How to Create a P2P Loan Lending App in 2022? Cost & Features

Money lending has always been a common practice for people all across the world. However, in recent years the industry experienced a significant boost and opened up new opportunities for business. This is primarily because of the COVID-19 impact that caused an immense crisis for millions of people who have lost employment and earnings. That’s why they started looking for safe ways of borrowing money. This is where peer-to-peer lending platforms come into the picture representing one of the most appealing options for most of those people.

However, not everyone understands how it actually works and is it worth investing in this field for long-term benefits. So it is always best to get through facts and numbers to get a clear picture of what is going on with this segment today and what can be expected in the future. Based on the report provided by Research and Markets, the global P2P lending market experienced strong growth during 2015-2020 and is suggested to grow at a CAGR of around 31% within 2021-2026. Experts predict that the market will reach $558.91 billion in 2027. In 2021, the global market value was estimated at $115.61 billion.

As a result, P2P payment app development has quickly become mainstream. Even though there is a large number of such apps available on the market now, only a few of them are able to reach users and stay in demand during market challenges. This is because everyone wanted to enter this flourishing space a few years ago but didn’t have enough knowledge about the development. 

If you’re planning to start your own loan lending app development, it is always recommended to first learn the market, create an experienced team, invest in the engaging design, test the product and apply the best marketing strategies to make sure your app will be worthy. Borrowers can access money quickly, and investors can also get a good return without having to deal with traditional financial institutions. 

We curated this step-by-step guide to help you understand how to create a money lending app. But let’s start with the foundation. 

What are Peer-to-Peer (P2p) Lending Apps?

People look for loans in banks or other financial institutions when they need money for something. However, in reality, only 3 out of 10 people can really get loans. This is because the lending system is outdated and requires lots of information. Otherwise, banks and non-financial organizations usually reject the loan application based on many factors, like income, inadequate paperwork, poor credit score, and more.

Whenever the bank rejects the application, a person has only one option – ask friends, family, or relatives. But those who are able to lend the money often do that when they have a 100% guarantee that the person will return this money in agreed timelines. And not everyone is able to lend large amounts, so it can also become an issue in most cases.

This is where peer-to-peer (P2P) lending applications represent a happy medium for those who aren’t able to get money from banks or those who just want to avoid all these processes and easily get money whenever they need it. P2P lending works as a simple mechanism through which people who can lend money can connect with those who require them. It is like a bridge between both sides. In most cases, borrowers will also pay interest, and the lenders earn interest.

Since the lending process happens between two parties within one application, these products eliminate the need for a third party like banks. Thus, as a source of financing, P2P lending seems to extend the potential for borrowers to pay their debt, education, start a business, or anything they want. People who get rejected by banks find P2P lending platforms an excellent option.

Types of P2P Loan Lending Platforms by Loans

1. Personal Peer-to-Peer Loans

These applications allow borrowers to get loans for medical bills, car purchases, debts, home repairs, vacations, and other large purchases for personal use. The range of purposes for which borrowers can get money in these apps is much broader than traditional financial institutions offer.

2. Education Peer-to-Peer Loans

As the name suggests, these applications allow people to use peer-to-peer loans to fund their education. As a rule, these loans come in lump sums that allow the borrower to pay for studies in whatever way they need.

3. Business Peer-to-Peer Loans

Small businesses and startups often choose business peer-to-peer loan applications to develop a business. Since investors will have the right to affect the process of the development, startups usually come to these applications for various needs, like the development of new products, investing in marketing campaigns, or expanding the business by hiring new employees.

Benefits of Peer-to-Peer (P2P) Lending App Development

Benefits For Investors

• Great Potential for a Relatively High Return 

Practice shows that many peer-to-peer lending apps provide greater returns compared to most savings accounts or traditional investing methods. For instance, Prosper’s platform provides 3.5% to 7.5% returns to investors.

• Makes it Easier to Diversify The Portfolio

Modern peer-to-peer lending applications allow investors to easily spread their capital across various investments to reduce the risk of losing money. For instance, they can split $5.000 and invest parts of their money into different projects. Therefore, if the loans default, investors will lose only a small part of the money while getting profit from the rest and earning more than they invest. And investors don’t need to lend a bunch of money as many platforms allow you to start from $25 and check how it works.

Benefits For Borrowers

• Interest Rates and Fixed Monthly Payments

One of the most beloved benefits of peer-to-peer applications for borrowers is the competitive interest rates. If your project or idea meets the specific requirements of a particular investor, then you get a higher chance of getting lower interest rates than banks and credit unions. Therefore, it is a better option than using a bank loan.

In addition, borrowers can feel safe about payments as they will have fixed monthly payments that will be spent from their bank accounts. This not only helps reduce stress but also promotes stability and security that many banks don’t offer.

• More Accessible

As we mentioned above, most peer-to-peer lending applications are more accessible than banks. While banks usually reject loans for various reasons, these platforms are less rigid than banks, and they estimate borrowers on significantly different criteria.

Some consider education and type of income. As a result, those who find it hard and even impossible to get loans from banks find it much easier to use peer-to-peer apps as they usually offer loans while banks don’t.

• Simplicity and Speed 

Since modern peer-to-peer lending apps are designed differently from outdated banks, their streamlined process provides borrowers with high speed and simplicity of use. It is much easier than traditional channels. To be more specific, it usually takes up to 10 minutes to find out if you’re eligible. And to get the loan, you will need only up to 5 days.

• Choose the Best Deal

While banks offer only several options, peer-to-peer lending applications allow borrowers to look for the best deal for them. In addition, soft credit inquiries make it easier to compare deals without lowering the credit score.

Technologies Used to Create a Loan App

Blockchain

P2P lending apps use blockchain to help reduce delays, boost the speed of approvals, eliminate the need for third parties, and guarantee transparency. Check our blockchain development services. 

Smart Contracts

Smart contracts are used in P2P platforms to suggest the loan amount, the period as well as interest rate against all borrower’s profiles.

Machine Learning

Machine learning can significantly simplify the entire lending process by automating various aspects of the business process by applying a customizable rules engine.

Artificial Intelligence

AI seems to expand credit availability for those whose credit possibility is measured using nontraditional metrics. 

How to Create a Money Lending App?

1. Learn Your Target Audience

If you want to know how to build a loan app, the first step is always getting to know your audience. It is best to look for your competitors and find who uses their applications. Here you can also learn users’ pain points, what they like about apps, and what they don’t like. The more your application meets the user’s needs, the more chances you have to launch a successful product.

2. Create an MVP or List of Features 

Practice shows that MVP is the best way to start your app development. This is because it will allow you to visually see how the product is going to work and what else you can implement later. However, you can just create a detailed plan of features needed for the application and start the development process. MVP also allows you to collect vital users’ feedback for further improvements and not waste time later. 

3. Create Your App’s UI/UX Design

The proper design and interface will lead your way toward success. It is vital to hire a team of designers who have already worked in this niche to make sure every minor aspect of user satisfaction is followed. For this stage, it is recommended to start with low-fidelity wireframes and high-fidelity mockups, allowing you to test each screen. Making a clickable prototype will also allow you to deliver a greater user experience.

4. Start the Development 

Once everything is done, you can safely start the development process. Make sure you choose the right platform for the app and the proper tech stack. We also recommend you power your app with the latest technologies that will help you stay in demand for many years to come. Make sure the team is made up of only top-notch engineers who are precisely familiar with the industry. This will ensure compliance with the industry’s requirements and save you a lot of resources.

5. Don’t Forget About Maintenance

The app release is not the last stage if you want to achieve success. Since the tech improvements appear every day, it is vital to maintain your app regularly and check how users like what you have done. To ensure your app is up-to-date, it is essential to upgrade it and add the latest technologies whenever they come into the picture.

What are Must-Have Features?

Registration

Let your users quickly register by providing a wide range of available options. They include social media accounts, Gmail, or a phone number. It is worth noting that the simpler this stage will be, the more user satisfaction you will get. You can later get all the needed information when they start applying for a loan.

User Profile 

This is the best place where the user will put all the information and details. Consider some templates to ease the process and make sure you have advanced authentication for a high-security level. Here you can also allow users to track their loan activity and status and add more vital things.

Loan Application Form 

As you can guess, it is the star of the app. Make sure you break the entire process into simple and understandable processes to make it quicker for them to put all information and not get lost. You should also guide them throughout the whole process to boost engagement.

Payments Log

Once a loan has been agreed upon and funded by the investor, borrowers will need to easily see all upcoming and completed payments. Give them quick access to every payment that is going to happen and see the remaining debt amount.

Push Notifications

Push notifications are considered to be one of the best ways to keep users informed and engaged. You can send notifications every time someone agrees to their loan, when the payment is made, the due date, and if they missed a payment.

Loan Lending App Development Cost

The cost depends on many factors that include the scope of work, required resources, location of the development team, the technology stack, and even more. However, you can roughly pre-estimate the p2p payment app development cost by looking through the price of hiring a team in various regions worldwide:

• North America: $45–$200/hour
• South America: $40–$80/hour
• Western Europe: $50–$200/hour
• Eastern Europe: $25–$150/hour
• Australia: $40–$170/hour

However, you should also understand that the quality of work also depends on the location, as the USA has the most advanced developers, while Europe lacks unique skills. You can reduce the cost by hiring a whole team rather than freelancers.

Why Choose Interexy?

We, as one of the top Dubai blockchain development companies, constantly work on improvements and the development of our solutions. Having an in-house team of only dedicated people, Interexy leads the way in terms of cost, transparency, and quality. 

Since we are working with a vast range of clients in over 15 spheres, we always stay informed about the latest tech advertisements and know how to properly implement them in practice. Providing only custom solutions, our clients are able to reach their goals within months and stay in demand for many years. Check our P2P lending app development services, and let’s get a free consultation!

Final Thoughts

Due to coronavirus, the P2P lending industry experienced significant growth during the last two years. As a result, most companies want to enter this field. However, it is essential to implement best practices and tech innovations into these platforms to make sure you stand out from the competitors and can engage users. Consult our experts, and let us cover your needs!

FAQs

What is a money lending app?

Money lending apps work as a bridge between borrowers and lenders that eliminates third parties like banks.

How Long Does it Take to Make a Loan App?

The answer hugely depends on many factors. But roughly, it takes up to 10 months.

Why is peer to peer lending app development so popular?

Due to many reasons. But most of all, it is because banks often reject loans due to various reasons and people experienced a financial crisis during COVID-19.