Peer to Peer lending in Nigeria is a modern way of borrowing and lending money that has gained popularity in the country over the past few years. It is a platform that connects borrowers and lenders directly without the need for intermediaries such as banks or financial institutions.
P2P lending has revolutionized the financial industry by providing a more convenient and accessible way for individuals to access loans and invest their money.
The purpose of this post is to provide a comprehensive overview of P2P lending in Nigeria, including its advantages, popular platforms, and how it works. We will also delve into the risks associated with P2P lending to help prospective investors make informed decisions.
With the increasing demand for alternative lending solutions, it is crucial for individuals to understand the P2P lending landscape in Nigeria.
So, without further ado, let’s get started!
How Does Peer to Peer Lending Works in Nigeria?
As explained earlier, Peer to Peer Lending, also known as (P2P) Lending is a direct lending model where borrowers and lenders connect without the need for intermediaries such as banks. P2P lending platforms allow individuals to access loans or invest their money by connecting them with borrowers who need funds.
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How Peer to Peer Lending in Nigeria works for Lenders
The following is how peer to peer lending works for lenders/investors in Nigeria:
- Sign up: To start lending on P2P loan platforms in Nigeria, first, you need to sign up and create an account on the platform of your choice.
- Choose a loan: After creating an account, you can browse through various loan opportunities and choose the one you wish to invest in.
- Lend money: Once you have selected a loan, you can lend money directly to the borrower. The amount you lend will be credited to the borrower’s account.
- Repayment: The borrower will repay the loan and interest over a specified period of time, and the payments will be credited to your account on the P2P platform.
- Withdrawal: Once the loan has been fully repaid, you can withdraw your funds from the P2P platform to your personal bank account.
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How P2P Loans Work for Borrowers in Nigeria
For borrowers, P2P lending in Nigeria works as follows:
- Sign up: Borrowers need to sign up and create an account on a P2P lending platform in Nigeria.
- Apply for a loan: After creating an account, borrowers can apply for a loan by filling out an online application form and providing the necessary details.
- Loan evaluation: The P2P platform will evaluate the loan application, including credit checks and other verification processes.
- Loan funding: If the loan application is approved, the loan will be funded by lenders on the P2P platform.
- Repayment: The borrower will repay the loan and interest over a specified period of time, making payments directly to the P2P platform.
- Loan closure: Once the loan has been fully repaid, the loan will be closed, and the borrower’s account will be updated to reflect the successful repayment.
Now that you’ve known how peer to peer lending works in Nigeria, let’s see some of the platforms that offer this service.
Top 5 Peer to Peer (P2P) Lending Platforms in Nigeria 2023
KiaKia is one of the most popular peer to peer lending apps in Nigeria. This app offers investors/lenders high returns on idle money they lend to borrowers.
On the other hand, borrowers also enjoy low interest loans for a relatively long tenor on KiaKia. These loans have flexible repayment terms which are often made directly on the app.
Kiakia has been around for long, and it offers one of the best P2P lending services in Nigeria. To use this platform, you must be at least 18 years old and have some basic documentation.
As a lender, you can get your returns based on your terms starting from monthly, quarterly, bi-annually and annually. KiaKia loans are usually provided for businesses as the amount ranges from N50,000 and N10,000,000.
P2Vest is another reliable P2P lending platform in Nigeria. Despite being a new P2P loan app in Nigeria, it offers top notch services to its users.
On this platform, you can also find a borrower as an investor, so as borrowers too can find lenders easily. P2Vest offers great returns to investors, while borrowers also enjoy low interest rates.
P2vest lending service is available to both individuals and businesses. Although it is best to go for the platform’s B2B loan service called P2VFB if you want to borrow money to fund your business.
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AjoBox is another reliable platform that offers peer to peer lending in Nigeria. Just like KiaKia, this platform’s lending service is mainly focused on SMEs.
These SME loans are funded by individuals and/or groups of investors with low-interest rates for borrowers, and guaranteed ROI for the investors. AjoBox loan service comes with long tenor ranging up to 12 months with flexible repayment terms. The minimum investment as a lender on this platform is N50,000.
Sukfin is another P2P loan app in Nigeria that is mainly focused on providing finance for businesses through investor lenders. To access a loan on this platform as a borrower, you must have a good credit score and also provide some documentation about your business.
Investors also get good ROI on this platform as the investment amount is relatively huge. Loans on this platform usually don’t require collateral, and the processing time is fast.
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On Fint, borrowers can easily find lenders, so as lenders too can easily find borrowers. Fint is another new peer to peer lending platform in Nigeria that offers loan services to borrowers at very low interest rates.
Lenders also enjoy juicy returns on their investments on Fint, as the platform assesses borrowers to make sure that they can pay back so that investors won’t lose their money. Lenders can start with a minimum of N4,750 for a flexible tenor ranging from 2 weeks to 6 months.
For borrowers, the minimum amount you can get on FINT is N20,000 and the maximum is 1 million Naira for individuals, while businesses can get up to 20 million Naira.
Advantages of P2P Lending in Nigeria
Here are some of the benefits of peer to peer lending in Nigeria:
- Access to funding: P2P lending provides borrowers with an alternative source of funding, allowing them to access loans quickly and easily.
- Lower interest rates: P2P lending platforms typically offer lower interest rates compared to traditional banks and financial institutions.
- Flexible repayment terms: P2P lending platforms offer more flexible repayment terms, allowing borrowers to choose a plan that works best for them.
- No collateral required: Most P2P lending platforms do not require collateral, making it an accessible option for borrowers who don’t have assets to use as collateral.
- Speed: P2P lending is a fast process, allowing borrowers to access funds quickly compared to traditional loan application processes.
- Increased transparency: P2P lending platforms are transparent and provide information about the loan and the borrower, allowing lenders to make informed investment decisions.
- Diversification of investments: P2P lending allows individuals to diversify their investments, reducing the risk of loss compared to investing in a single stock or bond.
P2P lending in Nigeria offers an alternative source of funding for borrowers and a new investment opportunity for individuals. With lower interest rates, flexible repayment terms, and increased transparency, P2P lending is an attractive option for many. However, as with any investment, it’s important to understand the risks and conduct thorough research before participating in peer to peer lending in Nigeria. By doing so, individuals can make informed decisions and take advantage of the benefits that P2P lending has to offer.