What fees are involved in P2P lending?

Peer-to-Peer (P2P) lending platforms usually charge fees to both applicants and lenders to facilitate their services. Here are the common fees involved:

Borrower fees:

• Origination fee: An upfront fee charged by the P2P platform to process and fund the loan. Usually, 1-5% of the loan amount.
• Late payment fees: A charged if the borrower misses or delays a repayment instalment. They are usually a fixed dollar amount.
• Partial payment fees: Applied if the borrower makes a repayment lower than the scheduled Equated Monthly Instalment (EMI) amount.
• Rescheduling fees: A fee may apply if the borrower requests changed repayment terms.

Lender fees:

• Servicing fee: An annual percentage fee is charged by the P2P platform on the outstanding loan to service the account. It is typically a specific percentage of the loan amount.
• Collection fee: Sometimes lenders are charged a fee if the platform has to pursue legal collection procedures for a non-performing loan.
• Transfer fee: If the lender wishes to transfer a loan to another lender on the secondary market, a fee may apply.
• Early withdrawal fee: Lenders may be charged a penalty for trying to withdraw invested funds before the loan matures.

The specific fees vary widely between different P2P lending platforms. Make sure to review all fee disclosures so you know the total costs involved before using a P2P lending service as an applicant or lender.