P2P lending & Payday Loan – The increasing presence of financial technology (fintech) in Indonesia proves that the rapid development of technology-based finance in Indonesia. In addition, with the growth rate of financial technology, it means that it certainly increases the awareness of Indonesians with regard to finance. With the existence of fintech, people are increasingly made easy for financial transactions such as applying for loans, saving money, investing and other financial transactions.
But this fintech has a broad scope of several types of fintech that most often we hear is P2P lending & Payday Loan. Both types of fintech are fintech types that are currently often heard by the public because they offer convenience in getting loan facilities. Even though it’s easy, you still need to understand more about the differences between the two in order to choose what suits your needs.
Peer-to-Peer (P2P) Lending (Productive Loan)
Peer-to-Peer (P2P) Lending is a financial service that will bring lenders to borrowers through an online electronic system. This P2P lending service is based on information technology, so borrowers and lenders do all of their information technology based transactions.
With P2P lending also provides many benefits for lenders, borrowers and banks such as:
- For lenders, fintech is an alternative investment with better return on profits. The risks are relative and lenders can also determine their own investments according to their preferences. For millennials it is also very suitable considering this product is supported by digital technology.
- For borrowers, with the existence of P2P lending fintech certainly helps the debtors to obtain other loan alternatives if the documents and collateral they have sufficient, but not in accordance with conventional bank regulations, P2P lending can be the solution.
Payday Loan (Consumptive Loan)
Payday loan is a type of short-term loan. As the name implies, this payday loan is provided for those who need funds but the payment is waiting for the payday to arrive or 30 days.
Both P2P lending and payday loans are both types of short-term loans, but often many consider these 2 types to be the same but in practice it is certainly different. Therefore we will discuss the differences of these two types.
Difference between P2P Lending (Productive Loan) & Payday Loan (Consumptive Loan)
The difference between the two types of fintech includes several things. First the amount of interest given to P2P lending is relatively lower, ranging from 5% per year to about 30% per year. Meanwhile, ordinary payday loans have a relatively higher interest rate, namely the daily interest starting from 0.5% if calculated annually, it can reach 180%.
In terms of profitability, P2P lending usually cuts administrative costs from borrowers, not from interest costs like payday loans. Therefore, in terms of P2P Lending segmentation can be said to be easier and safer.
Another difference is in terms of sources of loan funds. Typically, this fintech payday loan provides loans from their own funds, whereas for P2P lending funds come from crowd lenders or people who invest.
In addition, P2P Lending aims to assist SMEs in developing their businesses by opening up access to loans that are more flexible. On the other hand, Payday Loan aims to help people who need personal loans / fast funds for consumptive purposes or emergency needs. Because of that P2P lending can be used as a new and safe alternative investment.
So, Choose Which?
Now, which one is P2P Lending and payday loan? Choose the fintech lending platform that suits your needs. If you have an SME that you want to develop, you can choose P2P Lending, but if you have an urgent need / urgent fund but you are sure you can return it along with the interest on the loan, then you can choose Payday Loan.