How to Create a Loan App: Step-by-step Guide by CHI Software
Getting loans has become easier than ever nowadays due to innovative peer-to-peer (P2P) lending mobile applications. Evolving technologies make the borrowing process smooth and reduce the time to get the money needed.
Let’s look at an overview of the P2P lending systems, their benefits, features, and development costs, and discuss how to start a loan app.
How Does the P2P Lending System Work?
The term peer-to-peer means loans are issued and received by individuals directly — conventional financial institutions are not involved. The loan rates can be fixed or assigned, and participants are entities or individuals from any of the transactions’ parties.
Peer-to-peer lending apps are most needed by angel investors, investment brokers, startup funding, venture entrepreneurs, and similar businesses. Getting a loan comes down to a few simple steps:
- Applying online for a loan using a mobile application;
- Having the borrower’s creditworthiness screened according to platform requirements;
- Getting a credit decision — this typically takes 1–5 working days, but can be as fast as 10–40 minutes;
- Signing a contract and getting money.
Benefits and Disadvantages of P2P Loan Apps
Loan-lending apps are available 24/7 and provide opportunities for fast and easy transactions. Other benefits include:
- Lack of banks involved and the absence of intermediaries, who can be expensive;
- Transparent conditions determination: users can choose various options (if allowed), like a deadline, sum, and interest rate;
- High security and data privacy level — an encrypted route, passwords, and personal accounts;
- Benefits for borrowers — the applications’ approval speed and simplicity, lower requirements, transparent accountability, qualified service, and support;
- Benefits for lenders — access to a broad audience, and an opportunity to improve customer focus thanks to an innovative payment tool.
P2P loan apps have disadvantages, too. For a borrower, there are debt collectors, small loan sums, and the risk of falling into a “debt hole.” Disadvantages for lenders consist of spending a lot of effort on legal compliance and hiring highly skilled lawyers and financial specialists.
Loan-Lending App Features and Regulation
Today, many players work in the loan market; such companies include Prosper, Upstart, Earnin, Brigit, Dave, and others. These and other applications share a common approach to functionality and legal compliance.
In most apps, the main features are as follows:
- Registration and authorization — tools to sign up or log in using customers’ email, phone numbers, etc.;
- User’s profile (personal account) to view the information provided, get personal details, and manage and change profile info;
- Payment gateways — integration with multiple payment tools and platforms ensures quick and secure financial transactions;
- Loan calculator to define monthly payments, interest rate, and loan fees;
- Application management to check various loan requests and track their status;
- Loan proposal lists and search by lender;
- Chatbox where users can message and call; and
- Online 24/7 support through the app by phone, online form, or chatbox.
Advanced features increase the convenience for users. In particular, there are dashboards for borrowers, lenders, and admin, CMS integration, bank partner management, cloud storage integration, reporting, analytics, and repayment.
The platform owners must provide security, fault tolerance, and legal compliance with local and/or international laws, such as GDPR and CCPA.
Loan App Development: Preparation, Building, and Costs
Before building a loan app, you have to start a business to work as a legal entity. The procedure includes choosing the company’s form and name, initial capital formation, and submitting documentation to the local authority.
Then you have to find a development team to turn your business idea to life. The best way to do this is to cooperate with a software development company and its qualified project managers, requirement analysts, Android/iOS developers, designers, and QA specialists.
The idea goes into the research phase, where business analysts, solution architects, and technical experts get involved. The proper analysis of the market, determination of the business requirements, and UI design separates the product from others and helps identify a unique selling proposition. The next steps are the following:
- Definition of the app’s architecture, UI/UX, and MVP features, such as target platforms (Android, iOS, or hybrid), available SDKs, APIs, and code libraries, cloud solutions, and other essential points;
- Development of a mobile lending app and, if needed, a website;
- Testing with manual and automated tools to receive a high-quality, bug-free, and stable application; and
- Launching, follow-up maintenance, and support.
Development costs depend on the complexity and scope of functions, the solutions used, and the application’s features. The essential factor to be considered is the location: in different regions, app development hour rates vary from 10 USD to 200 USD. On the whole, applications range from 5,000 USD upwards and often come to around 20,000–30,000 USD.
Want to know more about loan lending app development? Read the full article here.