How To Create A P2P Lending App Like SoLo?
How To Create A P2P Lending App Like SoLo?
Last Updated on September 5, 2022
Peer To Peer money lending has become a common thing in 2022. A huge range of apps is also available in the market offering P2P money lending services. SoLo is one of the best examples from the huge list.
As per Brand Essence Research, the Peer To Peer lending market is going to be worth $802.34 billion by 2028. On the other hand, reports from Precedence Research, show that the global P2P loan market is expected to reach $705.81 billion in 2030 at a CAGR of 26.7%.
In creating a Peer To Peer lending app one must be aware of all the topics related to it like what is a P2P lending app, the pros and cons of a P2P money lending app, types, factors to consider, and the ideal way to promote the app.
In this article, I will be discussing all the important topics in creating a Peer To Peer lending app.
What Is A P2P Lending App?
The term P2P is generally referred to as “Peer To Peer” or “Person To Person”. P2P app is basically a platform where individuals can issue and receive loans directly from each other and no traditional financial institution is involved as an intermediary.
What Is SoLo?
SoLo is a platform where individuals can receive and supply short-term loan amounts. Users can get a loan of $50 to $500 from the P2P money lending app. Borrowers have the option to select the time they would like to return the loan amount and they can also add a tip for the lender.
Travis Holoway and Rodney Williams founded the SoLo Funds app. In 2018 the founders launched the app.
How Does SoLo Funds Generate Revenue?
SoLo does not follow the orthodox way in generating revenue like other P2P lending apps. SoLo does not implement any interest, it does not have any fees for the loans or even a subscription plan to avail of the services.
SoLo generates revenue through donations from users and several charges in specific situations. Charges such as-
- Late Fee- If the borrower does not pay the loan amount back within 35 days a 10% late fee is charged.
- Synapse Transaction Fee- If a borrower misses the 90-day deadline and his account is sent to third-party collection agencies Synapse Transaction Fee is charged when he repays the loan.
- SoLo Recovery Fee- When a borrower does not pay back in 35 days but the funds are recovered within 90 days a recovery fee will be charged from the lender which is 20% of the loan principal amount recovered by SoLo.
Interesting Stats Of P2P Lending App SoLo
- SoLo Funds have more than 100,000 active monthly users
- The average profit for a lender is between 3% to 10% of the loan amount
- All the loans on SoLo Funds are with 0% interest rates
- User can request or funds loans of anything within $50 to $500
- The loan duration in P2P money lending app is 90 days
- SoLo Funds charge a fee, equal to 20% of the amount, from the 36th day after the loan funding
- If the borrower pays back the loan after the repayment time a 10% late fee is charged to them.
How Does A P2P Lending App Like SoLo Work?
The working process of a P2P money lending app such as SoLo can be divided into steps-
- Sign Up- First, a user needs the option to sign up and log in either as a borrower or a lender.
- Analyze- Once the user is logged in as a borrower lenders will be able to see the risk factors for funding the loans of the borrower. The credit rating of the borrower will generate the rate of interest and terms.
- Submitting Loan Request- A borrower needs to put his loan request live on the loan market with the reason the loan is required. The lender can see this request from borrowers.
- Accepting Loan- Once the loan request is live the borrower will receive bids from lenders. The borrower will be required to select one offer from the lenders and read the terms and conditions of the loan before accepting it.
- Repayment- The borrower will be informed about the monthly repayment dates. If he is late in paying the monthly installments, a decrease in credit score will be reflected in his profile and a late fine can be charged to him.
Advantages And Disadvantages Of A P2P Lending Platform
1. The Advantages Of A P2P Lending App
- Cost-Effective: If you ever decide on taking a loan from a P2P money lending platform you can expect a quick process, no in-person interactions, and no extra charges for banking services.
- Flattering Rates: As the whole process in the P2P lending apps is free of mediators the extra charges are not available. The flattering rates are a reflection of the same.
- Multiple Borrowers For A Lender: A lender not only enjoys the cost-effectiveness, quick service, and flattering rates in a P2P lending app. They also have the opportunity to lend money to multiple borrowers at a time. A P2P lending app simplifies the process for an even better experience.
- Security: The online P2P money lending apps are free from any mediators. The lenders can trust the P2P lending apps in funding loans. As the apps ask for government-approved ID copies and other essential personal details from borrowers. It helps in increasing security.
2. The Disadvantages Of A P2P Lending App
- Limited Accessibility: The P2P lending apps are limited to only those who have a good credit score. Sometimes the charges can be higher than traditional banks. One can be denied to be a borrower with a poor credit score.
- Limited Amounts: A P2P loan app can be completely secured and trusted by users. But the amounts of loans are very limited.
- Debt Collectors Are Here Too: Traditional banks have debt collectors who force a borrower to repay the loan in court if he misses the repayment dates. A P2P lending app also has debt collectors so the threat to a borrower is still there.
READY TO LAUNCH YOUR APP?
Develop Your P2P Borrowing App Based On Common Loan Categories
You can focus on one or multiple loan types in your P2P lending app development. Each loan category brings different features and has a particular target audience.
- Personal Loans- Personal loans for private individuals are the most common type of loan. It is limited in restrictions, has lower rates, and is free from huge paperwork. A common person can avail of a personal loan for repaying bills, or for debt consolidation.
- Business Loans- There are lots of Peer To Peer lending apps that tend to invite companies in becoming borrowing parties. It is one of the complicated loan processes. You will need to provide the credibility of your business to lenders.
- Home Loans- People often need loans to purchase a property or renovate the existing one. If you create a P2P money lending app that offers home loans it can attract a huge audience.
- Car Loans- Vehicles are the most lavishing thing after real estate. So a car loan becomes an automatic on-demand type. You can build a car loan offering a P2P lending app to increase your customer base.
- Educational Loans- Students are required to pay for higher education. As the fees in higher education are quite high they seek loan options. You can develop your P2P lending app focusing on educational loans.
- Medical Loans- Medical insurance is essential in order to avoid the sky-high bills of hospitals. But the insurance itself becomes a burden on common people. That is why an app based on medical loans can be a game changer for you.
All the above-mentioned categories are focused on mitigating people’s need for money in different circumstances. You need to choose a need you want to solve before building your own P2P money lending app.
In case you have decided on the loan category you will be preferring for your P2P loan application let’s discuss the process of development.
How To Create a P2P Lending app – A Step-by-Step Guide?
Step 1 – Market Research
Just like in any app creation market research is essential for developing your P2P lending app. You are required to assess the market completely, develop an idea of the way it functions, identify your target audience and how will your app deliver the desired results.
Market research can also help in identifying the shortcomings of your rivals. Identifying their shortcomings can help your app grow at a rapid pace.
Step 2 – Ensure Safety And Legal Compliance
Security is one of the major factors in P2P lending app development. You must ask yourself if you can trust lending your own money through your app.
You can implement these to increase security-
- Authentication- An identity verification process can increase the security standard of your P2P loan app. Developers have huge options in authentication processes like passwords, 2-factor authentication, face recognition, and fingerprint scanning.
- Encryption- A P2P lending app must have encryption. You need to ensure your app uses secure server connections and is well equipped with all essential data-breaching tools.
- Legal Compliance- An app with a monetary process and sensitive data of users need to be legally compliant with all the regulatory requirements. You need to be aware of all the laws both local and global in order to comply with them.
Step 3 – Select A Business Model
As it requires a lot of effort in building a P2P lending application you surely want to make it rewarding enough. You can choose from the common business models like advertising and subscription to ensure your app stays profitable. You can follow a commission-based business model as well to ensure an income in every processed loan.
Step 4 – Essential And Advanced Set Of Features
If you are planning on creating your own P2P loan app you must have an idea about the essential and optional but advanced features.
Essential Features For A Money Lending Platform-
- Registration Form- It is the first step once your customer downloads the app. It is mandatory for an app to make the registration process quick and simple. Adding an option to sign up using social media profiles can be a game-changing move.
- Profile- A profile where users can edit their personal details or even update with more personal information and track their own activities in the P2P lending app can influence their experience in a positive way.
- Loan Application- This is what a P2P loan app is made for. A brief guide for first-time users will help them understand the process.
- Loan Calculator- An automated loan calculator eases the process for the borrower in selecting a lender. Borrowers can have the monthly repayment amounts, interest rates, and other statistical details through it.
- Payment- In this section of a P2P lending app, users can track their payment records and initiate a new payment as well.
- Notifications- Notification is crucial in Peer To peer loan apps. A user can be notified of his pending payments, due dates, and other information through notifications.
Optional Yet Advanced Features-
- Credit Score- A credit score helps in informing a lender about the credit history of a borrower. It helps the lender in deciding whether to lend the money to the borrower or not.
- Ratings- It is one way of showing appreciation for users. As credit scores reflect a user’s credit history a good rating will reflect his standard as a loan partner.
- Live Chat And Chatbot- Users may find specific obstacles in using the apps. You have to ensure there is a live chat or at least a chatbot feature to guide the user.
- AI-Based Analytics- This feature can improve the real-time analysis of in-app activities. Admins can gain detailed insights and user experience to update their P2P lending more effectively in the future.
Step 5 – APIs Integration
In building your P2P lending app financial APIs can be really effective. APIs can enhance the process of production, reduce costs, minimize the development time and offer advanced functions in your app.
APIs also help in making the account verification process safer and more secure.
Step 6 – UX/UI
A P2P app is generally preferred by users mainly based on its features and functionality. But an app is always in need of a quality UI and UX.
- Make the UX/UI simple and effective
- Organizing the information in a clear manner with graphs, and tables and adding a search option to navigate the stats
- Offer financial educational content as per your app concept
Step 7 – MVP Development
A Minimum Viable Product (MVP) is always a better way to start app development. This process can save you enough time, effort, and money in developing your P2P lending app. It will mark out the shortcoming you have in your app.
An MVP is only a framework with the essential features only. But it will help you in predicting the way users are going to accept your app so you can focus on their needs and observe the pros and cons of your app, also retain the first customers, and generate revenue.
Step 8 – Collect Feedback
If you want to assess how your P2P lending is doing you must offer a feedback feature to users. An automated survey through the chatbot can also help in collecting user feedback.
Creating a P2P lending app is not only limited to the release of the app. So you must focus on user experience, user feedback and as per them implement updates.
Things You Need To Consider While Building The P2P Lending App
- Quality Lawyer- In a P2P lending business, you need a quality lawyer to ensure all legal issues are settled in P2P investing and suggest proper ideas.
- Financial Expert- A financial expert can help you make all your policies up to date and follow financial regulations.
- Loan Agreement- It is mandatory to consider drafting a loan agreement in setting up a P2P lending startup. Users must be informed about the terms and conditions of the agreement. The agreement also needs to comply with government financial regulations.
- Bank Partner- You are required to choose a bank partner yourself. The bank will offer its services in keeping your money as well as the money of investors and borrowers. As the bank already has its compliance process it will help you. You can also select multiple banks as partners but that will cost you more.
- Local And International Laws- You must have an idea of both local and international laws and need to comply with them if you are planning to create a P2P lending app not limited to your local region.
- Integrations- Your P2P lending app must be prepared for multiple integrations like payment systems, wallets, and banking providers.
Ideas For Promoting Your P2P Lending App (Bonus Tips)
Once your P2P lending app is created you need to promote it with effective methods.
- Originality- The P2P lending apps are not that old but the competition is quite high so your developed P2P loan app must offer something unique-
- For example, you can offer a certain category of loan
- A market analysis can help you identify what apps are prevailing and what apps are failing
- You can offer more than only personal loans
- Press- Press can be a better way to expand the scopes of your P2P lending app
- News about your lending app through the press can help in gaining the trust of investors and borrowers
- It can also help you in finding opportunities to form a partnership with already established financial platforms
- Advertising- The most common yet highly effective method of promoting an app.
- Put ads on financial websites to target relevant audiences easily
- Ads on social media are highly recommended in this digital era.
Create Your P2P Lending App With OyeLabs – The benefits
OyeLabs is one professional web and mobile app development company. We possess years of experience in delivering quality solutions to different business niches.
We have diversified experience in developing P2P lending apps. Our developers are highly skilled and qualified. They can implement all the latest technologies you need in creating your P2P lending to succeed.
From custom P2P lending app development to upgrading your legacy software we can serve you everything. We work with startups, mid-size companies, and giant firms as well.
Contact us now to discuss your Peer To Peer lending app idea.
A P2P money lending app is basically a platform connecting people who need monetary assistance and people who can assist them. These types of apps are a revolutionary alternative to the traditional banking system.
SoLo Funds is one of the best platforms currently available in the market for both lenders and borrowers.
A legally compliant app with all essential features and some advanced features can help you offer a better customer experience.
You need to have a lawyer for legal advice, a financial expert to consult financial topics, and a banking partner, and your app must follow all the rules and regulations in order to avoid any type of issues legally or financially.
You can create your own P2P lending app like SoLo Funds with OyeLabs. Contact us now to know more about our Peer To Peer Lending App Development Services.