Peer-to-peer lending sites: MSE guide discussion

fun4everyone

Hands up, I am in a lot of them. Nothing I cannot afford to write off, but if the platform goes belly up I hope appropriate procedures are in place for all the bling loans I have on there...

takesyourchances

fun4everyone wrote: »

Hands up, I am in a lot of them. Nothing I cannot afford to write off, but if the platform goes belly up I hope appropriate procedures are in place for all the bling loans I have on there...

Goodness, read the article you linked above does not sound good. Hopefully the platform will not get affected as a whole for those invested. I was never in FS myself.

Alexland

Interesting article in the Telegraph today focusing on Lendy

https://www.telegraph.co.uk/investing/news/fears-peer-to-peer-loans-start-sink/

Alex

keyboardworrier

Luckily I didn't invest anything with Funding Secure, I saw how they are treating investors with regard to the power boat loan and decided against that platform.



The platforms that seem to be getting into trouble all offer rates of 12%+, not sure if it's a coincidence but I suspect probably not.

MoneyThing seems to be quite stable but is struggling to get some larger loans filled, probably because of the reported issues elsewhere and people re-evaluating just how risky it can be.



Some of these platforms are making P2P seem like the Wild West of finance when in reality a lot of platforms are just quietly getting on with business with little to no fuss.

masonic

keyboardworrier wrote: »

The platforms that seem to be getting into trouble all offer rates of 12%+, not sure if it's a coincidence but I suspect probably not.

I don't think it's just those platforms. There are some similar issues emerging at AC, specifically the ILI and UK Exim loans. I'm reliably informed there is a large spike in defaults at Unbolted. The other platforms, such as RS are looking safer for the time being, and I've recently moved a substantial amount of funds over there from other platforms to lend out at 6.7-6.8%, but those rates are no longer available.

It obviously takes a few years for these sort of problems to emerge in a P2P platform, so those without that kind of history can be discounted as too young to have issues come back and bite them.

olliebean

What's the thinking about Zopa atm? My only p2p exposure is in Zopa, and I've been gradually withdrawing from that as the repayments come in - but I've noticed increasing defaults, and my returns over the last year have been at least a couple of percentage points lower than the projected returns. I'm also concerned about what effect Brexit is going to have, so I'm wondering if I'd do better to sell off my remaining loans now rather than waiting for them to come in. Any thoughts/advice? It looks to me like I could get a better rate of return from a fixed-rate account than Zopa has given me this past year.

fun4everyone

I withdrew from Zopa a while ago, bottom line was I was not getting the returns I wanted for the risk.

fun4everyone

masonic wrote: »

I'm reliably informed there is a large spike in defaults at Unbolted.

Interesting. I stopped auto lend there and slowly got my money out but still have a small amount invested on that platform. The rates are rubbish especially considering how much they charge borrowers. Will see what transpires.

bxboards

masonic wrote: »

I don't think it's just those platforms. There are some similar issues emerging at AC, specifically the ILI and UK Exim loans. I'm reliably informed there is a large spike in defaults at Unbolted. The other platforms, such as RS are looking safer for the time being, and I've recently moved a substantial amount of funds over there from other platforms to lend out at 6.7-6.8%, but those rates are no longer available.

I avoided all of those on AC, and Archover for the EXIM-type loans on MLA and as I don't do GBBA avoided them by chance there too.

I don't think its hard to avoid defaults, as long as you are not greedy. 10-12% borrowers are paying that for a reason - they are sub-prime as conventional banks won't touch them. I've not been burnt on Collateral / Lendy or FS, as when doing DD, my spider dense always got tingly very quickly! I always remember its MY money at risk, not the platforms, they have little incentive to avoid writing bad loans in reality, but 12% is high risk, and a 12% borrower is likely to be paying 18-26%.

I am tending to focus more on AC, RS, Growth Street and Lending Works at the moment, the critical thing for me is fairly quick access to funds so a working secondary market or access within 30 days is worth it for me vs. the highest rates elsewhere. I'm in Kuflink, Landbay and Octupus as well, but for rates on the latter two are far too low for me currently.

masonic

bxboards wrote: »

I don't think its hard to avoid defaults, as long as you are not greedy. 10-12% borrowers are paying that for a reason - they are sub-prime as conventional banks won't touch them. I've not been burnt on Collateral / Lendy or FS, as when doing DD, my spider dense always got tingly very quickly! I always remember its MY money at risk, not the platforms, they have little incentive to avoid writing bad loans in reality, but 12% is high risk, and a 12% borrower is likely to be paying 18-26%.

It's worth remembering that AC started out as one of the higher rate platforms and at least some of the problem loans of today are from that era. I'm sceptical that the reduction in rates equates to a reduction in risk - rather, it seems to be driven by supply and demand. We've yet to see the outcomes from the newer generation of loans, but my point above was more to highlight failings in the platforms' procedures, which could be systemic, rather than the outcome for lenders in those individual loans.

I wouldn't equate an 8% loan with safety and below that rate I struggle with the risk:reward vs other asset classes. That said I do have money invested in the 6.5-8% range, but not a lot.

I'd agree, Lendy was easy to see coming, and there was a 6 month period after serious failings were highlighted where anyone could have exited with 100% return of capital and interest, as several of us did. A lot of the bad FS loans had the opportunity for people to exit also, as they would perpetually renew and for some reason fill on renewal. Speaking as someone who didn't avoid all of the mega-failures I don't think it was easy to spot them all in advance

As for Collateral, presumably you weren't burnt because you didn't invest? I personally don't believe anyone could have seen the fraudulent regulatory situation coming, and I don't think there was anything wrong with the loans I cherry-picked to invest in over there - I guess I might find out in the fullness of time whether those loans (which did not include any development finance) are recoverable.