Peer-to-peer lending sites: MSE guide discussion

nick5990

Nardge wrote: »

The next to crash on the other hand could well be Funding Circle and Funding Secure

Sorry I'm new to this forum, just skimmed the latest page on this thread, and came across this.

Can you give some more information re this? I have over £4k in Funding Circle atm.

I'm aware of the recently announced reduced growth forecast, and FC saying they would be tightening their lending criteria.

Nardge

nick5990 wrote: »

Sorry I'm new to this forum, just skimmed the latest page on this thread, and came across this.

Can you give some more information re this? I have over £4k in Funding Circle atm.

I'm aware of the recently announced reduced growth forecast, and FC saying they would be tightening their lending criteria.

Three aspects as to why I think Funding Circle are going under:

- They defaulted on many of my loans

- It took months to get a mere final £40 through the 'awaiting withdrawal' queue

- Lastly, and perhaps most tellingly:

A company that suddenly becomes secretive is thought to be amongst the worst signs...

https://www.4thway.co.uk/candid-opinion/funding-circle-review/

"How good are Funding Circle's interest rates, bad debts and margin of safety?

We used to praise Funding Circle for its openness in sharing details about its business, which used to include “sharing the fine detailed history of each loan over time”, which allowed us to assess its performance using both bank risk modelling and investing techniques. However, Funding Circle withdrew this information in spring 2018, which leaves a big question mark over its future. In many ways, withdrawing data that it used to provide causes me more suspicion than if it had never allowed its users and analysts to see the data at all. Without that data, Funding Circle is no longer able to earn 4thWay PLUS Ratings or 4thWay Risk Scores on its lending accounts. Funding Circle has demonstrated that it understands and contains the risks when approving loans, and it has historically priced interest rates well. Since we now get less information and since expected interest rates have fallen considerably, we can now no longer be sure whether it offers a large margin of safety in the event of severe economic disasters."

With Kind Regards

piccles

Hi. Newbie here (LTM-FTP). Can someone help me understand my ratesetter statement. I invested £1000 with them 6 months ago on a cashback deal but shows :-
"£0.00 interest to date"
"On loan £1,000"
"not earning interest £0.00"
"unmatched money £0.00"
"Project return 4.2%."
What ? Why no interest to date ?
Apologies if it's a dumb question.

Aidanmc

piccles wrote: »

Hi. Newbie here (LTM-FTP). Can someone help me understand my ratesetter statement. I invested £1000 with them 6 months ago on a cashback deal but shows :-
"£0.00 interest to date"
"On loan £1,000"
"not earning interest £0.00"
"unmatched money £0.00"
"Project return 4.2%."
What ? Why no interest to date ?
Apologies if it's a dumb question.

If you have invested in the 1 Year Market, interest is only payable at end of loan term. if you click 1 Year money, then Your money on loan at bottom of page you should see when interest will be paid.

Nardge

Further cautionary reflections on Funding Circle -

1) https://www.4thway.co.uk/candid-opinion/funding-circle-buries-its-data/

2) https://www.4thway.co.uk/candid-opinion/are-funding-circles-shares-a-buy/?utm_source=4thWay%20News%20and%20Tips&utm_campaign=ff404e8eec-Newsletter_57&utm_medium=email&utm_term=0_415f2326f1-ff404e8eec-583091249

Grandad2b

Originally posted in the Investments and Savings forum:

I have some money invested with Zopa - over the last 4 weeks their projected return is 5%. If I understand this correctly they take an additional 1% so they are lending money at 6%.

Meanwhile, they are offering borrowers £10000 at 2.9%. Half what they are returning to investors.

There seem to be two possibilities here: either their 2.9% is a lie or they are intending to lose money on my investment. Should I take my funds out now?

[Mods: is it ok to post in two threads or should I delete my original?]

AdrianC

Grandad2b wrote: »

Meanwhile, they are offering borrowers £10000 at 2.9%.

From 2.9%. Big difference.

Happy_Traveler

You may be interested in my experience of p2p investing.
I have been with Zopa for three years and only invested £2K at the start. I had a few losses but they were few and far between so overall I was happy with the risk and return in the first year. In the second year they introduced safeguard which offered a level of safety regarding defaults. Recently they have offered ISA but without safeguard which was phased out. I switched my loans to their ISA product and topped it up with £5k. That’s when it started to go wrong for me. From January this year I started having defaults nearly every month and some months multiple defaulters. Furthermore Zopa had always invested £10 per loan to spread the risk but noted on my loan book that Zopa were now in some cases loaning £30 of my money per loan increasing my risk. I am currently slowly extracting myself from this type of investment by not reinvesting and withdrawing income each month. To sell my loans incurs a 1% charge which I am currently reluctant to pay so the drip feed approach suits me. I do believe that Zopa’s dash for growth and profit has made them accept more risky loans or that the loan market has got more risky this year. What I can’t forgive Zopa for is deciding to increase my risk exposure by loaning increasing amounts of my money to individual loanees

JB50

Thanks to Money Saving Expert for updating its information on Ratesetter ref new products available.

Rules and regulations will change later in 2019.
Do NOT invest more than 10% of your available funds in peer-to-peer products, and don't invest with peer-to-peer platforms at all unless you can bear some risk. Minimum investment with Ratesetter is £10.
Interest rates are higher than ordinary bank and building society savings accounts but you may not get back all you invest.

Personally, I am happy with Ratesetter so far because I receive more interest with Ratesetter than with any of my other bank or building society savings products, and I do not pay tax because it's all in an IF ISA.

Ratesetter (FCA authorised and regulated) tell me they will open 3 new products called Access, Plus and Max (all available within an IF ISA) from 3rd October 2019, open to new and existing investors.

From 3/10/19 new investors may only invest in the new investment products. The new Ratesetter products are simpler to understand and I wonder whether Ratesetter developed them partly to comply with new regulations coming in later this year. They are not bad, but one must pay a 30 day interest penalty to withdraw funds from the Plus product, and a 90 day interest penalty to withdraw funds from the Max product. There is no fee or penalty for withdrawing your money at any time from the Access product. RS says there's no guarantee of how long it may take to withdraw funds, as it depends on another investor agreeing to take over the loan(s) your money is invested in.
Existing investors may still choose to operate their existing investment products. Personally, I like the existing products called Rolling, 1 Year and 5 Year, because with these I can set the system to allow repaid loans and/or interest to be paid into my IF ISA Holding Account and from there I can withdraw my funds with no fee and no penalty, or re-invest these funds if I wish.

I am well aware that peer-to-peer lending is riskier than a bank savings account, and they offer no guarantees that you will get all your money back, but I chose Ratesetter because they operate a Provision Fund which steps in automatically to pay investors if a borrower defaults on a loan. Ratesetter has been operating since 2010, and as at 2/10/19 so far no investor has lost money (unlike other peer-to-peer platforms). Ratesetter do not pay as high interest rates as some other peer-to-peer platforms, but it seems to me they are a little less risky because of their Provision Fund.

I have been investing with Ratesetter since 2017 and although it took me some time to get my head around the more complicated options and choices, one can choose to invest with them very simply, and not bother with all that complication.

Personally, I like to know how things work. If I wish, I can log into my Ratesetter account at any time, and see what is happening on a minute-by-minute basis. If I prefer, I can just set it to operate automatically, and just look at it occasionally.

JB50

I chose Ratesetter because they operate a Provision Fund which steps in automatically to pay investors if a borrower defaults on a loan. Ratesetter has been operating since 2010, and as at 2/10/19 so far no investor has lost money (unlike other peer-to-peer platforms). Ratesetter do not pay as high interest rates as some other peer-to-peer platforms, but it seems to me they are a little less risky because of their Provision Fund.