Peer-to-peer lending sites: MSE guide discussion

masonic

I have dipped in and out of P2P over the last few years to make use of bad debt relief, of which I have accumulated a substantial amount from the likes of Ablrate, MoneyThing, Assetz Capital and FundingSecure. Kuflink is one of a handful of platforms I have used for this purpose, and I have been broadly happy with the way they have handled bad debt to date. I've not been tempted to generate interest beyond that which I could obtain tax free through the relief, although as it turns out, extensions to loan terms and penalty interest have pushed my income over that limit.

I will re-evaluate the situation when base rate finally starts to fall, as that is probably a time when the risk/reward will be at its best.

Alexland

longleggedhair said:

I was in Zopa & Ratesetter pretty much from day one. They performed reasonably well but sadly both closed their P2P side and I had a full capital return. Currently with Loanpad (my only P2P) and they are very good. The portfolio seems well managed and they run a good show. However I only have about £6000 as I’m slightly nervous to put any real money in as the additional interest isn’t sufficient to cover the risk IMO.

Yeah I invested with Zopa and Ratesetter back in the day. Was lucky to never suffer any issues or delayed repayments with my P2P activities.

I recall Zopa offered me a cashback incentive for taking out a personal loan that I didn't need so repaid asap for a net profit so at one point I was both a borrower and lender.

I wouldn't really want more than a few thousand in P2P. I must have that within individual companies as part of my S&S funds but the difference is a P2P loss would be more directly visible than a company going belly up inside a much bigger S&S fund.

The thing that attracts me to the Kuflink autoinvest again is that you don't get involved in the weeds of selecting properties or into delayed repayment situations from extending loan terms. They just make your money available to you again at the end of the fixed term.

They seem well capitalised to cover deals going wrong and an important part of their business sales pitch is that no investor has ever suffered a loss which I am sure they would be happy to invest to protect. For what they do in bridging and development loans they seem to have been consistent and competent for a decade. Looking at them again 5-6 years later it's impressive about how little has needed to change in their business model.

masonic said:

I will re-evaluate the situation when base rate finally starts to fall, as that is probably a time when the risk/reward will be at its best.

I don't really see how it would be more attractive with a lower base rate surely the loan rates would also drop to maintain the same lending margin? I can see from my email archive my Kuflink autoinvest rate in 2018 was only 3.99% although the cashback made it worthwhile.

cfw1994

Alexland said:

It's been 5 years since I was last in P2P and it's interesting to see the survivors.

I'm tempted to chuck a grand in a Kuflink auto invest ISA at 10.25%.

I had a good experience with them last time and their companies house filings look in good order. I like that the directors have been reinvesting the growing business profits back into the business capital for if any loans go bad.

No cashback this time but worth a punt?

No idea what a grand of your money is in comparison with your overall wealth/investments, but I have been very impressed with Kuflink to date.
I have a couple of grand with them, no issues so far (although one investment is being ‘called in’….no punters like us impacted so far, they do seem to know what they are doing).

Alexland

cfw1994 said:

No idea what a grand of your money is in comparison with your overall wealth/investments, but I have been very impressed with Kuflink to date.

It's nothing of significance really my S&S accounts can go up or down 5-10 grand in a normal day but I am quite careful in my personal spending so making a choice that could lead to a permanent capital loss with no hope of recovery would seem a lot from the perspective of how much I might have sacrificed to save it.

cfw1994 said:

I have a couple of grand with them, no issues so far (although one investment is being ‘called in’….no punters like us impacted so far, they do seem to know what they are doing).

Thanks I guess that will happen every so often and keep them paying close attention to managing the risks. When I last had the auto-invest I got the feeling that my allocation into various loans was almost for presentation (I think some had already been fully funded and it was before they had a secondary market) and that while they remained solvent they would probably just return my money on the agreed date with the promised interest regardless.

cfw1994

I’m fairly confident they will recover all the funds they need for investors, & they are continuing to pay me the interest.
Since we dabbled, they have always shown the stats: numbers today:

I like that last box most!

Every now & then, I berate myself for not investing more with them…maybe this year!

thenewcomer

masonic said:

I have dipped in and out of P2P over the last few years to make use of bad debt relief, of which I have accumulated a substantial amount from the likes of Ablrate, MoneyThing, Assetz Capital and FundingSecure. Kuflink is one of a handful of platforms I have used for this purpose, and I have been broadly happy with the way they have handled bad debt to date. I've not been tempted to generate interest beyond that which I could obtain tax free through the relief, although as it turns out, extensions to loan terms and penalty interest have pushed my income over that limit.

I will re-evaluate the situation when base rate finally starts to fall, as that is probably a time when the risk/reward will be at its best.

sorry if this is a silly question. what is a debt relief?

masonic

thenewcomer said:

masonic said:

I have dipped in and out of P2P over the last few years to make use of bad debt relief, of which I have accumulated a substantial amount from the likes of Ablrate, MoneyThing, Assetz Capital and FundingSecure. Kuflink is one of a handful of platforms I have used for this purpose, and I have been broadly happy with the way they have handled bad debt to date. I've not been tempted to generate interest beyond that which I could obtain tax free through the relief, although as it turns out, extensions to loan terms and penalty interest have pushed my income over that limit.

I will re-evaluate the situation when base rate finally starts to fall, as that is probably a time when the risk/reward will be at its best.

sorry if this is a silly question. what is a debt relief?

For P2P agreements held outside of an IF ISA, you can claim tax relief on irrecoverable loans so that you only pay tax on your net gains from P2P investing. Bad debt relief can only be offset against income from P2P lending, so to use it you must have income from P2P in the same or subsequent tax years.

allegro120

masonic said:

thenewcomer said:

masonic said:

I have dipped in and out of P2P over the last few years to make use of bad debt relief, of which I have accumulated a substantial amount from the likes of Ablrate, MoneyThing, Assetz Capital and FundingSecure. Kuflink is one of a handful of platforms I have used for this purpose, and I have been broadly happy with the way they have handled bad debt to date. I've not been tempted to generate interest beyond that which I could obtain tax free through the relief, although as it turns out, extensions to loan terms and penalty interest have pushed my income over that limit.

I will re-evaluate the situation when base rate finally starts to fall, as that is probably a time when the risk/reward will be at its best.

sorry if this is a silly question. what is a debt relief?

For P2P agreements held outside of an IF ISA, you can claim tax relief on irrecoverable loans so that you only pay tax on your net gains from P2P investing. Bad debt relief can only be offset against income from P2P lending, so to use it you must have income from P2P in the same or subsequent tax years.

How would you know that they are irrecoverable?  Did Ablrate administrators declare any of their loans irrecoverable or do you just use your own judgment to calculate the loss?

masonic

allegro120 said:

masonic said:

thenewcomer said:

masonic said:

I have dipped in and out of P2P over the last few years to make use of bad debt relief, of which I have accumulated a substantial amount from the likes of Ablrate, MoneyThing, Assetz Capital and FundingSecure. Kuflink is one of a handful of platforms I have used for this purpose, and I have been broadly happy with the way they have handled bad debt to date. I've not been tempted to generate interest beyond that which I could obtain tax free through the relief, although as it turns out, extensions to loan terms and penalty interest have pushed my income over that limit.

I will re-evaluate the situation when base rate finally starts to fall, as that is probably a time when the risk/reward will be at its best.

sorry if this is a silly question. what is a debt relief?

For P2P agreements held outside of an IF ISA, you can claim tax relief on irrecoverable loans so that you only pay tax on your net gains from P2P investing. Bad debt relief can only be offset against income from P2P lending, so to use it you must have income from P2P in the same or subsequent tax years.

How would you know that they are irrecoverable?  Did Ablrate administrators declare any of their loans irrecoverable or do you just use your own judgment to calculate the loss?

This is covered in SAIM12050. In practice some of the Ablrate loans were declared irrecoverable long before Ablrate itself got into trouble. The earliest such loans were those involving shipping containers that are still the subject of litigation 8 years later. It was normal practice among P2P platforms to declare loans irrecoverable once formal enforcement proceedings were initiated against the borrower (this in turn was usually many months after the loan entered default). Any capital or interest recovered through these proceedings would be taxable as P2P income in the year it was distributed.

allegro120

masonic said:

allegro120 said:

masonic said:

thenewcomer said:

masonic said:

I have dipped in and out of P2P over the last few years to make use of bad debt relief, of which I have accumulated a substantial amount from the likes of Ablrate, MoneyThing, Assetz Capital and FundingSecure. Kuflink is one of a handful of platforms I have used for this purpose, and I have been broadly happy with the way they have handled bad debt to date. I've not been tempted to generate interest beyond that which I could obtain tax free through the relief, although as it turns out, extensions to loan terms and penalty interest have pushed my income over that limit.

I will re-evaluate the situation when base rate finally starts to fall, as that is probably a time when the risk/reward will be at its best.

sorry if this is a silly question. what is a debt relief?

For P2P agreements held outside of an IF ISA, you can claim tax relief on irrecoverable loans so that you only pay tax on your net gains from P2P investing. Bad debt relief can only be offset against income from P2P lending, so to use it you must have income from P2P in the same or subsequent tax years.

How would you know that they are irrecoverable?  Did Ablrate administrators declare any of their loans irrecoverable or do you just use your own judgment to calculate the loss?

This is covered in SAIM12050. In practice some of the Ablrate loans were declared irrecoverable long before Ablrate itself got into trouble. The earliest such loans were those involving shipping containers that are still the subject of litigation 8 years later. It was normal practice among P2P platforms to declare loans irrecoverable once formal enforcement proceedings were initiated against the borrower (this in turn was usually many months after the loan entered default). Any capital or interest recovered through these proceedings would be taxable as P2P income in the year it was distributed.

So presumably at this stage of play you can declare the whole remaining Ablrate's loan book as irrecoverable and claim it against the income you get from Kuflink. Is  this how it works?