Peer-to-peer lending sites: MSE guide discussion

agent69

paulgul wrote: »

First 2 admissions, I'm new to P2P lending and I haven't read this whole thread - I would be interested to hear from anyone who has dealt with Funding Secure.
They seem to be offering much higher rates than other lenders (I assume with higher risks) but also seem to operate in a different way in that you have to select your own investments from a given list.
Paul

No secondary market, so if you're in then you're in for the duration.

MrOverheads

paulgul wrote: »

First 2 admissions, I'm new to P2P lending and I haven't read this whole thread - I would be interested to hear from anyone who has dealt with Funding Secure.
They seem to be offering much higher rates than other lenders (I assume with higher risks) but also seem to operate in a different way in that you have to select your own investments from a given list.
Paul

I wouldn't agree that higher rates = higher risk in the p2p market. It depends on the platform having enough lenders to outbid each other and drive the interest rate down. Funding Circle for instance has millions being lent and the rate gets driven down quickly, but rebuildingsociety.com for instance (where my money is) has a smaller pool of lenders so rates only get bid down from the starting 20% (for C grade) to around 15% to 17% currently (6 months ago you could actually get 20% because rarely outbid). Bad Debts/Defaults for Funding Circle I believe runs around 4 to 5% but rebuildingsociety.com is closer to 2%. So which is riskier?

Jonbvn

paulgul wrote: »

First 2 admissions, I'm new to P2P lending and I haven't read this whole thread - I would be interested to hear from anyone who has dealt with Funding Secure.
They seem to be offering much higher rates than other lenders (I assume with higher risks) but also seem to operate in a different way in that you have to select your own investments from a given list.
Paul

Hi,

There is a good forum for FS here.
http://p2pindependentforum.com/board/29/fundingsecure

I have a nominal amount of money with FS. Some of the issues I have experienced are as as follows:

1. Relatively young platform.
2. Not lots of loans coming through.
3. The smaller loans tend to get filled up very quickly.
4. Larger loans (which do not fill up very quickly) tend to be for property.
5. No secondary market. Means your money is stuck for 6 months.

At the moment I see FS as a bit of a diversion and certainly would not consider it for serious money at this time. Of course, as the platform mautures this may change.

agent69

MrOverheads wrote: »

Bad Debts/Defaults for Funding Circle I believe runs around 4 to 5% but rebuildingsociety.com is closer to 2%. So which is riskier?

Lesser of 2 evils?

The default rate for FC stated on the P2P money site is 1.42%. There is no rate stated for RBS, primarily because they have such a small number of loans (so no picture has emerged).

stphnstevey

What would you suggest for a beginner in this area? ie how do you start out and dip your toe in the water?

Also, can I just check, are the rates per year or per term ie is the five year rate the rate you get in total over five years or do you get that rate every year so there is a cumulative effect?

Froggitt

Put a few hundred quid into 2 or 3 P2Ps, lend it out, suck it and see.

rwgray

stphnstevey wrote: »

...are the rates per year or per term ie is the five year rate the rate you get in total over five years or do you get ... a cumulative effect?

The rates quoted are always annual equivalent. The basis of calculation may vary, but you can usually hold up p2p gross rates against anyone else's.

AND starting this month, many of us won't have to worry abut the 20% tax deduction - as the £1000 personal allowance for investment income (outside ISAs) will cover what we earn.

See e.g. http://www.telegraph.co.uk/finance/personalfinance/savings/11489834/First-1000-of-peer-to-peer-returns-will-be-tax-free.html

Rich.x

alanq

rwgray wrote: »

starting this month, many of us won't have to worry abut the 20% tax deduction - as the £1000 personal allowance for investment income (outside ISAs) will cover what we earn.

See e.g. http://www.telegraph.co.uk/finance/personalfinance/savings/11489834/First-1000-of-peer-to-peer-returns-will-be-tax-free.html

From the article in the link "The first £1,000 of peer-to-peer earnings will be tax-free from April 2016. So unless your investments only begin to pay interest in a year's time you still have to worry for this tax year.

rwgray

alanq wrote: »

"The first £1,000 of peer-to-peer earnings will be tax-free from April 2016." So unless your investments only begin to pay interest in a year's time you still have to worry for this tax year.

Quite right, thanks... there had to be a catch!

Another year of declaring income to the tax office, although to be fair, it's usually just a paragraph long, and I believe you officially have until about January for them to receive it - because the tax is levied on the following year's PAYE - although I tend to do mine in April of course. Better than forgetting.

Rich.x

konstantinovs

Anybody got a Funding Circle referral I can use to get the £50 cashback offer? Cheers.