Peer-to-peer lending sites: MSE guide discussion

stphnstevey

Just started with Ratesetter - can I just ask about the reinvestment through Market Rate - I don't want the hassle of manually reinvesting repayments every month, but I am worried about the Market Rate being too low.

Do other people use this to automate reinvestment?

If you try higher rates, what sort of time do you have to wait to wait for it to be matched? Is there a queue and they work their way through the lowest rates first and then to yours?

Thanks

rwgray

stphnstevey wrote: »

Is there a queue and they work their way through the lowest rates first and then to yours?

Yes.

You can view the queue by clicking "View Full Market".

Avoid matching the "Borrower Offers" rate, because this pulls the market down for everyone.

Either join the queue for the lowest "Lender Offers" rate, currently 6.7% over 5 years, or aim a point or two higher. The surprising thing is that higher offers are often matched within a day or two. I am currently offering 6.8%, 6.9% and (experimentally) a full £1,000 at 7.7% (but don't expect anything to happen soon).

Sometimes, the borrowers hoover up everything available, e.g. by Monday evening there might be a thousand loans matched in 24hr rather a hundred. I have a little money matched at 6.8% and 6.9% already, with a whole range from just 5.7% upwards, but with more patience and experience my average could have been significantly higher. Don't be afraid to do this manually, and wait up to a week for a good match.

Rich.x

stphnstevey

What sort of factor should you take into account when accessing the returns advertised vs actual returns, bearing in mind bad debt and non payment? Are you looking at 90%, 50%, 20% of advertised rates?

Is anyone willing to give an indication of what returns they actually received vs the advertised rates?

ctdctd

stphnstevey wrote: »

What sort of factor should you take into account when accessing the returns advertised vs actual returns, bearing in mind bad debt and non payment? Are you looking at 90%, 50%, 20% of advertised rates?

Is anyone willing to give an indication of what returns they actually received vs the advertised rates?

With Ratesetter, the rate you see is the rate you get unless their whole business model goes tits up.

stphnstevey

Ohh so you mean the rates include an allowance for unpaid loans?

Froggitt

https://www.ratesetter.com/lend/provisionfund
To help our lenders get bigger returns, we've created our own protection system - the Provision Fund. It's not a guarantee but it has enjoyed a 100% track record since our 2010 launch, and has an independent FE score of 1.0, compared to cash at "0". None of our 23,178 lenders has lost a single penny. They have, however, made substantial returns. The shield provided by the Provision Fund's 162% coverage ratio (view historical performance) has given many the confidence to invest more in RateSetter, way above the limited £85k guaranteed by FSCS-covered alternatives.

TheTracker

Hmm, perhaps I'm a little contrarian but having bad debt provision is a downside in my books on platform selection. I'm not interested in paying someone else to insure against risk in this way, and you'd better believe they cost money to set up and maintain. I'd rather they invest the money in quality control of accepted loans and borrower rates together with recovery effort.

TheTracker

stphnstevey wrote: »

What sort of factor should you take into account when accessing the returns advertised vs actual returns, bearing in mind bad debt and non payment? Are you looking at 90%, 50%, 20% of advertised rates?

My view is advertised rates should be inclusive of bad debts and non payment and out of market transaction time and within a few basis points of reality. So if people are getting only 90/50/20% of advertised rates I'd be complaining to advertising regulators.

Jonbvn

TheTracker wrote: »

Hmm, perhaps I'm a little contrarian but having bad debt provision is a downside in my books on platform selection. I'm not interested in paying someone else to insure against risk in this way, and you'd better believe they cost money to set up and maintain. I'd rather they invest the money in quality control of accepted loans and borrower rates together with recovery effort.

Interestingly ZOPA use to be that way originally. Then RS came along with their PF and stole a march on them (IMHO). Since then ZOPA have adopted a safeguard fund.

I was a lender at ZOPA in 2008. Quality control and recovery efforts? Well I am sure you get the picture.;)

If you are looking for higher risk P2P lending, there are many platforms to chose from.

badger09

Jonbvn wrote: »

Interestingly ZOPA use to be that way originally. Then RS came along with their PF and stole a march on them (IMHO). Since then ZOPA have adopted a safeguard fund.

I was a lender at ZOPA in 2008. Quality control and recovery efforts? Well I am sure you get the picture.;)

If you are looking for higher risk P2P lending, there are many platforms to chose from.

Me too. I started lending in November 2006. Most of my defaults are on loans made in 2008 and early 2009.

The risk simply wasn't worth it for me so I've been withdrawing funds since late 2010. It was fun while it lasted though - even the arguments I had with Giles over the income tax position of lenders :cool: