Passive income from Peer to Peer lending? A little-known way to make money online

Passive income from P2P lending

Is it really possible to build a passive income stream from P2P lending?

Yes, but it’s not risk free

Here I will explain how do I make Peer to Peer lending work for me 24/7

P2P lending is, at the moment, one of my best tool to create some additional streams of revenue with limited effort


The dream of an automatic income

Automatic income exists, but (I’m sorry to tell you) easy money does not exist at all.

Peer to Peer lending is a tool, it is not a money printer. Investing properly a part of my money in peer to peer lending is generating me passive income.

The best part of investing in peer to peer lending platforms for automatic income is that it is almost hands-free.

The “hard” part is the initial setup, it can take a few hours to fully understand how the autoinvest works, then I only check if everything is flowing every month.

You must play the lottery millions of times before having any likelihood of winning, so it’s not easy. Statistically, it’s easier to be hit by an asteroid. Click To Tweet


Passive income from P2P lending: A (still) little-known way to make money online Click To Tweet

Even money has a price

You must work and learn a profession before you start getting money out of it, so even in this case, the money doesn’t come easily – we know that.

You’re lucky if at least you like your job, otherwise forget it, it’s lifetime torture! Even those who practice “the oldest job in the world” must often bear the unbearable, in order to earn money and to have a comfortable life, whether that’s a man, a woman, or doesn’t identify with a gender.


Make money by scamming others

Often while browsing the internet we find offers to make money online easily, by scamming others. It could seem easy, but it isn’t.

Even scamming others requires some skills that not everyone has. Scamming takes time, effort, and a natural tendency to seek out risk. Click To Tweet

You, who are reading – yes, you right there – are likely wondering what you’d be willing or capable to do?! Good. Let’s see!

Not everyone is willing to invest time, precious free time, to learn something. The majority of us, when we are free, wants to relax. What about something that we’re not familiar with and that forces us to get out of our comfort zone? Never!

Peer to peer investing is not about scamming others but it is about lending money to people who ask for credit.


Analysing social lending and real estate Crowdfunding

I had to invest in something profitable but with a reasonable risk, when some acquaintances of mine from London introduced me to P2P lending.

Now let’s start with a simple and short video that explains clearly what is peer to peer lending about:

Peer-to-Peer Lending (AKA P2P Loans or Crowdlending) Explained in One Minute

This video is from the U.S. but it is actually useful for us as well at this stage.


After some study I realized there was room to generate a additional passive income stream from P2P lending.

  • I then examined the available P2P platforms
  • I sent out requests for assistance
  • I contacted old-time users
  • I enquired into financial advisors
  • I collected data, stats and information

To invest in social lending is not difficult, and it may be not risk free, especially if you don’t know how to do it.

It takes some of your precious time to set it up, a few minutes, then you can enjoy the revenue once and forever (…long time).

Ops, I forgot, you also need a starting capital and the will to invest long term.


What do I need in order to invest in Peer to Peer lending?

  • An email address
  • A bank account
  • A medium/high risk appetite
  • A starting capital
  • A simple strategy
  • The patience to wait for the money to grow
 Direct loans risk rating chart P2P lending risk assessment
Loans with less stars means less reliability and more credit risk. High interest loans have to be picked carefully. I have developed strategies to get the best P2P loans on many platforms.


Risk/reward in Peer to Peer lending

As you can see also in this case (peer to peer lending and real estate online investments), returns are linked to the level of risk and also to the time you are willing to invest to make it to work for you.

Obviously, a higher interest rate is often associated with a higher risk.

There is no “free lunch” unfortunately.

What I am trying to do, is to find the maximum return with a reduced risk. It is possible because I’m doing it, and I’ll tell you how do I try to get it.

Reducing risk won’t bring it to zero.

I don’t like to talk about predisposition and aversion to risk, as there have been written enough books about it (which you should read).

My approach is just the opposite. I go and get the information I want if I need to. What I discovered is that this is possible and it is worth it.

In the investment world happens that advisors and banks may be in conflict of interests. Since we know that, we tend to overweight information coming from outside (news, cousins, neighbors..).

Everyone needs to be informed about the risk they face when they invest but, in my opinion, it is much better if, instead of waiting the information from others, we try to gather it on our own.

Risk/reward in direct loans investing is difficult to understand deeply but there is a strategy. It’s where common sense and game plan meet. The smartest way to lower risk in Peer to peer investing is to not concentrate on a sigle loan, platform, marketplace. Spreading the risk on the safest tools, loans, countries is a good idea.


The difference between P2P lending investing and other forms of high revenue investments

  • P2P lending is not rocket science.
  • I am the lender and there are borrowers.
  • In the middle there are platforms, loans originators and marketplaces.

I believe that if one is willing to understand how P2P lending works, he can get there in a relatively short time.

This doesn’t apply to other forms of investments, especially the most famous ones like trading stocks and currencies.

That’s why I find P2P (informed) investing something at reach of ordinary people that want to invest, but are not willing to study how to do it.

Don’t get me wrong, peer to peer loan investing is absolutely not risk free and is limited only to a part of my portfolio.


⚠️ Is Peer to Peer lending a scam?

is peer to peer lending a scam?

Investors tend not to trust new opportunities.

This is reasonable because a lot of investment trends don’t last long.

P2P lending exist since 2005, so it is not old but not even newly born.

Since the success of the main P2P lending platforms is bounded to their transparency, there are easy ways to get to that information.

Transparency means data, so there are numbers, and numbers don’t lie. People lie.

As I said, P2P lending (and also real estate crowdfunding) is one of those areas in which (almost) anyone can reach a sufficient knowledge to evaluate risk and convenience.

Common-sense will do the rest, if you have any.

The possible returns justify the effort to get informed, since in Euros, they go up to 12% and, in theory, they even go beyond 20%.

I don’t recommend any investment, nor to invest in P2P loans.

What I recommend is to collect information, because there is an opportunity out there and it may be worth understand how it works and decide what to do. I also recommend not to trust only my voice but to go out there and get more opinions to eventually make an informed decision.

What is good for me may not be good for you.

Never invest in something you don't understand thoroughly Click To Tweet


Who invented P2P lending

The concept at the base of P2Plending seems futuristic, but if we pause to think about it, it is actually something really simple and old.

In fact, before the invention of banks and financial companies, whoever needed a loan would go to the family and/or the villagers.

He/she would explain to them why they needed the money, and then whoever wanted to would take part in the collection with the promise (or not) of a little or big interest on the capital, once the loan was repaid.

 Woman hair Zopa is the first best p2p lending
Zopa is the first p2p lending tool ever (2005). It is still working.

P2P lending as we know it now was created in 2005 in London with the Zopa platform, which is still now perfectly functioning. That was many years ago, so I’d say it’s a good sign.

Since then, with the explosion of fintech companies, that is to say, information technology applied to finance, the aggregators of loans have multiplied.

Dozens of tools, more or less similar to Zopa, have been created, offering varying levels of risk, ethicality, and convenience.

The Baltic countries are leading this revolution, and at the moment, they’re the ones offering transparent and fruitful tools in Euros.

It is important to invest in Euros for me, I don’t want to be subject to the currency exchange risk, which can massively multiply or reduce our results.

Peer-to-peer lending is well explained on Wikipedia, too.

The concept is to bring together the demand for credit of some, with the willingness to lend money to others, without going through the banks.

Actually, not all P2Ps are the same, and many of them are simple aggregators of offers from finance companies of various countries.

Sometimes, these foreign finance companies, offer credit also to those who would not have access to traditional banks offer.

In some case, guaranties in physical goods are requested (or not), which posits the doubt of the ethicality with which the credit is offered, in some countries, to some clients.

Obviously, there is also a good side of the coin, when credit is offered at lower rates than those of the banks, and when those who lend can select business projects in which to invest, and make a big difference.

This is available also in the charity sector (see Kiva).

The feeling of lending money to a tiny business owner in a far country and get repaid is priceless.

 Kiva microcredit lending to people no-profit
Kiva makes me feel good lending to people with great ideas but no money to start!


Property social lending in Europe

In addition to loans investing there are financial technologies that allow me to invest in properties. Now I can buy or rent portions of houses and properties in general without getting … out of your house.

An example of a platform to invest in properties in Europe,  (but not very convenient, in my opinion) is Housers. They offer geographic diversification and they apply different legal systems to allow participating to the investment of public retail.

 Man opening curtain Housers bad reviews
Housers is interesting but not liquid for now. Risk/reward is difficult to figure out.

Housers was one of the very first platforms of this kind, but some investors are reported to be leaving Housers for higher revenue platforms (above all Estateguru(12,04%) and CrowdEstate(14%)).

For now, I will focus on investments that are easy to understand, where we will find more liquidity and even the possibility of leaving before the terms.

For the first time in history, we can function as a bank, assimilating an estimated part of the risk while getting adequately repaid.

Our duty now, is to get the most out of it, to generate an automatic income from it, lowering the risk involved to the minimum. P2P Lending practice is authorized by governments.

My goal?

A low-maintenance automatic income

My goal is to produce a monthly automatic income, and I believe this is an unprecedented investment opportunity (in Euros, too).

Online investing is getting at reach of average people, it is more transparent then before, and automation (if wisely used) can be game-changing.


Is Peer to Peer lending right for Me?

  • Yes, if I consider spending some of my precious time understanding how p2p works
  • Yes, if I have money idling on the savings account or invested in dangerous activities
  • Yes, if I have a medium to very high risk appetite
  • Yes, if the goal of earning yields above 9/10% per year are right for my expectations
  • Yes, if I can understand the power of compound interest
  • Yes, if I have the courage to start and the firmness of not being carried away from success
  • No, if I want to get rich fast
  • No, if I don’t want to understand what is P2P lending investing
  • No, if I have a medium to low risk appetite
  • No, if I don’t have a starting capital nor the will to transfer money abroad


Who are the biggest P2P players in Europe

I have an opinion about the biggest P2P platforms in Euros, one of these is Mintos (read why)!

Other famous names are Bondora, and Twino! Amongst other similar products available in many languages, there is Peerberry.

October and especially Flender I find interesting to invest in profitable business loans.

In the UK we find the biggest of our continent, so there are Ratesetter, Founding Circle, Zopa and many more.

Beware! Most British P2P platforms are only accessible to UK resident taxpayers, other American ones (Lending club, Prosper, Upstart) have the same limitation.


Alternatives to P2P loans? Real estate!

What about Real Estate investing from the smartphone?

As I already said it is possible to get a share of a property starting from 50€.

I’ve made a list with my P2P ratings and a and a comparison P2P table with ratings

P2P Lending chart

Our instinct always tells us not to risk, right? But, not doing anything comes at a price, too.I decided to take action, because I found out I was losing money waiting for the next opportunity. Click To Tweet

NOTE: The indications contained in this analysis are to be considered mere information tools and do not intend to constitute in any way financial advice, solicitation to the public savings, suggest or promote any form of investment.

Ask a question, smart people do! Read the most of the possible answers to “the question “how to invest money” in my new essential guide.

This blog is for information purposes only and should not be considered as investment advice or an invitation to trade.

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7 thoughts on “Passive income from Peer to Peer lending? A little-known way to make money online

  1. Michael Brown says:

    The difference between you and the other is that you state that passive income is difficult but possible. I like you prose, more risk more reward but avoiding risk is also a risk! You are helping me, keep writing

  2. Angela M says:

    I read your blog posts. To start I setup Flender, Mintos and Bondora. Most money on Mintos for now. I spoke to my fin. advisor and he agreed to make this test with P2P

  3. Marian says:

    Thanks for this really extensive and well researched article!

    Investments into p2p and p2b (business) loans make up a substantial part of my passive income and also play a big role in my FIRE (financial independence, retire early) plan. I like to have the steady influx of interest payments and also think that the p2p investments are somewhat de-coupled from the stock market (the other big part of my investments).

    I currently have about 45k EUR in p2p and p2b loans and get an average return of 14% p.a.
    Even is this might not be sustainable for a long time, a ROI of 10% can be achieved in the long run, I’m sure.

    Keep up the good work, I like reading your articles!


    Marian from

  4. Reginald Lococo says:

    Hey There. I found your blog using msn. This is a very well written article. I will be sure to bookmark it and come back to read more of your useful information. Thanks for the post. I will definitely comeback.

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