Peer to Peer Lending- some advise please?

agent69

Broken_Biscuits wrote: »

cheers.

happy to be corrected.
was reading through it on the trek home for the first time today but paying more attention to my own cash penalty than the actual small print.


will have another read through it but happy to see that if an emergency does pop up then there isn't a huge charge for withdrawal.

You can get a quote for selling out via their website.

Just checked it and to sell my 5 year loans would cost about 2.5% (assuming somebody would buy them).

kidmugsy

What happens if the customer, i.e. the lender, dies? Does his estate have to pay a penalty to close his accounts?

TheTracker

kidmugsy wrote: »

What happens if the customer, i.e. the lender, dies? Does his estate have to pay a penalty to close his accounts?

Most of my P2P is through ThinCats. Their Ts&Cs address death of a member by saying they'll do everything they can to transfer ownership upon evidence, and there is no indication of a specific fee in such an instance. Like many platforms they run a secondary market for trading/closing positions and the fee is the higher of £25 or 1% of the loan, capped at £75.

weenie15

If you are concerned about opt out rates, then perhaps long-term p2p isn't for you. Money you invest here should really be money that you won't need in a hurry - that's what your emergency cash fund should be for!

So you're thinking of investing in lots of £50? Perhaps consider saving up the two lots, open up an account with Funding Circle with the £100 and you can loan out 5 x £20 loans and get higher rates. My average is over 9%.

Slightly higher risk than with say Zopa and Ratesetter, but you are loaning to UK businesses rather than individuals.

Go with A+ rated companies if you want to play it safer but you'll still get a good rate.

I have loans with Ratesetter, Funding Circle and Lending Works - a bit in each to spread my risk.

N1AK

Broken_Biscuits wrote: »

i wouldn't recommend taking out a 5 year product and then selling up early a few months in. But its nice to see that if you have a shtf moment you actually wont be heavily penalised if you desperately need the money!

Exactly. The cash out option is more of a small side benefit for unforeseeable circumstances; you shouldn't be choosing Ratesetter for money you're remotely likely to want back faster than the term.

We've got about £10k in Ratesetter now on the 5 year market. Obviously I don't want to lose it, but I can afford the small risk of that happening and think it is worth it for return offered.

N1AK

weenie15 wrote: »

So you're thinking of investing in lots of £50? Perhaps consider saving up the two lots, open up an account with Funding Circle with the £100 and you can loan out 5 x £20 loans and get higher rates. My average is over 9%.

Slightly higher risk than with say Zopa and Ratesetter, but you are loaning to UK businesses rather than individuals.

Go with A+ rated companies if you want to play it safer but you'll still get a good rate.

I have loans with Ratesetter, Funding Circle and Lending Works - a bit in each to spread my risk.

We've got about £8k in Funding Circle, widely spread in £20 loans. Although they estimate a pre-tax return of around 8.3% for our portfolio we're currently running around 5%. There was a 6 month period at the back end of last year where bad debt completely cancelled out all the interest earned!

I would suggest the risk is considerably higher than Ratesetter. With Ratesetter you'll get what you expect unless the whole thing falls apart. With Funding Circle you also have the risk of individual defaults. That may well be worth the ~1.5% premium you can get vs Ratesetter, but I'd suggest it isn't for people who are less able/willing to lose the money they are investing.

arbster

N1AK wrote: »

We've got about £8k in Funding Circle, widely spread in £20 loans. Although they estimate a pre-tax return of around 8.3% for our portfolio we're currently running around 5%. There was a 6 month period at the back end of last year where bad debt completely cancelled out all the interest earned!

That's a significant commitment to P2P lending - do you use other sites too, or just Funding Circle?

As a new investor to FC, I'm concerned to hear you were hit so severely by bad debt, and especially that your returns have been so much lower than FC's estimate. Can I ask what proportion of your loans are to borrowers in the B, C and C- categories?

Presently I have nearly £2,000 loaned out, at a Gross yield of 10.3%, with an estimated return after bad debt and fees of 7.4%, and maximum exposure to a single borrower of 3.2%. My calculations tell me that I have 66% of my loans with A+/A loans, and only 13% with C/C- loans, and the latter are only where I have done some due diligence on credit and financials. I'm hoping that my returns will be in line with FC's estimates, but time will tell.

agent69

This relates to Ratesetter

http://p2pindependentforum.com/thread/2079/happens-when-die

luvpump

krish123 wrote: »

Hi Guys,

Just read about P2P lending and trying to gauge if this is something suitable for me.

lets say i wanted to lend £50 per month is this possible? want sort of return would you get on this sort of money?

also when do you get repaid the interest earned, on a monthly basis or after the end of the term so say 1,3,5 years etc?

For newbie like myself what would be the best site to use ratesetter? Zopa?

I want to keep risk minimal, not necessarily out there for the best returns but more safe investments.

I have a substantial amount in "Ratesetter" , you can do it on a monthly basis,around 3% which i mostly do, kind of like a Bank or Building Society, but you can get up 5% on a year.. Try it with a smaller amount and see how you feel . But there will always be a risk, but if anyone looses money it would send the P2P industry down the drain . No one has lost any money with with Rate-setter so far

N1AK

arbster wrote: »

That's a significant commitment to P2P lending - do you use other sites too, or just Funding Circle?

As a new investor to FC, I'm concerned to hear you were hit so severely by bad debt, and especially that your returns have been so much lower than FC's estimate. Can I ask what proportion of your loans are to borrowers in the B, C and C- categories?

Presently I have nearly £2,000 loaned out, at a Gross yield of 10.3%, with an estimated return after bad debt and fees of 7.4%, and maximum exposure to a single borrower of 3.2%. My calculations tell me that I have 66% of my loans with A+/A loans, and only 13% with C/C- loans, and the latter are only where I have done some due diligence on credit and financials. I'm hoping that my returns will be in line with FC's estimates, but time will tell.

I've got about £20k in p2p lending mostly with Ratesetter & FundingCircle. I haven't done a breakdown by band, but my gut feel is that most defaults have come from A grade loans (but I also expect that I have a bias towards A+/A grade loans in my portfolio).

Gross yield:
11.1% ?
Annualised return (after fees and bad debts):
5.0% ?
Estimated fully
diversified return (after fees and bad debts):
7.2% ?

To be fair to FundingCircle they do highlight that 10% of investors with more than 100 loans, and with all loans below 1% of total lending, are getting returns of 5% or less.

The biggest single issue which I think has negatively impacted my returns is that I use autobid, and you can't tell autobid not to buy up loans other lenders want to sell. I know that some lenders track their loans and if they see anything funny then they'll sell them off before FundingCircle downgrades the debt. Us poor !!!!!!s on autobid cannot avoid buying up those loans. Effectively it is a subsidy for active investors by auto-investors; and one I am no longer willing to support, which is why I don't do any new lending on that platform.