Automatic Vs Manual Lending in Peer-to-Peer Lending: Embracing Efficiency

Explore the nuances of automatic versus manual lending in the P2P lending landscape. This blog delves into the efficiency, risk management, and returns of both methods, highlighting the trend towards automation for accessible, technology-driven investments.

  • Feb 21, 2024
  • 5 min read

In the evolving landscape of peer-to-peer (P2P) lending, investors are presented with two distinct approaches: automatic and manual lending. This blog dives deep into the intricacies of both, highlighting their core features and advantages and how they fit into the modern financial ecosystem. While both have their place, there's a growing inclination towards automatic lending, for reasons we'll explore. Let's embark on this financial journey, understanding the nuances that make automatic lending increasingly appealing.

P2P lending is an innovative financial model that connects borrowers directly with lenders through online platforms, bypassing traditional banking institutions. This model offers competitive interest rates and potentially higher returns for investors, making it an attractive alternative to conventional financing options like equity and mutual funds.

Manual Lending: The Traditional Approach

Manual lending, the traditional method in P2P platforms, allows lenders to review individual loan applications, assessing the borrower's risk profile, interest rates, income, and loan duration before deciding to lend. This hands-on approach provides lenders with control over their investment decisions, appealing to those who prefer personal involvement in their financial activities. However, it requires a significant investment of time and effort to analyse each potential borrower, which can be a daunting task for many.

Pros of Manual Lending
  • Personalised Control
    Investors can select exactly who they lend to based on their personal risk tolerance and investment strategy.
  • In-depth Analysis
    It allows for a thorough examination of borrowers' profiles and loan purposes.
Cons of Manual Lending
  • Time-Consuming
    Requires considerable time to review and select loans.
  • Risk of Bias
    Personal biases might influence lending decisions, potentially affecting portfolio diversity and returns.
  • Defaults
    Losses can be higher if any of the borrowers default on the payment.

Automatic Lending: The Future of P2P Lending

Automatic lending is gaining momentum as the preferred choice for many investors within the P2P lending space. This innovative approach utilises algorithms and predefined criteria set by lenders (such as loan duration, risk level, and amount) to automatically allocate funds to suitable loans. This hands-off strategy simplifies the investment process by efficiently diversifying investments across multiple loans, thereby spreading risk and saving time. Automatic Lending is like investing in mutual funds where you don’t have to actively manage your portfolio.

Pros of Automatic Lending
  • Efficiency
    Automatically matches loans with your investment criteria, saving time and effort.
  • Diversification
    Spreads investments across numerous loans, reducing risk.
  • Simplicity
    Ideal for new investors or those with limited time, as it requires minimal intervention.
  • Consistent Investment
    Keeps your funds continuously invested, potentially leading to higher returns.
Cons of Automatic Lending
  • Less Control
    Investors have less control over individual loan selections.
  • Generic Criteria
    May not account for the unique nuances of each loan beyond the predefined criteria.

Average Returns

Average returns for manual lending in P2P platforms can vary widely depending on factors like risk tolerance, loan selection, and overall platform performance. Studies suggest a range from 7% to 15% or even higher. Although the risk increases and requires significant time and effort to research borrowers, analyse risks, and manage portfolios.

Average returns for automatic lending tend to be in the 7% to 12% range, though there can be variations depending on the platform's chosen risk profiles and lending strategies.

Why the Scale Tips Towards Automatic Lending

The movement towards automatic lending isn't without reason. Its efficiency and simplicity offer a compelling case for both seasoned investors and newcomers alike. Automatic lending democratises the investment process, making it accessible to a broader audience by removing the barriers of time and in-depth financial analysis.

Moreover, the ability to effortlessly diversify across a wide array of loans mitigates risk, a cornerstone principle of investment that can't be overstated. By allocating investments across different borrowers, loan types, and risk levels, automatic lending can achieve a balanced portfolio that manual lending struggles to match in efficiency.

Embracing Automatic Lending: A Step Towards Financial Innovation

As we venture further into the digital age, the appeal of automatic lending in the P2P lending sector is clear. It represents a shift towards leveraging technology to make smarter, more efficient investment decisions. This approach aligns with the broader trend of financial technology innovations that seek to simplify and enhance traditional financial services.

While manual lending still holds value for those who desire a hands-on approach, the benefits of automatic lending—especially in terms of time-saving and risk management—make it an increasingly popular choice. It embodies the future of investing: a world where technology empowers individuals to achieve their financial goals with greater ease and efficiency.


In the landscape of peer-to-peer lending, both manual and automatic lending have their merits. However, as we navigate the complexities of modern finance, the trend is unmistakably leaning towards the efficiency, simplicity, and risk mitigation offered by automatic lending. This method not only suits the fast-paced nature of today's investment world but also opens the doors to those who may have been previously sidelined by the intensive demands of manual lending.

However, automatic lending is handled by the platform, so selecting the right platform is crucial from an investor’s point of view.

By embracing automatic lending, investors can capitalise on the opportunities presented by P2P lending with less effort and time investment, making it a cornerstone of contemporary investment strategies. As we look towards the future, the integration of technology in finance promises to further refine and enhance the way we invest, making financial success more accessible to all.

Key Insights

    Personalised Control
    Manual lending offers personalised control and in-depth analysis but is time-consuming and prone to bias.
    Efficient Automation
    Automatic lending simplifies investment with algorithms, providing time savings and risk diversification but less individual control.
    Return Variability
    Manual lending yields 7%-15% returns; automatic lending typically offers 7%-12%, influenced by platform and risk strategy.
    Trend Shift
    Automatic lending's popularity grows due to its accessibility, risk mitigation, and financial technology innovation alignment.
    Platform Critical
    Choosing the right P2P platform is vital for leveraging technology in automatic lending for efficient, smarter investments.