Peer-to-peer lending sites: MSE guide discussion

TattyBear

Futuristic wrote: »

Sorry newbie here, so is RateSetter the recommended place for multiple investments for 1-3 years below £10k?

Yes. It's as safe as you're going to get outside of an FSCS protected bank savings account, especially for £10k.

Futuristic

Anyone got a referral for me for the £25

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Signed up

Froggitt

Futuristic wrote: »

Anyone got a referral for me for the £25

You have mail

Futuristic

On funding circle, why are people investing a bunch of 5x £20/£40 on the same loan request instead of say £100 at one time?

arbster

Futuristic wrote: »

On funding circle, why are people investing a bunch of 5x £20/£40 on the same loan request instead of say £100 at one time?

Probably because they then have more flexibility to re-sell some or all of those loan parts on the secondary market, should they later choose to do so. Some people deliberately buy more than they want at high rates of interest, then sell back at a premium to make additional profit.

mikb

Further to arbster's reply: It's because Funding Circle have no mechanism for dividing/adjusting a loan part you've bought. So this is the only way for a user to adjust their exposure.

(By comparison: Assetz Capital changed to a system where you just have a "holding" in a loan, so you can adjust it up or down as needed, loan parts are not something users need to concern themselves with)

If you bid £1000, you are stuck with a single loan part of £1000 which can only be sold "in full!" as :money:says. Assuming you find someone with deep enough pockets to buy it off you.

Compare that with 50 x £20 parts: Much easier to find a bunch of people looking to pick up a little bit here and there.

agent69

arbster wrote: »

Some people deliberately buy more than they want at high rates of interest, then sell back at a premium to make additional profit.

A large number of FC members are flippers. They buy loan parts at high rates and then sell them for a premium. The most famous exponent of this is the tall one who often bids 6 figure sums on individual loans.

mvarrier

Futuristic wrote: »

On funding circle, why are people investing a bunch of 5x £20/£40 on the same loan request instead of say £100 at one time?

Just to add to what has been said, many people participate in flipping. This is either buying multiple chunks of loan at the maximum interest rate and then selling it at a premium or the case of property loans which have come with cashback you can either sell them at a small discount (and still make a profit) or sell them at par to auto-bidders (another reason to not use auto-bid). Smaller chunks are easier to shift and if you needed to liquidate your entire holding it would be much easier if they were all in £20 bites

Futuristic

Thanks guys, explains a lot!

Are property loans/development usually safe or have people seen these A+ marked investments go into defaults? I've been reading on other blogs & forums and it seems FCs rating system is pretty wonky

Would diversifying for example £500 (In £20s) into 4 different "A+" 8-9% investments be a good idea?

mvarrier

The property loans are relatively new and none (or not enough) have gone to completion to test the system.

Arguably the secured property bridging loans on other sites, e.g. savingstream offer similar security but rates of 12%...