This post is also available in: Spanish
Amongst all the online investment platforms available today, European peer-to-peer lending sites are the ones that offer the highest returns.
Let’s have a look at how P2P lending works and which are the best European P2P lending sites in 2021.
Why do I focus on Europe? Simply because I am European and currently based in Europe. Most US lending sites, as well as some UK sites, prohibit European citizens from investing, so this post focuses exclusively on those platforms that are available to all European citizens. The nice thing is that the majority of European P2P platforms accept international investors.
Another reason for focusing on Europe is that currently, the European platforms offer higher returns than those in the United States or Asia.
📈 Is P2P Lending Growing in Europe?
P2P lending volume is growing year on year in Europe and globally. You can check out my post on where to find statistics on the P2P lending market, but even without checking any stats, the growth is quite obvious to those of us who have been investing in P2P lending for the past five years or so.
When we talk about growth, we need to consider both the actual lending volumes and also the confidence and comfort of investors when considering this asset class for investment.
According to a survey by Robo.cash, 64.9 percent of European P2P investors have full confidence in P2P lending. Remarkably, 52.3 percent of the respondents mentioned that P2P loans take a considerable share of their investment portfolio – over 25 percent.
The level of confidence in P2P lending is also observed in the distribution of funds in investment portfolios. It’s no secret that most investors look for diversification by investing in various assets – stocks, bonds, cryptocurrencies etc. It’s quite telling, then, that 52.3 percent of respondents said that investments in P2P loans take more than 25 percent of their portfolios.
While it is a newer class of investment, there is no doubt that it is growing at an increasingly rapid rate, so it’s well worth understanding how things work, even if you’re skeptical at the outset.
🌍 Who Can Invest in P2P Lending Sites?
These European lending sites are open to all European investors, possibly even those outside of Europe in some cases. The only exceptions are the UK-based platforms, which are typically restricted to investors resident in the UK. Zopa is one such example. It’s been around since 2005 but is restricted to UK-based people.
The majority of platforms that are open to other countries are based in the Baltic countries. We have leaders such as Mintos and Bondora which have proven to be success stories, and now many other new entrants are fighting to get a piece of the pie.
Many of these platforms are available in more than one language, precisely to cater for the fact that in Europe people speak so many different languages and might not be comfortable investing their money if the site is only available in English. For example, my favorite lending site, Mintos, is available in English, Czech, Spanish, German, Latvian, Polish and Russian.
From my experience, at the moment in Europe the country with the most investors in P2P lending is Germany, leading by a long margin. German investors love P2P platforms. Germany is a country where people have a high purchasing power and they are looking for good returns on their savings, and hence P2P lending platforms are a great match for them.
💶 What Returns Can You Expect from Peer-to-Peer Lending?
I think peer-to-peer lending sites are one of the best ways to earn passive income. The vast majority of investors are accustomed to using real estate for (mostly) passive income, but in my experience P2P lending can produce better returns while being more passive than real estate.
I’ve been averaging 11% returns per year over the past two years over the various platforms I’ve used.
You can read about my returns on each P2P lending platform in a separate post.
A common question I receive is about how much return is considered as the minimum acceptable.
My answer is that it is an ever-shifting minimum interest rate. What you want to do is compare any investment return with the risk-free interest rate.
The risk-free rate of return is the theoretical rate of return of an investment with zero risk. It represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time. In theory, the risk-free rate is the minimum return an investor expects for any investment because he will not accept additional risk unless the potential rate of return is greater than the risk-free rate.
In practice, however, the risk-free rate does not exist because even the safest investments carry a very small amount of risk. Thus, the interest rate on a three-month U.S. Treasury bill is often used as the risk-free rate for U.S.-based investors.
At the moment it hovers around the 2.5% figure, so based on that and the risk of loan platforms (note that some carry much more risk than others), I would be looking for anywhere between 9 to 20%.
Let’s have a look at some of the best loan platforms in Europe, based on my experience investing over the past 4 years.
🔝 The Top European P2P Lending Sites in 2021
If you’re unsure which platform to invest in, one of the best things you could do is to check the platforms’ ratings on multiple channels. I’ve analyzed most of the platforms out there and taken a look at their Facebook, Trustpilot and Google scores, so here’s the list of the top four most reputable P2P platforms in Europe at the moment.
I also keep an eye on the market data on European P2P lending on a monthly basis, as this is an important indicator of whether any of the platforms are in trouble or whether they are in a healthy growth and profitability stage.
I’ve invested in all the platforms I recommend so I can speak from experience about each one of them.
This is by far my favorite platform.
The interface is great; everything is understandable and you don’t need to fish around for data. You get a daily report in your inbox and you can also use the auto-invest functionality, which I always do.
Mintos has a solid secondary market which provides investors with liquidity. If you want to sell off your loans at any point, you can put them on the secondary market, choosing whether to apply a discount (making them more attractive) or add a premium (less attractive). If you want to sell quickly, applying a discount is the best way to do this.
The minimum investment in any single loan on the primary market is EUR 10, DKK 80, GEL 25, PLN 50 or CZK 300. There is no minimum for investments in the secondary market.
You have to be careful when setting the auto-invest parameters on Mintos. Check out the Mintos lender ratings post on Explorep2p as well as the Mintos loan scanner to see which are the most trustworthy lenders on the platform.
The income earned at Mintos is taxed for each investor based on the legislation of the respective country where the investor is a tax resident. Each investor can receive extensive information necessary for tax returns when logged into their Mintos investor account.
You can add funds safely via your online banking directly in the app, by bank transfer or with debit/credit card. I recommend using N26, TransferWise or Revolut when doing deposits and withdrawals as you avoid fees altogether.
Companies can also invest through Mintos without any problem. There are specific documents that need to be provided in order to comply with AML legislation, but it’s pretty straightforward.
During the past three years, Mintos experienced significant growth, making it the peer-to-peer lending market leader for continental Europe with a 38% market share according to AltFi Data. Since their establishment, they have exceeded EUR 660 million in cumulative investments by investors and they expect the number of loans funded to reach EUR 1 billion by the end of the year.
See also: My full 2021 review of Mintos
Over the past years, Mintos have made considerable investments in technology, people and the marketplace, making the service even more convenient for investors. The number of investors has been growing in exponential numbers year on year. As an investor, this is reassuring, as I know I’m not alone using this platform, but I’m joined by tens of thousands of others like me.
On Mintos, you can expect returns between 6% and 18%, and the minimum investment per loan is €10.
By signing up to Mintos through the link below and investing, you will receive a 0.5% cashback. I’ve been investing with Mintos for the past two years and have obtained great results, so if you have any questions before deciding whether to invest, leave a comment below and I’ll help you out.
Launched in 2017, PeerBerry has been gaining quite a lot of popularity among peer-to-peer platforms recently. As with many crowdlending platforms, PeerBerry originated in the Baltics – specifically Riga, Latvia.
This platform has an average annual investment return of 11.51%, a solid return for most platforms. With more than 18,000 investors and over €212 million in funded loans, PeerBerry is certainly making some waves in the peer-to-peer business.
See also: My review of PeerBerry
As with many peer-to-peer platforms, PeerBerry offers an Auto Invest function and a BuyBack guarantee. Unfortunately, however, no secondary market is available yet.
I really like this platform and its website. PeerBerry has the potential to be one of the big players in European P2P over the coming years.
Twino was where I got my start in P2P lending, and it works very similarly to Mintos. The biggest difference is that there are more loans available on Mintos.
With Twino, you can invest in unsecured consumer loans that have been issued by TWINO Group lending companies in 5 different countries (Poland, Georgia, Denmark, Spain and Russia).
Twino does not charge investors any fees, instead making its profit from the spread between the interest rate charged to borrowers and the interest rate offered to investors.
The currency on your Twino account will be set depending on the currency of your first deposit. In case your first deposit is made in GBP, all operations under your account will be held in GBP. All other currencies will be converted to EUR and your account will operate in EUR. Twino accepts all currencies. Payments received in currencies other than EUR and GBP will be converted to EUR. Payments received in currencies other than EUR and GBP will be converted to EUR by the Swedbank currency exchange rate.
Twino offers support on weekdays from 9 AM to 6 PM EET via email, phone or Skype chat. I have always found them helpful whenever I needed certain explanations, especially since a few years ago this was all new to me.
See also: My full review of Twino – 9.21% returns
Within Twino you will see a XIRR percentage figure, which gives you an idea of how your investments are doing.
XIRR is the annualized internal rate of return, which shows your current portfolio yield at a given date.
However, bear in mind that it takes into account only the received payments (deposits, withdrawals and interest payments), not the interest payments that you will receive in the future. XIRR and all interest rates are shown in annual terms. The XIRR number is reliable once the interest payments from all the loans in which you invested a deposit have been received.
While Twino was my earliest foray into P2P lending, I have decreased my investment there when compared to other platforms like Mintos, simply because Twino seemed to have slowed down over the years, but they are showing very exciting signs of growth in 2021 so I would once again recommend them.
Flender is an Ireland-based peer-to-peer (P2P) website that specializes in business loans. The platform facilitates loans of between €15,000 and €300,000, with terms of up to three years.
Much like any other P2P lending site active in the space, Flender is open to investors of all sizes. In return for backing its business loans, the platform claims to offer an average annual yield of 9.9%.
If you’re keen to find out more about Flender and its P2P investment model, be sure to read my in-depth review. I cover all of the key points that I think you should know – such as how the platform works, where your money ends up, what risks you need to consider, and more.
Crowdestor is a platform where investors can invest in business, real estate, transport and startup projects from just 50 Euro.
The platform has around 13,000 investors, with an advertised average interest rate of 15% over a total €33.5 million in raised funds so far.
See also: My Crowdestor review
I have personally achieved an average interest rate of 17.17%, but I have been very selective of which projects I invest in, as I don’t feel comfortable evaluating certain types of projects.
Swaper is one of the latest entries into the P2P lending space in Europe, having started operations in May 2019. They have found success pretty quickly though, amassing more than 4000 active investors, 160m euro in investments and 2.1m euro in interest paid back to investors.
See also: In-depth review of Swaper
I really like this platform and the team have been extremely pleasant to deal with whenever I contacted them.
Viventor is a Latvian peer-to-peer platform that was founded in 2015, so it’s got a number of years in the market already. It is another loan aggregator like Mintos and has more than 6,000 investors for a cumulative investment of more than 80 million Euros.
Loan originators on Viventor pre-fund the loans and then resell them on Viventor to us investors. However, they do keep at least 5% skin in the game for each loan.
See also: My Viventor review
Viventor currently works with over 15 loan originators in Lithuania, Poland, Spain, Bulgaria and Kenya. The biggest number of loans come from Lithuania.
Returns are high on this platform, I have been able to obtain 15% plus returns and no defaults so far. If you want to diversify beyond Mintos to protect against platform risk, Viventor is a good option.
You can read my full 2021 review of Viventor for more information about this platform.
With October you don’t lend money to other people but to small businesses. I find this site to be very well structured and organized. Their chat is very helpful if you have any questions or doubts about any of the investments.
This peer-to-peer lending site is available in English, Italian, French and Spanish. All European investors are welcome to join and invest.
The minimum investment per project is €20 and there is no secondary market. You can expect returns between 5% and 9% per year.
I’ve been investing with October over the past three years and have had very good results. The loan offerings are very well presented, and each loan is fulfilled very quickly, sometimes in a question of hours. This shows that investors really trust this platform and that that loan offers themselves are very attractive.
The businesses asking for the loans are very diverse and come from the four countries I mentioned. As an entrepreneur myself, I not only enjoy the returns from October, but I also enjoy reading about the various businesses that appear on this site and observing their financial statements.
One thing to keep in mind is that most of the loans are fairly long-term, with the shortest being for 2 years. I try to keep the loans I invest in between 2 and 3 years out of personal preference for shorter loans and higher liquidity in my portfolio.
When you click the link below to start investing with Lendix and invest your first €500, you will receive an extra €20 to invest on the October platform.
🚀 Other Peer-to-Peer Lending Sites
I’ve also invested in a few more European peer to peer lending sites, here are a few notes on them.
MyTripleA – A Spanish platform that works well but has very little projects available. It is similar to October in the sense that you are lending to SMEs. They do offer guaranteed returns of 2% however if you’re happy with parking money for minimal but secure returns. Over the past year, they seem to have had trouble finding suitable projects though, so I have stopped investing on this platform. It still is a good choice if you want a guaranteed return, albeit a low one of just 2%.
Bondora – One of the earliest European platforms, based in Estonia. I tried this out but wasn’t really excited about the returns nor the actual look of the site and the way things are presented. It seems to be passing through a rough patch with poor management decisions being the root cause. You will struggle to find loans with good returns and a buyback guarantee. I am still partially invested via Go & Grow and can only hope it will recover its previous top player status over time, perhaps with a change in management.
And here are yet some others that are on my radar:
There are several other sites that I consider either a scam or badly managed and on the course towards bankruptcy and loss of investor funds. Be very careful who you trust when investing in these platforms. Many people just want to paint a nice picture for any platform just to take in commissions, and the platforms themselves all try to emphasise how safe they are and what great opportunities they are offering to investors. Don’t believe everything, and check out my list of worst P2P lending platforms before you proceed.
If you’re concerned about the safety of P2P platforms, make sure you also read my post on whether it is safe to invest in P2P lending.
How Will Coronavirus affect P2P Lending?
A big question on investors’ minds at the moment is whether the coronavirus pandemic will change the face of P2P lending. I’ve written a separate post with my thoughts on the coronavirus crisis and its effect on P2P lending platforms, go check it out and let me know if you agree with me.
Alternatives to P2P Lending
If, like myself, you want to diversify beyond P2P lending, I would suggest you read up on real estate crowdfunding platforms as well as crypto interest accounts. You can obtain similar rates of return (usually 3-4% less than P2P lending) but these other types of investors tend to be safer as they involve collateral.
If you’re interested in trying out peer to peer loan platforms, I suggest you start off with Mintos.
I’ve been able to consistently achieve returns higher than 10% over the past three years, and so have my friends who are also invested in this platform.
If you have any questions about Mintos or other platforms I mentioned, or how the model of peer to peer loans works, please leave a comment and I’ll do my best to answer your questions.
Before you make any investment decisions, I also encourage you to have a look at how your country taxes proceeds from peer to peer lending. You can check out my article on how peer to peer lending is taxed to get started on this topic.
You should also read about the risks of P2P lending before making any investments, and make sure you are comfortable with that level of risk for the money you are putting into P2P lending platforms.
Have you invested in p2p lending platforms? What has been your experience with these platforms?
Bonus: Mega list of worldwide investment platforms
Use the table below to find many other worldwide investment platforms that you can check out. Many of them are based in the US but accept international investors.