The ins and outs of Harmoney, LendMe, Squirrel Money and Lending Crowd compared from a borrower's perspective

The ins and outs of Harmoney, LendMe, Squirrel Money and Lending Crowd compared from a borrower's perspective

By Jenée Tibshraeny

Peer-to-peer (P2P) lending is gathering steam in New Zealand with four licensed platforms entering the market over the past 18 months.

The idea is, those who need cash can get it directly from those who are willing to lend it at a price, through an online platform licensed by the Financial Markets Authority.

While the P2P lenders in New Zealand share the same over-arching concept, there are a number of differences in the way they operate and position themselves in the market.

Harmoney and Squirrel Money are targeting consumer borrowers – facilitating unsecured loans in Harmoney's case, and unsecured and secured in Squirrel's – while LendMe and Lending Crowd are tapping into the business market as well – facilitating larger secured loans.

The P2P lenders also take different approaches to how borrowers’ interest rates are determined, with Squirrel letting its marketplace dictate rates to some extent, while the other P2P lenders set rates themselves.

Yet the fact all lenders take borrowers’ credit histories and financial situations into account, suggests highly indebted borrowers, who are perhaps unable to borrow from a bank, may not be in the running for a good deal, if any deal, through a P2P lender.

While the average interest rates P2P lenders are charging are below banks and personal finance companies – for example ANZ charges interest of 17.95 - 18.95% on personal loans and Instant Finance, 19.95 - 29.95% – they are turning down a large number of would-be borrowers.

Squirrel Money managing director, John Bolton, in December told he wanted the platform to stay in the bank quality end of the market.

In fact, so far Squirrel’s lending has only been to borrowers deemed A and B risk grade, and it's only approving around 21% of the loan applications it receives.

Harmoney, LendMe and Lending Crowd are also taking cautious approaches.

Lending Crowd managing director Wayne Croad says the platform’s objective is not to enter into “that second tier end of the market”.

He points out Lending Crowd lets borrowers know whether they make the cut after they answer a few simple questions through the online quoting process. Croad is also managing director and majority owner of finance company Finance Direct.

Here’s a table that compares and contrasts the P2P lenders from a borrower’s perspective.

It's still early days for these platforms, so their average interest and approval rates are likely to change over time.

Also of interest are Harmoney's detailed statistics page here and the FMA's tips on P2P lending brochure here




Squirrel Money

Lending Crowd


Part owned by founder and CEO, Neil Roberts (48%), Trade Me, Heartland Bank, P2P Global Investments and others. Began trading in NZ in Sep 2014.

Plans to launch in Australia.

Founded by Mark Kirkland and Edwin Morrison, of Auckland-based law firm Kirkland Morrison O’Callahan and Ho. Began trading in Dec 2015.

Part of the Squirrel brand that provides mortgage broking services. Headed by John Bolton. Began trading in Nov 2015.

Founded by Finance Direct's managing director, Wayne Croad, and technology specialist, Bob Durrant. Began trading in Dec 2015.

Wants to launch in Australia.

Borrowers targeted


Consumers, business, rural - trusts, companies, other organisations


Consumers and small to medium-sized businesses.

Secured or unsecured loans



Secured or unsecured


How much you can borrow

$1,000 - $35,000

$25,000 - $2 million

Secured: $3,000 - $70,000

Unsecured: $3,000 - $30,000

$2,000 - $200,000

Repayment period

3 or 5-year

Variable – different repayment options for different types of loans. Most loans are offered for 1 - 5-year terms.

2, 3, 5-year

3 or 5-year

How interest rates are calculated

The risk grade Harmoney assigns you based on your income, assets/liabilities, credit and third party checks, and repayment history.

The credit score LendMe assigns you based on your ability to service the loan, your credit history and the loan to value ratio – the amount of the loan compared with the value of security.

The Squirrel marketplace. Investors bid an interest rate between +/- 0.50% of the market rate. The market rate gradually goes up or down depending on supply and demand. Squirrel adds a levy to the borrower interest rate based on your individual risk profile.

The risk grade Lending Crowd assigns you based on your credit profile and security offered.

Interest rate range

9.99 - 39.99%

6.64 - 15.04%

9 - 14%

Personal: 7.90 - 19.10%

Business: 8.95 - 19.75%

Average interest rate charged





How far through the process you find out your interest rate

Once you’ve provided Harmoney with your personal financial information needed for it to calculate a rate.

You can get an estimate quote online straight away.

Once you’ve provided LendMe with your personal financial and security information needed for it to calculate a rate.

Immediately. Squirrel publishes live data on its web site so borrowers can get indicative rates immediately.

Once you’ve provided Lending Crowd with your personal financial information needed for it to calculate a rate.

You can get an estimate quote online straight away. You will be notified at this time if you qualify for a loan.


Multiple – investors lend money in $25 chunks.

Banks & institutional investors provide about 75% of funding, retail investors the balance.

Multiple – investors lend money in $1,000 chunks. Can fund entire loan.

Launched with just retail investor funding but aims to bring a bank and institutional funders on board.

Single investor.

Is, and plans to remain, 100% retail investor funded.

Multiple – investors lend money in $50 chunks. Can fund entire loan.

Aside from retail investor funding will also receive some funding via Finance Direct. May take funding from institutional investors and banks in time.

How you’re matched with an investor

Investors choose whether they want to invest in your loan based on the level of risk and return.

Investors choose whether they want to invest in your loan based on the level of risk and return.

The platform automatically matches investors with borrowers based on interest rate and term.

Investors choose whether they want to invest in your loan based on the level of risk and return.

Portion of loan requests that get approved





Portion of approved loans on market that get funded





How quickly you get the money

Once your loan is approved and fully funded through investors. 95% of loans fully funded within 24 hours.

Once your loan is approved and fully funded through investors.

Once your loan is approved and matched with investor. In most cases you can draw your loan down in 24 hours.

Once your loan is approved and fully funded through investors. You can choose a window of three working days to disperse the loan.

Establishment / platform fee


2 - 7% of the loan amount, depending on your credit score.

$250 for unsecured loan.

$500 for secured loan.

$250 - $1,450 depending on loan size.

Early repayment fee





Other fees

Overdue repayment fee: $30 - $75. Borrowers have 5-day grace period before charges kick in.

Dishonour fee: $15

Legal fees: If enforcement action is required against you.

Legal fees for security establishment. This is to undertake the legal process of placing the security in an independent bare trust with the lender or lenders assigned beneficial interest in the security.

Missing a payment: $25 a month until loan is up to date. Penalty of 5% interest per year over normal rate. Borrowers have 5-day grace period before charges kick in.

Overdue fee: interest of 20% on the amount in arrears.

If loan reaches 91 days in arrears, the full amount of the loan will become due and a number of fees will apply.

Payment protection cover available as an optional add-on

Yes – two levels of cover available.

Partial: death, terminal illness.

Complete: death, terminal illness, disability, involuntary redundancy, and bankruptcy.

The fee is calculated as a percentage of your loan.



Yes – cover applies for death and terminal illness. Lending Crowd is planning to expand cover to sickness, redundancy and bankruptcy this year.

The fee equals 2.25% of the amount being financed for individual loans or 3.65% of the amount for two person loan.

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I think the interest rate information about Harmoney is incorrect. The average interest rate p.a. across all loans is 12.66%. This is calculated monthly and updated on the platform.

Hi JC,

Thanks for your feedback. I can confirm that rate is correct. 12.66% is the average interest rate paid to INVESTORS. The average rate paid by BORROWERS - the focus of this article - is 17.73%.

My colleague David Hargreaves is working on an article comparing P2P lenders from an investor perspective. This should be published within the next couple of days.   

Interesting as 12.66 + 1.5 (platform service cost) < 17.73. That leaves 3.57% of total loans paid for by the borrower, which seems rather high to me. I have not used the platform to borrow so I need to read more about this.

The difference is due to loan rewrites -a scam that allows Harmoney to double dip on their commissions and also due to loan defaults.

OK, that would mean that the fee is closer to 1.6% assuming 1 rewrite across all borrowers. That makes sense.

I think P2P lending is a global fad. I just hope that private investors are fully aware of the risks.. It is sub prime debt all over again.

Many of Harmoney's borrowers are restructuring bank debt at lower interest rates. That's kind of the opposite of sub-prime.

Sorry JC. Just explain what you are saying again. It seems to me you are saying these borrowers are very safe bets. But it seems they are borrowers teetering on the edge.

They are no more risky than bank customers if they're restructuring bank debt. To have bank debt in the first place, they would need to have gone through bank credit checks and screening.

What you are saying is misleading as the restructured bank debt is now debt the banks want off their balance sheet. The yields tell you all ie. It is very high risk. You just have to make sure of a diversified portfolio as the probability of defaults once you get above 10% yields is high.

The restructured debt is usually at lower interest rates than the banks, depending on the risk grade. Lenders select loans based on their own risk tolerance. There is always a risk of default, no different to banks that issue credit cards.

How do you know banks want borrowers off their books? I would argue the opposite.

Back up the bus. I've used Harmoney - borrowed $12,000 superquick to buy a bargain Hilux - turned out to be a super awesome buy, didn't want to sell any shares or assets and had a $11,000 (net) bonus coming up.Knocked it off a couple of months later. Of course, you all know better, cause you've perused the loan book.

Yes borrowers have the ability to clear loans as quickly as they like. Happens quite regularly.

Why not cash advance on one ot two credit cards credit card and 0% trsf over to further card...that is what the quality credit risk is doing...P2P is last resort, unsophisticated lending. With current bank offers little need for it.

Because you have to pay back cash advances relatively quickly to avoid interest charges. P2P lending loans are over 36- or 60-month periods. Most people are constrained by monthly income.

Because I don't have any - and don't want any, and turns out don't really need any.

Be interesting to see what return the investors in this loan achieved. Short term bridging finance should attract a higher rate of interest. there is no penalty for early repayment.

J.C. I find it hard to believe that p2p are taking defaulting loans off banks at lower interest rates? This makes no sense. It sounds subprime to the lay person.

They don't take "defaulting loans".

of course it's risky some are 20 year olds asking 5K for an holiday in gold coast... I always wonder who funds those probably institutional investors. I think if you put some time and thinking into choosing the loans you can do OK. I get 12% before tax after fees with higher grades loans, that is 4 time what the best savings account can do... My only worry is if the platform is going to crash otherwise I would have invested more.

I'm currently sitting around 11% across my loan portfolio, but I rarely invest in much lower than risk grade A. My strategy is to partially invest interest earned into lower risk grades. Banks do the same based on probability-based modelling of default.

The portion of loan requests that get approved says it all.

Per the Harmoney fees have moved, specifically:
"If you accept a loan, you'll be charged fee, added to the loan total, depending on the amount borrowed:
$200 for loans under $5,000
$450 for loans $5,000 and over"

Lots of things have changed since 2016 when this article was published. Interest rates are now lower. Maximum Loan has doubled to $70K+fees (for those with an A credit grade).

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