Peer to peer lending, where to start

Snow_Dog

P2P lending is not what most would regard as a starting point for investing. However i figure it is another part of a valid spread of investments.


Ratesetter is OK - pretty straightforward - you invest in 3 different categories, rolling, 1 year or 5 year market. Longer the term usually the better the rate, penalised if you withdraw it early. rates these days are typically 3-5% which in my book is not that great. Hint - set your own lending rate (they dont make it overly easy to do that and have just removed that option from the rolling market).


Kuflink - OK, investing in property loans usually 6-7.2% or their spread market where they split up your investment across a dozen loans, howver that only pays 3.99% for 1 year investment. Hint, if you do want to invest in a particular loan wait until its mostly filled before moving money over and committing it as you wont be earning interest until loan goes live. Some of their valuation info just feels a little bit mickey mouse to me.


Assetz Capital - my favourite - lots of options from a instant access account at 4.1%, 1 month account at 5.1%, couple of others and then the MLA (manual lending account), this allows you to select the amount you want to invest in specific loans, you read the valuation and credit report and if you think its a good investment then you select it, rates are typically 6-9%


P2P is regulated by the FSCS but not under the compensation scheme so money lost is lost.


All platforms/sites are different in how they work, my suggestion is open a couple with a few hundred notes and experiment, once you are totally happy then stick the real money in.

grey_gym_sock

Marine_life wrote: »

I've also recently upped my investment significantly with Mintos which is a Eurozone based investor which enables you to specify 'guaranteed buy-back' i.e. if the loan is going bad they will automatically buy it back from you .....so technically no risk.

lol ... that is a joke, right?

could you rephrase that, in case some people don't get the joke and take it seriously?

Rollinghome

Snow_Dog wrote: »

P2P is regulated by the FSCS but not under the compensation scheme so money lost is lost.

P2P is regulated by the FCA (or not, in the case of Collateral, now in administration, which incorrectly told lenders it was ).

It might be possible in some circumstances to claim compensation through the FSCS of up to £50,000 if lenders lose money as a result of bad advice from a regulated advisor, but that wouldn't apply to many lenders.

Looks as if some rates on Ratesetter are going to be a lot lower than 3% now as a result of the changes they've quietly made to Rolling accounts. Which in view of the risks probably doesn't make much sense but doesn't seem to stop some people lending.

bowlhead99

Marine_life wrote: »

I've also recently upped my investment significantly with Mintos which is a Eurozone based investor which enables you to specify 'guaranteed buy-back' i.e. if the loan is going bad they will automatically buy it back from you .....so technically no risk.

A rule for inserting 'technically' in a sentence is that the sentence still has to be true without it...

What you mean is that if at the time of the loan or loans going bad, they still have the desire to buy it back from you and the financial ability to buy it back from you, one would expect them to stick to the terms and buy it back from you.

Just like loans made to the underlying borrower on any of these platforms: if the borrower still has both the desire to stick to the loan terms and the financial ability to stick to the loan terms, they will probably stick to the loan terms. But we all know things go wrong and people default on stuff and businesses fail.

So, "technically no risk" (or simply "no risk") isn't true (or technically true), so caveat emptor and all that.

It seems to work and is currently paying me over 11%. But again, untested in difficult market conditions.

So "it seems to work" in rosy economic conditions rather than it actually being well-tested in making good on its guarantees during periods of recession or low credit availability... Quite a difference

george4064

A good place to start would be:

http://www.moneysavingexpert.com/savings/peer-to-peer-lending

And

https://forums.moneysavingexpert.com/discussion/4313323/peer-to-peer-lending-sites-mse-guide-discussion

Marine_life

grey_gym_sock wrote: »

lol ... that is a joke, right?

could you rephrase that, in case some people don't get the joke and take it seriously?

In what way is it a joke?

Or maybe you have a curious sense of humour

grey_gym_sock

Marine_life wrote: »

Or maybe you have a curious sense of humour

well, i do

bowlhead has spelled out what was wrong with your statement.

a key word to watch out for is "guaranteed". whenever i see it, i ask: who is making the guarantee? because a guarantee is only as good as the person/organization making it.

people often think "guaranteed" means "risk-free", which it doesn't.

anybody who wants something risk-free shouldn't be looking at p2p at all, but at national savings products and FSCS-protected deposits.

stehouk

I use ratesetter, lending works and archover, i had to withdraw from funding circle as i had a lot of bad debts and my money is frozen until it is repaid at a rate of £1-2 per mth, i have 1k sat in there and i don't expect i will be seeing it again for a very long time
use the referals to boost your'e investment, i recomend family members so i get double cash back

Marine_life

bowlhead99 wrote: »

A rule for inserting 'technically' in a sentence is that the sentence still has to be true without it...

What you mean is that if at the time of the loan or loans going bad, they still have the desire to buy it back from you and the financial ability to buy it back from you, one would expect them to stick to the terms and buy it back from you.

Just like loans made to the underlying borrower on any of these platforms: if the borrower still has both the desire to stick to the loan terms and the financial ability to stick to the loan terms, they will probably stick to the loan terms. But we all know things go wrong and people default on stuff and businesses fail.

So, "technically no risk" (or simply "no risk") isn't true (or technically true), so caveat emptor and all that.


So "it seems to work" in rosy economic conditions rather than it actually being well-tested in making good on its guarantees during periods of recession or low credit availability... Quite a difference

agree - loose wording on my side

agent69

RomfordNavy wrote: »

Due to a change in circumstances I now need to start returning an income from investments rather than just leaving it in the bank.

This is not a good reason for getting into P2P. The risks are high with very little visibility of what's going on behind the scenes.



If you were into P2P for the last 8 - 10 years you have probably done well out of it, but the COL fiasco is a stark warning of what can happen when things go wrong.