Peer to peer lending - Zopa, RateSetter, FundingCircle etc

easteregg_2

pqrdef wrote: »

But is P2P now also going to succumb to the tyranny of the price comparison sites?

I should declare an interest that I run the P2P money site that does compare the gross and net rates on peer-to-peer lending. One of the drawbacks with P2P lending is that a 6% gross on RateSetter will be quite different than a 6% return on Zopa. Without a specialised comparison site you wouldn't know which is better.

pqrdef

easteregg wrote: »

One of the drawbacks with P2P lending is that a 6% gross on RateSetter will be quite different than a 6% return on Zopa. Without a specialised comparison site you wouldn't know which is better.

I know. But I'm still dubious about comparisons. Even after allowing for fees and a nominal bad debt rate, there's the question of spread of risk - Funding Circle does quite a lot of C loans, while on Zopa the C category has become too small to bother with.

Then there's the question of underwriting. Zopa stands or falls on its in-house underwriting, but it's less clear to what extent FC relies on the lender taking responsibility for deciding who to lend to.

Then there's the live auctions. On FC most of the best-paying loan parts are bought in the last 10 minutes of an auction. Anybody who's not able to join in the scrum must either settle for lower rates or lend rather slowly.

rated

easteregg wrote: »

I should declare an interest that I run the P2P money site that does compare the gross and net rates on peer-to-peer lending. One of the drawbacks with P2P lending is that a 6% gross on RateSetter will be quite different than a 6% return on Zopa. Without a specialised comparison site you wouldn't know which is better.

I've been meaning to work out why some of the US based P2P outfits e.g. http://www.lendingclub.com pay higher net rates than the UK ones. Any ideas?

easteregg_2

rated wrote: »

I've been meaning to work out why some of the US based P2P outfits e.g. http://www.lendingclub.com pay higher net rates than the UK ones. Any ideas?

With the majority of peer-to-peer providers the lenders set the rates, so I'm sure the answer to your question is supply is exceeding demand.

As peer-to-peer lending has become more popular the supply has increased. While the demand has also increased, it hasn't increased as much as the supply, hence rates drop.

Lending club in the US state that there bad debt rate is below 3%, but in the UK Zopa have a bad debt rate of just 0.82%, therefore the risks with the UK lending have been lower.

jimjames

rated wrote: »

I've been meaning to work out why some of the US based P2P outfits e.g. http://www.lendingclub.com pay higher net rates than the UK ones. Any ideas?

Factor in the exchange rate too which can be a big variable and will potentially dwarf any return you get on the money you lend.

Ricky2012

I have heard there is a site u can lend payday loans to pple in africa for something like 10% a month interest return, anyone know what its called have been scouring the net and all i can see is Kiva etc?

JohnRo

Let me guess, Nigeria?

blizeH

MiserlyMartin wrote: »

Ratesetter now a dead loss. Monthly market rate now a pathetic 2.6%!!!!

2.3% now, wow.

You can still get a nice rate on the 3 year loans though they aren't ideal. Using a very basic test sample, I put £1k into all of these when I first started the thread, and found my earnings on FundingCircle/RateSetter (3 year) are pretty much identical, whereas Zopa is a fair bit behind. I imagine other people's experiences would be greatly different to mine though depending on how much you invest, how long for etc

blizeH

We seem to have hit rock bottom now, it's at a staggering 1.9%! https://members.ratesetter.com/your_lending/lend_money/market_view.aspx?PID=1

JohnRo

blizeH wrote: »

We seem to have hit rock bottom now, it's at a staggering 1.9%!

The picture is clear and reflects the money market in general, though the recent 3 & 5 year "spikes" are a bit of a mystery.

http://www.ratesetter.com/lending/market_trend.aspx

The problem ratesetter as a business have in this climate is that their loans don't appear to be competitive any more, which they once were.