Which peer-to-peer market is most secure for accessing funds?

firestone

aroominyork wrote: »

I have investments with Ratesetter, rolling and one year, and with Assetz, 30 day notice. Am I right in thinking that if there was an economic downturn, a rise in interest rates or the mood turned against investing in p2p, my one year Ratesetter is the best option for confidence I can access my funds (albeit when the year ends)? I say this because the rolling and 30 day markets are dependent on someone else wanting to buy my loans at the rate I took them out, whereas the one year market automatically releases my funds (assuming there are no defaults not covered by a provision fund, and ignoring early repayments).

It may have changed with some of the "tweaks" RS have been doing over the last few months (i have not re-read the new investor terms at the bottom of home page but withdrawals will be covered) but at One time you did not need a match at the rate you took out as you mention.What happened was - if a buyer was found and the current rate was lower then your selling rate RS would keep the difference in future accrued interest payments but if the existing rate was higher then your rate you was penalized and it came out of your money when sold (section 9 of the old terms) i believe.When you sell you get a quote with all fees etc
I have also seen people say the One year is safer then 5 year or rolling is safer then both but in theory they would all be effected in the same way if the provision fund runs out as there is a pooling event where all customers are treated the same and not on a loan or market/term basis

aroominyork

So I exchanged emails with Ratesetter who said in the 1 year market you are only matched to contracts for 12 months or less. Contract that are 12 months exactly will be brand new borrower loans, whereas anything less than 12 months in the 1 year market will be previously sold out of loans. They will point out to management that this is not in their Ts & Cs.

In the meantime, they said their email will stand as a guarantee that I will not be matched to a loan for more than 12 months in the 1 year market and I can expect to receive both the capital and interest repayment, if not repaid early, at the end of the 365 day term. That’s not perfect but is good enough for me.

firestone

And there would still be the choice of paying the 0.3% fee for early release if needed

N1ckS

The 0.3% fee is only applicable if someone is willing to purchase those loans. It's highly likely that you will be able to do this but it's not a guaranteed exit.

firestone

N1ckS wrote: »

The 0.3% fee is only applicable if someone is willing to purchase those loans. It's highly likely that you will be able to do this but it's not a guaranteed exit.

Good point and does apply to the other markets as well

aroominyork

firestone wrote: »

Good point and does apply to the other markets as well

Though fees are different for other markets:
- rolling, no fee
- 1 year, 0.3%
- 5 years, 1.5%

Alexland

When investing in P2P you need to be ready for your loan to be repaid late, in part or not at all. As such on the RS 1 year market it doesn't really matter if you are invested in loans of more or less than 1 year duration as you could easily have more problems with a delayed 11 month loan than difficulties reallocating a 13 month loan for the final month. Still I get the feeling that giving good customer outcomes is more important to RS than the exact details of who has which underlying loans (as the central risk pot covers it anyway) and provided RS have the money they would do what is required to return the money at the end of the 1 year term. Despite RS being one of the better platforms I still didn't think the interest rate premium justified the risk of continuing with them compared to other investment options.

aroominyork

Alexland wrote: »

When investing in P2P you need to be ready for your loan to be repaid late, in part or not at all. As such on the RS 1 year market it doesn't really matter if you are invested in loans of more or less than 1 year duration as you could easily have more problems with a delayed 11 month loan than difficulties reallocating a 13 month loan for the final month. Still I get the feeling that giving good customer outcomes is more important to RS than the exact details of who has which underlying loans (as the central risk pot covers it anyway) and provided RS have the money they would do what is required to return the money at the end of the 1 year term. Despite RS being one of the better platforms I still didn't think the interest rate premium justified the risk of continuing with them compared to other investment options.

It's not delays/defaults I am concerned about - that comes with the territory of investing in p2p. It's the risk being stuck with a one year loan on Day 366 because no investors want to take it over.

Re. whether or not the premium justifies the risk, that was the reason for starting this thread - to avoid the risk of being stuck with a one year loan because the p2p market goes wotsits up. With the assurance which I have been given I think it is worth the premium; without that assurance possibly not.

firestone

aroominyork wrote: »

So I exchanged emails with Ratesetter who said in the 1 year market you are only matched to contracts for 12 months or less. Contract that are 12 months exactly will be brand new borrower loans, whereas anything less than 12 months in the 1 year market will be previously sold out of loans. They will point out to management that this is not in their Ts & Cs.

In the meantime, they said their email will stand as a guarantee that I will not be matched to a loan for more than 12 months in the 1 year market and I can expect to receive both the capital and interest repayment, if not repaid early, at the end of the 365 day term. That’s not perfect but is good enough for me.

You probably know but just in case you don't you can click the 1 year line on your account page on the next page shown in the section where it says your loans you can check the term & rate etc

aroominyork

This post is to tie up a loose end. I asked RS for a manager to confirm what I was told in post #13, that in the one year market you are never matched to loans longer than one year, and this morning I received the following from the Heads of Investor Services:

"...all funds that operate in the one year market operate for that term length only. Therefore, you will only be matched to a loan with the term of one year or less (e.g. due to an early repayment).

You will not be matched to loans of a longer term as this would as you correctly stated mean it could be possible to be tied in for longer than one year. Which again is not going to be the case."

So while their published Ts & Cs might not be clear - and hopefully they will tidy them up - I am content with their process for matching loans to investments.