P2P Lending Software Development: Cost & Features

Peer-to-peer, person-to-person, or P2P lending apps are a relatively new approach to lending and borrowing. Borrowers can access money quickly, and investors can also get a good return without having to deal with traditional financial institutions.

For this reason, according to the report by Research and Markets, the global P2P lending market witnessed strong growth during 2015-2020 and is expected to grow at a CAGR of around 31% during 2021-2026. By 2027, it is expected to reach $558.91 billion.

In this article, we will explore the development of the P2P lending platform in detail: its advantages, disadvantages, mechanisms, features, and cost.

peer to peer lending app

What is P2P Lending App?

Peer-to-peer lending platforms allow lenders to find their borrowers bypassing traditional banks or other financial institutions as intermediaries. It is the modern alternative to traditional bank financing, especially in the field of smaller consumer loans.

P2P lending offers both secured and unsecured loans. However, most of these loans are unsecured personal loans. Secured loans are usually backed by luxury goods.

Key Advantages and Disadvantages of Peer-to-Peer Lending Platforms

Let’s take a look at why P2P loans can be a good alternative to traditional lenders, and discuss some drawbacks you need to consider.


  • Lower interest rate and higher returns. Unlike banks, P2P lending apps don’t have extensive physical infrastructure across the region or country, and there are no employee salaries to pay. Other expenses like software are also optimal. For these reasons, interest rates on loans are also much lower compared to banks, and P2P loans generally offer investors higher returns than other types of investments.
  • More accessible source of funding. Such platforms allow you to liquidate your funds before the end of the loan term, on the condition that you can sell the loan to another lender on the secondary market. This function may not be available in ready-made solutions, however, you can always have it on a custom platform. 
  • Thorough inspection. There is no requirement for a guarantee, still, the borrower needs to submit different details alongside his tax identification number to demonstrate their solvency. A P2P loan application consistently provides clients with a high degree of trust.
  • More flexibility. Peer-to-peer loans are unsecured, which means you do not have to put up any collateral or tie any personal property to the deal. This also ensures that the application process is quick and straightforward, allowing the parties to have the funds in a shorter time.


  • Credit risk. Borrowers applying for P2P loans may have a low credit score that will not allow them to obtain a conventional loan from a bank. Therefore, a lender should be aware of the counterparty’s likelihood of default.
  • Legislation. In some countries, peer-to-peer lending is not allowed or the companies offering financial services must comply with multiple regulations. As a result, peer-to-peer lending may not be available to some borrowers or lenders.

How Does a P2P Loan App Work?

Peer-to-peer lending is a fairly straightforward process. There are two user roles in the app: money lenders and money borrowers. All transactions are handled through a dedicated online platform. The following steps describe the general P2P lending process:

  1. Potential borrowers and lenders fill out an online application on the peer-to-peer lending platform.
  2. Borrowers must link their bank account to the app (the bank account should be more than one year old), add their personal information, and describe their business or occupation. The platform reviews the application and determines the risk and creditworthiness of the applicant. Then, the borrower is assigned the appropriate interest rate. Lenders must determine what type of loans they can offer and also connect their bank account. So that the money can be credited to the borrowers.
  3. If the application is approved, the borrower gets the available options from the investors based on the credit score and the assigned interest rates.
  4. The borrower submits the loan request with a defined purpose, the amount required, desired term, etc.
  5. Lenders see the request. If it matches their preferences and criteria, they can bid on it.
  6. The borrower chooses the best interest rate and benefits from the various offers.
  7. Both the borrower and the lender agree to the terms and conditions of the loan. The app charges a certain commission and transfers the requested amount from the lender’s account to the borrower’s account. 
  8. The app shows the dates for repayments and the amount to be paid each month. The borrower is responsible for making regular (usually monthly) interest payments and repaying the principal when due.
p2p money lending mobile app development

Key Features of Peer-to-Peer Loan Mobile App

For Borrowers

  • Sign up. Firstly, borrowers need to sign up with their email address, phone number, and password.
  • Go through two-factor authentication. It is a must-have feature for apps related to finance that makes the user account more secure.
  • Create a profile. Borrowers need to add their personal details like name, contact number, age, country, and region, etc.
  • Link to a bank account. Borrowers should demonstrate that they have a monetary account that is at least a year old.
  • Apply for a loan. Borrowers should be provided with a form that asks for the necessary details to complete the application.
  • Get and check a credit score. Before borrowers apply for a loan, their credit should be added to the user’s profile so that money lenders can make bidding decisions. 
  • Set up reminders and notifications. Borrowers should get regular reminders about the repayment date and the amount left to be paid. Notifications allow borrowers to track loan deals available.
  • Upload documents. Borrowers should be able to upload their documents to prove their identity and address.
  • Choose payment methods and gateways like e-wallet payment apps, debit/credit card, UPI, and e-banking.
  • Repay. The feature is used to allow borrowers to pay their loan EMI using preferred payment methods.
  • Use EMI calculator. Borrowers should calculate the EMIs based on the amount they want to borrow and the preferred number of months to repay. 
  • Use in-app chat and chatbots. It helps to provide effective communication between both parties through messaging within the app. 

For Lenders

  • Register. A user needs to sign up as a money lender on the app with an email account, phone number, and password.
  • Create a user profile. Lenders should be able to add their personal details and information.
  • Link bank account. Lenders will need to link their bank account so that they could make transactions from the app. 
  • Document management. There should be a feature to save and view the documents of the interested money borrowers in a single place. 
  • Manage leads. When lenders get multiple requests or leads for a loan, they should be able to manage all the clients easily. 
  • View payment history. Lenders should be able to see all the payments transferred by him and the EMIs received. 
  • Get notifications. Moneylenders should receive updates and notifications about the new loan requests and when borrowers pay the EMI. 

For Admins

  • Manage borrowers and lenders. With this feature, admins can check and manage borrower and lender profiles activities, their information, borrower credit score, loans taken and provided.
  • Send notifications. Admins should be able to inform the app users about the latest updates, policies, reminders about payment, and new offers to improve engagement rate.
  • Explore analytics. Admins should see all the reports and analytics in real-time, including new registrations, the number of loans approved, the number of transactions made, and the commission earned. 
  • Approve accounts. Admins should review the new registrations and approve them to avoid fraud activities. 
  • Manage loans. Admins should keep track and manage all the loans, the amount, details of lender and borrower, transactions, EMIs, etc. 
  • Give rewards. Admins should be able to offer reward points to borrowers for paying the EMIs on time.

What to Consider Before Developing a Peer-to-Peer Lending App?

Before you start developing a P2P loan platform, it would be useful to find out about certain key factors that you should take care of.

Find a Reliable Banking Partner

You will need a banking partner to take care of your banking financial transactions. You may be able to negotiate some killer features for your business within the app that will give you a competitive advantage. 

Mind Government Rules & Regulations

A P2P platform as well as all organizations that provide financial services must comply with multiple guidelines and regulations. This way, you ensure all the participants play by the rules, avoid non-compliance fines, and protect your reputation.

GDPR Compliance

The General Data Protection Regulation (GDPR) ensures that your users have basic rights, such as the right to be informed, the right to access, the right to rectification, restriction of processing and erasure of data, the right to data portability, and rights in relation to automated decision-making and profiling.

Automate a Borrower Onboarding Process

To prevent fraud, you should have an established process of borrower onboarding and verification that includes:

  • A government identification proof
  • Verification of phone number
  • Tax return proof
  • Bank account information
  • Income verification process

Set Interest Rates

You will require an advanced algorithm for pricing loans. It should be constantly updated and perfected. For getting a loan, the borrowers must have:

  • Minimum 600 FICO score
  • A credit profile with any delinquencies
  • Minimum one open bank account
  • A debt-to-income ratio below 40%
p2p lending software development

How to Create a Money Lending App?

You need to find a fintech development company with a proven track record. In this case, they can share their experience and advise you on certain things that may not be obvious at first. Discuss your requirements, features, technology stack, etc. 

Usually, the development team will consist of a Project Manager, Business Analyst, UI/UX Designers, front-end and back-end developers, and a QA team. Here’s what you and your trusted partner will do step by step.

1. Analyze the Market and Target Audience

It’s important to understand users’ pain points, challenges, and requirements in your targeted market to ensure that the app achieves success. Study the top competitors like Upstart, Prosper, Funding Circle, and Payoff: download their apps, analyze their operation, and find their positives and negatives. This will help you to better grasp trends in lending software development and create some Unique Selling Points (USPs) for your solution.

2. Choose a Platform

Understand whether your money lending solution is going to be a web or a mobile app. In the latter case, will it be available on App Store or Google Store? Or maybe you should consider building a cross-platform application?

3. Decide on Feature Set

It is vital to produce your version of an app that will be competitive among its peers. It can be done by adding valuable features like choice of payment options, 24/7 live chat support, geolocation, etc.

4. Create UX/UI Design

The right uncluttered interface and functional user experience can make your app a success from the start. For this reason, UX/UI designers create low-fidelity wireframes, high-fidelity mockups, and prototypes carefully testing each screen. 

5. Proceed to the Development Phase

After UI/UX is ready and verified, decide on P2P lending software core features:

  • Registration
  • User profile
  • Loans application form
  • Notifications
  • Payment log.

After that, you can add additional ones.

6. Test, Test, and… Test

After developing the app, it is important to fix any bugs to ensure that the app can be downloaded and run successfully so that app users do not find it confusing. The cost of a bug in your release can be devastating as bugs and lags can cause a storm of negative feedback leading to low ratings and bad reviews, so take testing seriously.

7. Release and Gather Feedback

Collect valuable customer feedback after the app is released. Some of the user comments can help improve the app. Also, analyze the metrics on mobile performance. The more insights you get, the better your app will perform.

8. App Maintenance

To make sure your app is up to date, it’s important to constantly improve it with new features keeping pace with constantly evolving industry needs, and keep track of technical changes.

Peer-to-Peer Lending App Cost

The total cost of the lending app development depends on a number of factors, e.g. the overall complexity of the solution, the features required, tech stack, developers’ hourly rate, team composition, etc. On average, P2P software development requires about 2200 development hours, which translates to a budget of approx. $110,000.

On a Final Note

When you decide to build a peer-to-peer lending platform, there are many things to consider, from features that will help you stand out in the market to rules and regulations, since you are dealing with other people’s finances. A trusted fintech development partner like Itexus will help you sort out all these issues. Get in touch with us!

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