Is peer-to-peer lending halal?

What P2P lending is

P2P platforms connect people who have money with people or businesses who want to borrow. Instead of a bank in the middle, you lend directly through the platform and receive repayments plus a set interest rate, often higher than a savings account. Some platforms also sell you parts of loans to consumers, small businesses or car buyers.

Why it's riba

Any fixed extra amount charged on a loan is riba, whoever the lender is. A friendly app and a "community" feel don't change the contract. See What is riba in Islam?

The Prophet ﷺ cursed the one who consumes riba, the one who pays it, the one who records it and its two witnesses (Sahih Muslim 1598). And the Quran calls believers to let go of it:

Rewards like "lending yield" in crypto apps raise the same issue. See Is crypto staking halal?

Halal alternatives

• Interest-free loans (qard hasan): lending to someone in need and getting back exactly what you gave is highly rewarded in Islam. Some microlending sites let you lend to small businesses abroad with no interest.
• Islamic P2P and crowdfunding platforms: instead of lending, they use murabaha (buying goods and selling them at an agreed markup) or musharakah (a profit-and-loss partnership). Check that a shariah board supervises them.
• Community savings circles: a group of friends pays in monthly and takes turns receiving the pot, with no interest. See Is a savings circle halal?

If you already have P2P loans

Stop adding new money and withdraw as loans are repaid. You can keep your original capital; give the interest you receive to charity. Many platforms let you sell your loan parts early, which can speed this up.