Peer-to-peer lending sites: MSE guide discussion

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  • masonic
    masonic Posts: 23,279 Forumite
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    Thrugelmir wrote: »
    I doubt companies use pawnbrokers. There are plenty of asset leasing companies (arms of major lenders) in the marketplace.
    MoneyThing is lending money using things like paintings and jewellery as security, so in that case the comparison with pawnbrokers is a close one. Obviously that's not the case with the other two platforms highlighted above by jamesd and I'm not sure how the high rates could be rationalised in those cases.
  • rwgray
    rwgray Posts: 554 Forumite
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    edited 12 July 2015 at 12:13PM
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    masonic wrote: »
    I'm not sure how the high rates could be rationalised in those cases.

    SavingStream is typically 6 months at 12% but can be repaid at any time. Compare it with any "payday loan" arrangement and it looks cheap. I heard a radio ad yesterday for borrowing unsecured at nearly 1300% APR.

    Your security gets you the fixed-price deal without the hassle of persuading a bank that wanting to borrow does not disqualify you from deserving to do so.

    Rich.x

    ps. Just signed up and actually the loans available range from days up to a year! Which just happens to suit me right now...
  • stphnstevey
    stphnstevey Posts: 3,224 Forumite
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    edited 20 July 2015 at 9:21PM
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    jamesd wrote: »
    Why would you want to use Zopa or RateSetter and get around 5% when you can instead get around 12% using SavingStream, MoneyThing or Ablrate for secured lending?

    I suggest that you ignore gowgowuk's offer. Those in the referral section typically offer to pay you a significant portion of their own cut, with offers there that get you £90, £85 and more combinations, not just £50.

    JAMESD - may I ask what proportion of
    a) your total investments
    b) what proportion of your P2P lending

    are invested in the 12% P2P you mention?

    The reason being I am trying to decide this myself and would be interested in what an experienced P2P investor would do
  • mvarrier
    mvarrier Posts: 104 Forumite
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    I'm not as experienced as James but I have approx half my assets (not including my home) in high interest current accounts and half in P2P.

    Of the half in P2P, 75% is in savingstream/moneything @12% and the other 25% in funding circle/ratesetter. The proportion in SS/MT continues to creep up.

    I do not have much in traditional investments as we are expecting to move home and need to liquidate assets in approx 3 years, so P2P offers more flexibility.

    Before committing large sums of money to a 'riskier/higher paying' platform it is important to familiarise yourself with their operation/handling of defaults/competence in DD/financial solvency etc. Personally I have found SS and MT to be forthcoming and professional and my confidence has grown.
    Some would say (very fairly) that 12% is too good to be true and that the risks are underestimated. Only time will tell...
  • stphnstevey
    stphnstevey Posts: 3,224 Forumite
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    mvarrier wrote: »
    I'm not as experienced as James but I have approx half my assets (not including my home) in high interest current accounts and half in P2P.

    Of the half in P2P, 75% is in savingstream/moneything @12% and the other 25% in funding circle/ratesetter. The proportion in SS/MT continues to creep up.

    I do not have much in traditional investments as we are expecting to move home and need to liquidate assets in approx 3 years, so P2P offers more flexibility.

    Before committing large sums of money to a 'riskier/higher paying' platform it is important to familiarise yourself with their operation/handling of defaults/competence in DD/financial solvency etc. Personally I have found SS and MT to be forthcoming and professional and my confidence has grown.
    Some would say (very fairly) that 12% is too good to be true and that the risks are underestimated. Only time will tell...

    Thank you for your input :)
  • mvarrier
    mvarrier Posts: 104 Forumite
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    rwgray wrote: »
    SavingStream looks good with a fixed return of 12%. I don't mind having to reinvest regularly, although it may mean that your effective rates can come down much faster than with a 60-month fix.

    Saving stream pays out all interest on the same day each month, therefore it is easy to either re-invest the same day without a break (if opportunities are available), or withdraw if not (rarely necessary).
    Also, you can re-invest any amount (unlike FC with £20 minimums) therefore compounding can be even more efficient.
  • rwgray
    rwgray Posts: 554 Forumite
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    mvarrier wrote: »
    Saving stream pays out all interest on the same day each month ... Also, you can re-invest any amount therefore compounding can be even more efficient.

    Thanks. My concern was that they'll have to start paying less than 12% sometime, hence lower rates on the horizon. However, with base rates due to rise soon, maybe nicht!

    Rich.x
  • MrOverheads
    MrOverheads Posts: 45 Forumite
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    I'm still heavily invested in rebuildingsociety.com Averaging 16.6% across over 100 loans, so the risk is well spread, and I have 3% in recovery, of which rebs send weekly emails with update on the recovery process. Half of the defaults are for one loan which is also my oldest loan when I hadn't diversified my portfolio as much. The rebs emails give me confidence that at least a reasonable chunk of the 3% will be recovered from the loan security.
  • stphnstevey
    stphnstevey Posts: 3,224 Forumite
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    by diversify, do you mean investing in small amounts to spread your money over several loans?

    Does this take up much extra time to do?
  • rwgray
    rwgray Posts: 554 Forumite
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    stphnstevey wrote: »
    Does this take up much extra time to do?

    Yes.

    Mainly in the sense that it takes time to invest all of your initial capital on one site.

    You could throw the whole lot at one "safe-looking" loan on day one, then it defaults and all your funds are tied up in recovery (at best).

    So we take our time a little...

    Rich.x
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