Some peer-to-peer lenders package their loans together to offer a small range of loan terms and interest rates for consumers to choose between. These “products” may be presented as fixed term accounts or bonds, and may have different terms attaching to them. The terms will often be linked to the period of the product, or the ease of access to the funds with the indicative interest rates payable varying in line with the term of the product.
Lenders are essentially passive, simply choosing the product and trusting the platform to diversify them across a range of loans that will pay them the required rate. Investors can often choose to have their income paid to them or reinvested.
Although these products will often operate similar to bank accounts paying a specific interest rate they are more comparable to corporate bonds issued by a company. The payment of the interest and capital is reliant on the underlying loans generating sufficient returns and the loan defaults being low.