Question 1

What exactly is Peer-to-Peer (P2P) lending?

Accepted Answer

Peer-to-Peer lending (or crowdlending) is an alternative financing model that connects individual investors directly with borrowers via an online platform. By bypassing traditional banking intermediaries, borrowers can access capital faster or more flexibly, while investors earn the interest that would normally be kept by the bank.

Question 2

Who are the borrowers in P2P lending?

Accepted Answer

Depending on the platform, your money funds different asset classes. The most common are: • Consumer Loans: Personal loans for cars, home improvements, or short-term needs. • Business (SME) Loans: Financing for small and medium-sized enterprises for expansion or working capital. • Real Estate / Development: Loans secured by first-rank mortgages for property construction or bridging loans. • Agricultural / Green Loans: Financing for farming equipment or renewable energy projects.

Question 3

How does P2P investing differ from a bank savings account?

Accepted Answer

The core difference is risk and protection. Traditional bank deposits in the EU are protected by the Deposit Guarantee Scheme (DGSD) up to €100,000. P2P investments do not have this state-backed protection. In P2P lending, your capital is at risk. In exchange for bearing this credit risk, investors receive substantially higher yields (historically 8% to 14% p.a.) compared to standard bank interest rates.

Question 4

What is the difference between a "Marketplace" and a "Direct" platform?

Accepted Answer

• Marketplace (e.g., Mintos, PeerBerry): The platform does not issue loans itself. Instead, it aggregates loans from independent, third-party "Loan Originators" (non-banking financial institutions) from around the world. • Direct Platform (e.g., EstateGuru, Crowdpear): The platform directly originates, evaluates, and issues the loans to the borrowers, meaning there is no middleman between the platform and the borrower.

Question 5

What is a "Loan Originator" (LO)?

Accepted Answer

In the marketplace model, a Loan Originator is the lending company that actually issues the loan to the end-borrower, evaluates their credit score, and collects the monthly payments. After issuing the loan, the LO lists a portion of it on the P2P platform to get funding from retail investors.

Question 6

What are the main risks involved in P2P lending?

Accepted Answer

P2P lending carries several specific risks: • Borrower Default Risk: The end-borrower fails to repay the loan. • Loan Originator Risk (Marketplaces): The lending company goes bankrupt and cannot honor its buyback guarantees or transfer collected funds. • Platform Risk: The P2P platform itself goes out of business. • Liquidity Risk: The inability to cash out your investment before the loan term ends. • Macroeconomic Risk: Global crises, inflation, or regional conflicts affecting repayment rates.

Question 7

What is a "Buyback Guarantee" or "Buyback Obligation"?

Accepted Answer

It is a contractual promise made by the Loan Originator. If a borrower’s repayment is delayed by a specific number of days (usually 30 to 60 days), the Loan Originator promises to buy back the loan from the investor at its full nominal value, plus accrued interest. Important: A buyback guarantee is not a state guarantee. It is only as reliable as the financial health and balance sheet of the Loan Originator providing it.

Question 8

What does "Skin in the Game" mean?

Accepted Answer

"Skin in the game" is a risk-alignment mechanism. It refers to the percentage of a loan (usually 5% to 15%) that the Loan Originator is required to keep on its own balance sheet. Because the Originator's own money is tied up in the same loan as the retail investors, they are highly motivated to perform strict credit checks and recover bad debt.

Question 9

What happens if a borrower defaults on a real estate P2P loan?

Accepted Answer

Real estate loans are typically backed by collateral (a mortgage). If the borrower defaults, the platform initiates a debt recovery process. The property is seized and sold at auction. The proceeds from the sale are then used to repay the investors. This process can take anywhere from 6 to 24 months, which is why LTV (Loan-to-Value) is a crucial metric.

Question 10

What is LTV (Loan-to-Value)?

Accepted Answer

LTV represents the ratio of the loan amount to the appraised value of the collateral property. For example, a €60,000 loan on a property worth €100,000 has a 60% LTV. A lower LTV provides a higher safety buffer for investors if real estate prices drop and the property must be auctioned.

Question 11

What happens if the P2P platform itself goes bankrupt?

Accepted Answer

Licensed European platforms are required to keep investors' uninvested funds in strictly segregated bank accounts (separate from the company’s operational funds). Furthermore, your investment is a direct legal claim against the borrower, not the platform. Regulated platforms must have a "run-off plan" (living will), meaning an independent third-party administrator would take over the IT systems to collect borrower payments and distribute them to investors until all loans mature.

Question 12

How does European regulation (ECSPR) protect me?

Accepted Answer

The European Crowdfunding Service Providers Regulation (ECSPR) introduced strict, unified rules for P2P platforms across the EU. Regulated platforms must provide standardized Key Investment Information Sheets (KIIS), segregate client funds, conduct investor knowledge tests, publicly disclose default rates, and manage conflicts of interest transparently.

Question 13

How are returns from European P2P platforms taxed?

Accepted Answer

Income generated from P2P platforms is generally treated as ordinary interest income or capital gains, depending on your country of tax residency. The vast majority of platforms pay out gross returns (before tax). It is your legal responsibility to declare this foreign income in your annual domestic tax return.

Question 14

What is Withholding Tax (WHT) and how can I reduce it?

Accepted Answer

Regulated platforms in jurisdictions like Latvia or Lithuania are legally required to deduct Withholding Tax (typically 5% to 20%) at the source before paying you interest. However, under Double Taxation Treaties (DTT), you can usually reduce this rate to 5% or 0% by providing the platform with a valid Tax Residency Certificate (TRC) from your local tax authority.

Question 15

What is an Auto-Invest strategy?

Accepted Answer

Auto-Invest is an automated tool provided by platforms that automatically invests your available funds into loans that match your predefined criteria (e.g., minimum interest rate, maximum loan term, specific loan originators). It saves time and ensures your money is instantly reinvested, maximizing compounding interest.

Question 16

What is "Cash Drag"?

Accepted Answer

Cash drag occurs when your money sits uninvested in your platform account earning 0% interest. This usually happens when the platform faces a shortage of new loans (high investor demand, low loan supply) and your Auto-Invest cannot find loans matching your criteria.

Question 17

Can I withdraw my money before the loan term ends?

Accepted Answer

This depends on the platform. Many platforms offer a Secondary Market—an internal liquidity facility where you can sell your active loans to other investors. You can sell at par value, at a premium, or at a discount (if you need liquidity immediately). Note that secondary market sales may incur a small transaction fee (e.g., 1%).

Question 18

What is the main purpose of Crowdiz?

Accepted Answer

Crowdiz is an advanced analytical aggregator designed to bring total transparency to the European P2P lending market. We replace marketing promises with hard, verified data. Our goal is to provide investors with clear visualizations of platform health, market geography, and historical performance, allowing for smarter, data-driven investment decisions.

Question 19

How does Crowdiz collect and verify platform data?

Accepted Answer

We operate a frictionless B2B data exchange. We gather data directly from P2P platforms via secure portals, analyze publicly audited financial reports, and monitor regulatory disclosures. We track monthly loan originations, verified default rates, and licensing updates without commercial bias.

Question 20

Does Crowdiz provide financial or investment advice?

Accepted Answer

No. Crowdiz is an analytical tool and an educational data aggregator. We provide the infrastructure, institutional metrics, and operational transparency, but all investment choices and risk assessments are entirely your own responsibility.

Question 21

What does "Skin in the game" mean in the context of Crowdiz?

Accepted Answer

Unlike standard affiliate websites, Crowdiz operates with absolute transparency. The founder of Crowdiz invests his own real money into selected P2P platforms. We publicly share the exact performance, strategic allocation, and actual returns of this personal portfolio. We don't just analyze the market; we actively participate in it.

Question 22

Why did Crowdiz reset its historical investment data?

Accepted Answer

To provide the most authentic and transparent experience for our users. By resetting the founder's investment accounts to zero, we allow visitors to track a brand-new portfolio in real-time. This provides an undistorted, realistic view of what a new investor entering the market today can expect in terms of yields, cash drag, and platform performance, without the influence of legacy loans.

Question 23

Is Crowdiz free to use?

Accepted Answer

Yes. The core analytical data, market overviews, global platform statistics, and access to our real-time portfolio tracking are completely free for retail investors.

Everything You Need to Know About P2P Investing

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Everything You Need to Know About P2P Investing

P2P BasicsWhat exactly is Peer-to-Peer (P2P) lending?

P2P BasicsWho are the borrowers in P2P lending?

P2P BasicsHow does P2P investing differ from a bank savings account?

P2P BasicsWhat is the difference between a "Marketplace" and a "Direct" platform?

P2P BasicsWhat is a "Loan Originator" (LO)?

Risks & GuaranteesWhat are the main risks involved in P2P lending?

Risks & GuaranteesWhat is a "Buyback Guarantee" or "Buyback Obligation"?

Risks & GuaranteesWhat does "Skin in the Game" mean?

Risks & GuaranteesWhat happens if a borrower defaults on a real estate P2P loan?

Risks & GuaranteesWhat is LTV (Loan-to-Value)?

Risks & GuaranteesWhat happens if the P2P platform itself goes bankrupt?

Risks & GuaranteesHow does European regulation (ECSPR) protect me?

Taxes & ManagementHow are returns from European P2P platforms taxed?

Taxes & ManagementWhat is Withholding Tax (WHT) and how can I reduce it?

Taxes & ManagementWhat is an Auto-Invest strategy?

Taxes & ManagementWhat is "Cash Drag"?

Taxes & ManagementCan I withdraw my money before the loan term ends?

About CrowdizWhat is the main purpose of Crowdiz?

About CrowdizHow does Crowdiz collect and verify platform data?

About CrowdizDoes Crowdiz provide financial or investment advice?

About CrowdizWhat does "Skin in the game" mean in the context of Crowdiz?

About CrowdizWhy did Crowdiz reset its historical investment data?

About CrowdizIs Crowdiz free to use?

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