Understanding Peer-to-Peer Lending in the Fintech Era
The rise of fintech companies in recent years has enabled us to access financial products conveniently through our electronic devices, often with more attractive conditions than traditional banks.
Among the various financial products available through fintech are peer-to-peer (P2P) loans. Essentially, a borrower requests a loan, and through the fintech platform, investors who wish to fund the credit are matched. This way, the borrower receives their loan, and the investor earns returns.
Although only four regulated fintech companies in Mexico currently offer this type of scheme, it can be an option for those seeking loans with conditions different from traditional banking and investors looking for higher returns, regardless of the risk.
How It Works for Borrowers
In Mexico, the fintech companies offering P2P loans are Doopla, YoTePresto.com, Prestadero, and Afluenta. The borrower requirements are similar across these platforms.
To access a loan through such a platform, the first step is to create an account with an email and password. Additionally, you’ll need a valid official ID, recent proof of residence, and income or bank statement evidence to confirm your creditworthiness.
Like any loan, there’s a maximum repayment period: Doopla and Afluenta offer up to 48 fixed payments, while YoTePresto.com and Prestadero allow up to 36 fixed payments.
There are also minimum and maximum loan amounts: Doopla ranges from 20,000 to 350,000 pesos; YoTePresto.com from 10,000 to 450,000 pesos; Prestadero from 10,000 to 300,000 pesos; and Afluenta from 7,000 to 360,000 pesos.
Juan Carlos Flores, Doopla’s General Director, explained that borrowers are assessed using several variables to determine the loan risk and classify them based on default probability levels. This helps establish the loan’s interest rate.
“Among the variables we analyze are credit rating, income, job security, or age. We evaluate 30 variables to determine the interest rate and default risk,” Flores described.
Similarly, interest rates fall within a range. For example, Doopla’s are between 12% and 34% annually; YoTePresto.com’s range from 8.9% to 38.9% annually; and Prestadero’s range from 10.9% to 30.9% annually.
Who Benefits from These Alternatives?
Experts from Stripe assert that P2P loans through fintech companies are convenient for those seeking quick contract processes and the comfort of doing it via mobile devices.
Regarding loan conditions, experts claim that these financing models can offer better interest rates and fewer fees compared to traditional bank loans.
However, traditional banks can provide much larger loan amounts. Moreover, those who are unbanked and don’t meet requirements for traditional bank loans can find an alternative in this option, with simpler requirements, to build or improve their credit history.
Recommendations for a Secure Loan
“If you’re seeking this type of loan, ensure the institution you’re applying to is registered with Condusef and CNBV,” advised Flores, warning that some websites impersonate fintech platforms.
Condusef recommends avoiding financial institutions that, when applying for the loan, request prepayments or access to sensitive banking information before granting credit.
Furthermore, fintech companies are obligated to provide the loan contract in PDF format for review and certainty of conditions, fees, and details before applying.
