Comprehensive Guide to Invest in Loan in 2022

How Can you invest in Loans

Peer-to-peer lending, also known as P2P lending, is an alternative financing method that allows people to borrow money from other people via online lending platforms. Borrowers looking for unsecured personal loans can use these platforms to connect with investors who are willing to lend to them in exchange for a higher return on their investment. Before lending to a verified borrower, investors can review a list of their details on the P2P lending platforms like Monexo.

Lenders can diversify their investments by making small loans to multiple borrowers. P2P lending, also known as crowdfunding or social lending, is gaining traction among Indian borrowers and investors.

P2P Business model

The crowd-funding model is the foundation of the peer-to-peer lending model. The majority of P2P lending platforms are structured as NBFC (Non-Banking Financial Companies) fintech firms. The P2P model, in contrast to traditional banking and financial institutions, is a modern credit model designed to meet current business credit needs.  

Individuals, high net worth individuals (HNI), Hindu Undivided Families (HUFs), and other non-banking institutions can use P2P lending to pool their savings. An auction is held under the P2P business model, in which the lender can make a bid for a borrower’s loan requirements, and the borrower can accept or reject the bid. Further, the platform can offer services such as credit assessment, recovering loans, and so on. The platform generally co-ordinates the transaction between the lender and the borrower.

Features of Peer-to-Peer Lending  

  • P2P lending systems raise loans from people who want to invest their money for people who don’t have access to traditional banking systems. 
  • It extends credit to individuals who cannot obtain it through financial institutions by eliminating the need for a banking system or a financial intermediary in the borrowing and lending process.
  • The main idea behind this system is to provide benefits to both borrowers and investors. While it allows people to borrow funds at low interest rates, it also allows savers to earn a good return on their savings.
  • The entire process is carried out through online platforms where both lenders and borrowers register and are directly connected with one another. Members can only participate in transactions after a thorough assessment.
  • The Reserve Bank of India regulates all peer-to-peer lending platforms.

How to Start with P2P lending


Now is a good time to get started with peer-to-peer lending. In September 2017, the RBI issued a notification requiring all P2P lending platforms to register as non-banking financial companies (NBFCs) and published a set of P2P lending platform guidelines.  The global peer-to-peer lending industry, which was valued at $3.5 billion in 2013 and $64 billion in 2015, is expected to be worth nearly $1 trillion by 2050. By 2023, the Indian P2P lending market is expected to be worth $ 4-5 billion. P2P lending is here to stay, and the sooner you realize it, the better in this asset-class faster you earn on your surplus funds. 

Starting with P2P lending on Monexo is very simple, you just have to register, add money, choose from the list of borrowers as per your risk appetite and just relax and earn.


Over time, build a diversified investment portfolio. This effectively means that you should make smaller loans to a larger number of borrowers. This gives you the leverage to absorb any unexpected shock caused by a loan default. Diversification of your investment entails not only different borrowers, but also different profiles, credit scores, requirements, and ability to repay the loan, among other things. As a result, small amounts must be spread across a large number of loans to borrowers of various genders, locations, risk-buckets, occupations, and so on. Monexo is India’s leading NBFC-P2P with more than 7 lacs registered borrowers providing a wide variety of choice.

Invest & Stay Invested

It is preferable to invest your money rather than leave it idle. Idle money generates no revenue, and you have a wide range of asset classes to choose from. When compared to stocks and mutual funds, peer-to-peer lending provides higher and more consistent returns and should be considered as part of your investment portfolio. Begin with $50,000 to $250,000, depending on your risk tolerance, and gradually build your portfolio. Long-term investment plans of at least 24 to 36 months are the best way to get good returns with P2P lending because returns compound over time, increasing the return on investment.

What are the borrowing and lending limits? 

The loan amount can range between Rs 500 and Rs 750. The aggregate maximum amount per lender across all P2P platforms is Rs 50,00,000. If a lender lends more than Rs 10,00,000, a certificate from a practicing Chartered Accountant certifying a minimum net-worth of Rs 50,00,000 is required.

A single lender’s loan to a single borrower should not exceed Rs 50,000 in one-on-one lending. P2Ps should obtain a certificate from the borrower or lender stating that the borrowing and lending limits have been met.

Benefits of P2P lending

  • Good ROI: The most obvious advantage of P2P lending to an investor is the potential return on investment (ROI). P2P lending can generate passive income for an investor with free cash and a little risk tolerance. 
  • Low Entry Barriers: Another advantage of peer-to-peer lending is the low entry barrier. When compared to other forms of passive income (such as real estate), P2P lending requires less capital to get started and is a one-time cost.
  • Easier than Stock Market: You may believe that the stock market is the king of passive income and low entry barriers, and there is certainly some truth to that assertion. One key distinction between P2P lending and the stock market is that P2P lending can provide a more consistent return in the short term. Because your capital is repaid with interest in regular instalments, you can rely on P2P lending to generate predictable returns over a shorter time horizon. While the stock market can provide 8% annual returns, keep in mind that this is a historical average.
  • Makes your portfolio more diverse: Most savvy investors advocate portfolio diversification and avoiding “putting all your eggs in one basket.” If you want to diversify your portfolio, peer-to-peer lending can be an excellent option. P2P lending is not only an appealing alternative asset, but it can also produce impressive returns for investors even in a low-interest-rate environment. 
  • You can choose where to invest: Another benefit of P2P lending through platforms like Monexo is that investors can generally choose the level of risk they are comfortable with. The greater the risk you are willing to take, as with any investment, the greater the potential return. When investing in peer-to-peer lending, you can choose to invest in higher or lower-rated borrowers, aligning your strategy with the level of risk and your risk appetite. 

Final Verdict

P2P lending is on the rise all over the world, including in India. This boom appears to be here to stay. Investing in P2P lending can be risky due to its newness in the market, but the risk can be mitigated with proper research and prudent investment decisions.

Overall, peer-to-peer lending is an exciting investment opportunity for those looking to combine the benefits of several asset classes. P2P lending has a relatively short time horizon, the potential for high returns that every investor seeks, requires little capital to begin, and can generate predictable, passive income. Always invest through a trustworthy platform like Monexo.


Ajay Deep

Ajay Deep is a young enthusiast who Loves Chandigarh and is always eager to make this beautiful city even more beautiful. A Mechanical Engineer By Chance and Working in an IT MNC by Choice. A Writer, Photographer and a Budding Entrepreneur. A Designer, Developer and Digital Marketing Expert. In brief : A Jack of All Trades and Master of Few :) You may reach Ajay Deep at
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