The lender, backed by Finance Direct, is offering secured loans from 7.9 per cent.

Founder Wayne Croad said Lending Crowd wanted to drive down the cost of borrowing money. Its highest rates are just under 20 per cent, which is about half what the market’s first entrant, Harmoney, charges.

Investors are given the opportunity to diversify their investments into $50 segments to spread their risk.

Lending Crowd joins three other operators: Harmoney, Squirrel Money and LendMe. Crowdfunder PledgeMe has also indicated that it wants to begin offering peer-to-peer lending services for companies wanting to raise capital.

Borrowers who take out loans up to $10,000 are charged a fee of $250.  Beyond that, fees increase with the size of the loan, up to $1450 for loans up to $200,000.

Investors are charged 10 per cent of the interest every time interest is paid into the investors’ account.

Croad said there was a big appetite for peer-to-peer lending in New Zealand and Lending Crowd had transacted $500,000 in business since it launched on December 21.

It will start marketing at the end of February or early March.

He said it was important for peer-to-peer lenders to partner with the right people and Lending Crowd was having discussions with technology firms. “I see the tech aspect as being more important than the financial side at this point.”

He said he was very pleased with the reception to the Lending Crowd launch.