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Peer-to-peer lending sites: MSE guide discussion

edited 30 November -1 at 1:00AM in Savings & Investments
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  • edited 21 October 2019 at 3:56PM
    JB50JB50 Forumite
    7 posts
    edited 21 October 2019 at 3:56PM
    Thanks to Money Saving Expert for updating its information on Ratesetter ref new products available.

    Rules and regulations will change later in 2019.
    Do NOT invest more than 10% of your available funds in peer-to-peer products, and don't invest with peer-to-peer platforms at all unless you can bear some risk. Minimum investment with Ratesetter is £10.
    Interest rates are higher than ordinary bank and building society savings accounts but you may not get back all you invest.

    Personally, I am happy with Ratesetter so far because I receive more interest with Ratesetter than with any of my other bank or building society savings products, and I do not pay tax because it's all in an IF ISA.

    Ratesetter (FCA authorised and regulated) tell me they will open 3 new products called Access, Plus and Max (all available within an IF ISA) from 3rd October 2019, open to new and existing investors.

    From 3/10/19 new investors may only invest in the new investment products. The new Ratesetter products are simpler to understand and I wonder whether Ratesetter developed them partly to comply with new regulations coming in later this year. They are not bad, but one must pay a 30 day interest penalty to withdraw funds from the Plus product, and a 90 day interest penalty to withdraw funds from the Max product. There is no fee or penalty for withdrawing your money at any time from the Access product. RS says there's no guarantee of how long it may take to withdraw funds, as it depends on another investor agreeing to take over the loan(s) your money is invested in.
    Existing investors may still choose to operate their existing investment products. Personally, I like the existing products called Rolling, 1 Year and 5 Year, because with these I can set the system to allow repaid loans and/or interest to be paid into my IF ISA Holding Account and from there I can withdraw my funds with no fee and no penalty, or re-invest these funds if I wish.

    I am well aware that peer-to-peer lending is riskier than a bank savings account, and they offer no guarantees that you will get all your money back, but I chose Ratesetter because they operate a Provision Fund which steps in automatically to pay investors if a borrower defaults on a loan. Ratesetter has been operating since 2010, and as at 2/10/19 so far no investor has lost money (unlike other peer-to-peer platforms). Ratesetter do not pay as high interest rates as some other peer-to-peer platforms, but it seems to me they are a little less risky because of their Provision Fund.

    I have been investing with Ratesetter since 2017 and although it took me some time to get my head around the more complicated options and choices, one can choose to invest with them very simply, and not bother with all that complication.

    Personally, I like to know how things work. If I wish, I can log into my Ratesetter account at any time, and see what is happening on a minute-by-minute basis. If I prefer, I can just set it to operate automatically, and just look at it occasionally.
  • JB50JB50 Forumite
    7 posts
    I chose Ratesetter because they operate a Provision Fund which steps in automatically to pay investors if a borrower defaults on a loan. Ratesetter has been operating since 2010, and as at 2/10/19 so far no investor has lost money (unlike other peer-to-peer platforms). Ratesetter do not pay as high interest rates as some other peer-to-peer platforms, but it seems to me they are a little less risky because of their Provision Fund.
  • jayjayunojayjayuno Forumite
    4 posts
    Part of the Furniture Combo Breaker
    MoneySaving Newbie
    Robo.cash.
    Anyone any experience if this,good or bad?
    I was thinking of putting something in, short term, it offers 12% for 30 day investments, which would help while I'm looking for a property.
  • AdrianCAdrianC Forumite
    32.1K posts
    10,000 Posts Seventh Anniversary Name Dropper
    ✭✭✭✭✭
    jayjayuno wrote: »
    Robo.cash.
    Anyone any experience if this,good or bad?
    I was thinking of putting something in, short term, it offers 12% for 30 day investments, which would help while I'm looking for a property.
    12% annualised is ~1% for a month.

    What do you think the chances of a default, or of not being able to access your money, at the end of the month are? Higher than 1%?
  • Snow_DogSnow_Dog Forumite
    688 posts
    jayjayuno wrote: »
    Robo.cash.
    Anyone any experience if this,good or bad?
    I was thinking of putting something in, short term, it offers 12% for 30 day investments, which would help while I'm looking for a property.


    Anything that offers 12% is going to come with associated risk. If you can afford to lose the lot then fair enough, thats the question you have to ask yourself.
  • jaizanjaizan Forumite
    27 posts
    Fourth Anniversary 10 Posts Combo Breaker
    One of my former tenants was a Chinese student who managed to take out a substantial loan with RATESETTER just before returning to China.

    Ratesetter persist in sending letters chasing the money, which is not very effective since he has emigrated. These people are clearly thick.

    The banks don't lend to students temporarily in the UK, however it seems the P2P companies are quite happy to lend to such people, even though most return home after their studies.

    I cannot imagine what such careless lending does to their default rate and the net return after defaults.


    I advise anyone to look carefully at their default rates and lending controls before lending money to RateSetter.
  • firestonefirestone Forumite
    492 posts
    100 Posts Second Anniversary
    ✭✭
    while its not to say it is not worrying - by the amount of debt chasing/bailiffs programmes on tv it would seem that anybody including the banks can be taken for a ride
    You would assume RS as they are on comparison sites and work with companies like Giff Gaff are using industry wide T&C such as minimum 3 years UK resident,over 21,bank account with source of income etc
  • I wrote a brief blog on this as I found it confusing and wanted to work out what those access fees mapped to in terms of reasonable savings.
    "ratesetters-access-plus-and-max-offerings-which-should-i-pick" - on medium
    Hopefully of some help to people with same confusion.

    Tl;DR,
    "Access is best until day 121
    Plus is best all the way until day 341
    The gain tails off as time goes on. The gain from exceeding the above dates is less than the loss from withdrawing early"
  • FroggittFroggitt Forumite
    5.9K posts
    I wrote a brief blog on this as I found it confusing and wanted to work out what those access fees mapped to in terms of reasonable savings.
    "ratesetters-access-plus-and-max-offerings-which-should-i-pick" - on medium
    Hopefully of some help to people with same confusion.

    Tl;DR,
    "Access is best until day 121
    Plus is best all the way until day 341
    The gain tails off as time goes on. The gain from exceeding the above dates is less than the loss from withdrawing early"

    What's unclear with these new RS products, is how borrowers are split between this pot, and the old 5 year pot which is still going.
    illegitimi non carborundum
  • JB50JB50 Forumite
    7 posts
    I've had a Ratesetter IFISA since it started and I recently recommended a friend (warning them they could lose their investment!). A few days later I saw that I'd received £50 bonus in my Everyday (taxable) account, as my friend had invested £1000. I wanted it transferred into my IFISA but a member of staff explained when I phoned that I must request to withdraw the £50 but there was no guarantee how long this might take, as it depended on whether another investor was willing to take over my £50 Everyday investment. What actually happened was that I clicked the button to withdraw it, and it took about 4 hours for my money to go into my holding account. OK it's only £50 but reality was better than expected. I could then have withdrawn the £50.03 (including my few days' interest) entirely, but I chose to invest it into my existing 1 year IFISA product, which still operates as before, even though it's unavailable to new investors. :)
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