authority (OJK) and licensed to operate in Indonesia. These platforms make it easier for the general public, especially MSMEs, to obtain loans.

But what exactly is P2P lending?

OJK Regulation No.77/POJK.01/2016 defines Fintech lending or peer-to-peer lending/ P2P lending is IT-based direct lending service between creditors/lenders and debtors/borrowers to enter into loan arrangements.

P2P lending service providers offer online platforms to facilitate lenders to allocate higher-return direct loans to debtors, who can apply for credit faster and with fewer prerequisites compared to borrowing from conventional financial institutions. Investing in P2P lending offers a competitive annual return, although this depends on the loan’s risk profile and appetite. Therefore, the very first step in P2P lending investment is to understand its risks.

Generally, the steps in P2P lending are as follow:

1. Member registration. Either the lender or borrower could register online via computers or smartphones;
2. Borrower applies for loan;
3. The P2P lending platform analyzes and determine if the borrower is eligible for loans, including their risk rating;
4. Eligible borrowers will be placed in the P2P lending marketplace, along with comprehensive information on their profile and risk rating;
5. P2P lending investors analyze and pick from the list of borrowers;
6. Investors provide funds to borrowers of their choice through the P2P lending platform and enter into loan arrangements;
7. Borrowers make repayment on the due date through the P2P lending platform;
8. Investors receive the payment through the P2P lending platform.
   P2P lending benefits borrowers by providing simpler, faster, and collateral-free loan applications. For lenders, the system makes loan diversification easier and boosts the opportunity for profit.

AdaKami, a local P2P lending platform that offers collateral-free loans, dedicated to helping Indonesians reach their dreams in every stage of their life through reliable financial services and finally helps support the government in enhancing financial inclusion in Indonesia. Features like simple registration and application, fast 48-hour loan processing, and personal data protection and security guarantee for its users make AdaKami the best choice for P2P lending.