How much have you made on P2P Lending sites?

masonic

Maceo wrote: »

Agree 12% is unusually high and I would question that rate and who they are lending to.

One can't simply assume risk from the rate offered. It is necessary to do some due diligence on the borrower and loan security (if there is any!) before investing. Some platforms get in the way of that by obscuring borrower information and these are the platforms that tend to make the riskier unsecured loans. I started out investing some money in Ratesetter, but moved on to other platforms quite quickly, in part because I consider unsecured loans to anonymous borrowers be riskier to the ones paying 12%. It's already been noted that Ratesetter may be heading into difficulties and I expect the number of defaults to start picking up as the economy slows. Rates of 4-6% don't give much margin for default loss if the provision fund is exhausted.

As discussed in the main P2P thread, 1-2% per month is the going rate for some types of short term loan. If you are getting much less than that you would probably be better off in an alternative asset class with a long term track record.

jnm21

Thanks Masonic - I don't fully agree with the article linked, but certainly an interesting read. I think it may be omitting recoveries as the ratesetter responses suggest (the author certainly makes no mention of security owned). Also it seems to ignore the green shoot that is the 2016 data - they note that for 2014 & 15 the % usage of fund contributions marginally outstrip the % repaid, but fail to mention that for the 2016 year (admittedly early days) this situation is reversed significantly.

Still as a result of reading that I may reconsider investing more until I can see how things go, so thanks for pointing it out.

Maceo

jnm21 wrote: »

Can I ask more detail on this please (sorry in advance for all the questions)? I presume that this is Zopa plus? When you say bonuses, I presume you mean RAF bonuses? If you exclude bonues such as RAF (i.e. capital & interest only), what rate of return would you say you are getting from Zopa Plus?

Many thanks in advance. :beer:

In the early years Zopa only offered long or short loans and they weren't covered by any safeguard offer, so if a loan defaulted you pretty much lost your money unless they could claim it back via debt collectors.

Fast forward to today you now have safeguard and the three tier model.

The money I lost was on money I lent out in the early years. Since zopa introduced safeguard I haven't lost anything.

The bonuses I got from Zopa were from introducing friends and family were you got £50 for every friend you signed up. They also did one or two promotional offers were they gave you £50 if you deposited a certain amount.

jnm21

Thank you Maceo. May I ask if you use Zopa Plus (tier 3/no safeguard if I read correctly)?

Maceo

jnm21 wrote: »

Thank you Maceo. May I ask if you use Zopa Plus (tier 3/no safeguard if I read correctly)?

No I am only using zopa classic and I have a small amount in old loans which aren't part of any of the current schemes.

I may try out zopa plus to see what kind of return I get but you need to put in at least £1000 into that option to spread the risk across many borrowers to minimise the chance of losing large sums of money.

Biggles

As at the end of July (around 13/14 months invested in the following, except for the remnants of my FC, which was running for six years):-

FC 4.0%
AR 13.0%
AC 8.4%
FS 8.4%
MT 11.9%
SS 12.5%

masonic

jnm21 wrote: »

Thanks Masonic - I don't fully agree with the article linked, but certainly an interesting read. I think it may be omitting recoveries as the ratesetter responses suggest (the author certainly makes no mention of security owned). Also it seems to ignore the green shoot that is the 2016 data - they note that for 2014 & 15 the % usage of fund contributions marginally outstrip the % repaid, but fail to mention that for the 2016 year (admittedly early days) this situation is reversed significantly.

I don't think there is any denying that the analysis is flawed because it is based on information that is incomplete. But therein lies the problem for me because it is based on all of the available information. So a thorough analysis cannot be done because the necessary information is kept hidden by RS. IIUC, RS is only taking security in the case of business finance and property loans to developers/investors. It is not possible to elect to invest in just these loans, nor see any sort of valuation of the security, and I don't think we as investors can see what proportion of these loans we may hold at any time. As such, I would tend to treat all loans at RS as if they were unsecured.

Also, I fear you may be misjudging the "green shoots" figure for 2016. RS will not put a typical loan into default until a payment is late by at least 90 days. That means that the only loans that could possibly be in default at the time the article was written would be those made prior to the start of April. That means that's only 50% of the loans made during 2016. Those loans would have had to go almost immediately into default. A very unlikely scenario. The fact that almost 10% of provision fund contributions are going towards bad debt from loans that have been made so recently and covering just 3 months is maybe not such a great statistic after all - but impossible to compare with the earlier figures, so who knows.