Peer-to-peer lending sites: MSE guide discussion

TheShape

masonic wrote: »

I find FundingSecure to be ok, although you should be careful you understand their secondary market if you want to use it to buy into existing loans. You inherit the income tax liability for the rolled up interest, which makes it unattractive for taxpayers - though it is great for passing on your tax liability when selling.

Interesting you are having problems with their website. I have already made suitably derogatory comments about the web "security" company they have decided to partner with.

I've been looking at the FundingSecure site this evening. The secondary market does look unappealing to buyers. If I've understood correctly, you pay the current holder of the loan for the capital and the nominal accrued interest ( the interest they would have earned to that point) but are liable for tax on the full interest payment when the loan is repaid. Does that mean the seller has a capital gain (assuming sold for higher than purchase price).

Is there good availability of new loans?

I'm sure that I've seen your comment on another forum.

masonic

TheShape wrote: »

Does that mean the seller has a capital gain (assuming sold for higher than purchase price).

Essentially yes, but don't ask me about the tax position. I'm in the fortunate position of not filling out a tax return and not making any significant capital gains, so I don't need to worry about this.

Is there good availability of new loans?

Better availability than most other platforms, but there are some less desirable loans among them.Their default rate is a bit higher than other platforms as well.

TheShape

I'm now registered with and have made my first small investment on FundingSecure.

There is a lot of availability on the Secondary Market, presumably because of the potential downsides to buying there. Will be sticking to new loans for now.

masonic

TheShape wrote: »

I'm now registered with and have made my first small investment on FundingSecure.

There is a lot of availability on the Secondary Market, presumably because of the potential downsides to buying there. Will be sticking to new loans for now.

Lots of people trying to pass on their tax liabilities, myself included
This is a platform that will benefit greatly from the IF ISA.

TheShape

masonic wrote: »

Lots of people trying to pass on their tax liabilities, myself included

I don't want 'em.

Having looked at the SM a little more, it's clear that most offers are at a discount and I imagine that you could buy at a discount that effectively compensates you for the tax liability (easier if a basic rate taxpayer such as myself as the discount need not be so large). A pain to have to calculate that for every SM purchase.

I imagine the real problem would be loans paid back early or not at all because the discount/interest calculation would depend on the loan/interest being paid at term.

TheShape

masonic wrote: »

This is a platform that will benefit greatly from the IF ISA.

That would be a benefit.

It's unfortunate, of course, that you can only contribute to on IFISA per tax year as it's then incredibly difficult to diversify (across platforms) in the IFISA. I foresee a lot of people investing with one platform in one IFISA and not diversifying across platforms.

masonic

TheShape wrote: »

Having looked at the SM a little more, it's clear that most offers are at a discount and I imagine that you could buy at a discount that effectively compensates you for the tax liability (easier if a basic rate taxpayer such as myself as the discount need not be so large). A pain to have to calculate that for every SM purchase.

Most of my sales have been at a small discount that would part-compensate a basic rate taxpayer for the liability.

I imagine the real problem would be loans paid back early or not at all because the discount/interest calculation would depend on the loan/interest being paid at term.

I don't think there is much to worry about when it comes to early repayments. I'm shocked when a loan pays back on time :rotfl:. Check some of the updates posted against older loans. Joking aside, it is a bit of a risk if you are a taxpayer.

On a separate note, you might have noticed that Collateral has removed the awful "security" seal from their website today.

TheShape

masonic wrote: »

I don't think there is much to worry about when it comes to early repayments. I'm shocked when a loan pays back on time :rotfl:. Check some of the updates posted against older loans. Joking aside, it is a bit of a risk if you are a taxpayer.

I am wondering what the 'safest' loans on the platform are?

masonic wrote: »

On a separate note, you might have noticed that Collateral has removed the awful "security" seal from their website today.

I'm still seeing it on their registration and login pages.

masonic

TheShape wrote: »

I am wondering what the 'safest' loans on the platform are?

There are some that are probably best avoided, a few in particular that look likely to go off the rails. Any where the borrower keeps coming back for a renewal without good reason are worth being wary of.

There are still some nice pawn and vehicle loans that appear from time to time, but are snapped up pretty quickly - those are my preferred target, but some of the property loans seem ok and I've invested in a few.

I'm still seeing it on their registration and login pages.

Yes, it seems on the login page they've just hidden it at the bottom, but they've made no change to the registration page. I'm a little disappointed.

Biggles

masonic wrote: »

On a separate note, you might have noticed that Collateral has removed the awful "security" seal from their website today.

What's that?