This paper examines factors driving default risk in the Australian peer-to-peer (P2P) lending market. It analyzes borrowers’ personal characteristics such as income, indebtedness, credit history, and interest rates alongside macroeconomic variables like inflation, unemployment, and stock market indices. The study highlights how both systematic (macroeconomic) and unsystematic (microeconomic) factors shape default risk, providing insights for policymakers and market participants to anticipate vulnerabilities in the non-bank lending sector.