Monexo Logo
Monexo Insights

P2P borrowing vs. Bank loans? What is the Difference?

P2P Borrowing vs Bank Loan

Although the banks have been the leaders in the Indian financial sector, the number of online P2P platform registrations is increasing at a prodigious rate. We Indians are the best at trailing the footsteps of our ancestors, even in the finance and investments and that is the reason, why people keep wondering how P2P borrowing is different from the bank loans. With the help of the cutting-edge technology, the investments, and loans are made easier in P2P lending solutions. However, asking why we should prefer p2p option over the loan from banks is before deciding, to be very cautious in terms of finance.

Is bank loan cheap against P2P loans?

In general, the banks offer loans at the interest rate of 11% to 15%. Interest may be an important element, but the loan processing charge, prepayment charges, file handling charges, repayment mode swap fees, etc., should be considered before making a decision. Adding up all these hidden fees may make the interest go up to 20% to 25%.

On the other hand, the P2P money lending platforms lend without any hidden charges and this factor makes them take the upper hand over the traditional banking sector.

P2P loan without a bank account

P2P loans are offered to people who have no bank account, unlike the bank loans. Although there are 1.25 billions of people living in India, many of them do not operate their bank account. By offering loans to the borrowers, who do not maintain their bank statement, P2P lending portals strive to flourish in India.
Lower fees

Read: Collaboration Between Banks and P2P Lending Platforms

While most of the credit companies in the market are associated with a high cost, the P2P loan lenders do not charge arms and legs. Unlike the banks, there are no middlemen in between the lenders and borrowers. Further, the online lending maintenance cost is pretty low. Therefore, their service is offered at a lower cost.

Global access

The P2P online money lenders can be accessed from any corner of the world, as these companies are managed through websites. Anybody who has an internet connection can register on the website, list their requirements and get a loan, from anywhere in India.

Minimum interest rate

The borrowers have the option to choose from different p2p lenders, who offer loans at different interest. Depending upon the borrower’s rating, the lenders reduce the interest rate. Further, the interest rate is fixed, making it easy for the borrowers to pay.

Credit score

All the registered banks consider the applicant’s credit score as the key factor for approving a loan. If the credit score is below 700, the chance of loan approval decreases. On the other hand, the p2p money lending websites facilitate loans, despite the bad credit. Instead of credit score, they take like social behaviour, cash flow, social behaviour, etc. into consideration.

Documentation process

Digitalized process removes the time consuming loan process. The leading p2p loan lenders like approve loan within a day’s time that you can have the money credited in the account, within 2-3 days of application.

For more details: Check Here

Share this article

Diversify your portfolio


Diversify your Portfolio Now

RBI Guidelines

Reserve Bank of India does not accept any responsibility for the correctness of any of the statements or representations made or opinions expressed by Monexo, and does not provide any assurance for repayment of the loans lent on it.

Monexo Fintech Private Limited ( is having a valid certificate of registration (CoR), dated 28th June 2018, issued by Reserve Bank of India under Section 45 IA of the Reserve bank of India Act, 1934.