P2P lending

Flameblow
Flameblow

Hey biz,

What are your thoughts on P2P lending? I am looking at a couple of UK providers and most of the top ones seem to have a default fund in case borrowers go under.

Obviously there is innate credit risk, the ROI seems decent but the liquidity is a concern given there are fixed terms I.e. 1 to 5 years.

I already have a corporate credit fund in my portfolio but am keen to have a bit of exposure to retail credit.

CouchChiller
CouchChiller

The medium risk loans seem to have about 5% annualised return.

VisualMaster
VisualMaster

There is huge risk in the fact that the broker is ripping you off, or running a scam like lending club.

You don't really own the loan... the broker does...

Sir_Gallonhead
Sir_Gallonhead

@VisualMaster

True! I am sure they take a significant cut on the interest itself.

Do you have much experience in P2P?

Raving_Cute
Raving_Cute

@VisualMaster

Why would Lenders Club be a scam?

iluvmen
iluvmen

@Raving_Cute

Not sure as well. They don't seem to be regulated here in the UK but the compliance and reviews seem legit.

Spamalot
Spamalot

You'll have to pay income tax on your measly little 5 percent return

PurpleCharger
PurpleCharger

@Flameblow

I have been using FundingCircle and Zopa for about 3-4 years now.

I would keep your exposure low - it is not as good as it was a few years ago.

Now the UK gov is funding some loans the number of shitty companies coming on board has increased, especially ltd companies with no assets and no director guarantees.

GoogleCat
GoogleCat

Guys what's the best Bitcoin lending site? I don't wanna use shitty ass loanbase or btcjam or any thing like that is there anything that isn't really popular that I could try

Booteefool
Booteefool

@PurpleCharger

Thanks for the reply!

Yeah I wouldn't spend more than £1k and even then it would be an experimental amount. Why did you go with Zopa?

I am considering RateSetter too but I hate how I need to provide ID for Zopa

Sir_Gallonhead
Sir_Gallonhead

@GoogleCat

Not sure mate, sorry! Try doing some research or see if existing providers do this already?

Inmate
Inmate

A bit of an update regarding the tax treatment of P2P income.

The HMRC says that any interest should be taxed but individual investors have basic tax free allowance. In my case, it would be any interest from savings and P2P loans that is under £1000 a year will not be taxed.

BinaryMan
BinaryMan

@Booteefool
I went with Zopa because at that time (~4 years ago) it was the most established. No other reason.

I have about £10k in each. Average rate of return after losses is 5.7% for Zopa and 5.2% for FundingCircle.

I am fairly conservative with FundingCircle so it could have been higher.

Im not putting more into FC, just reinvesting interest into companies that are at least asset backed or director backed now.

Il probably only put £500 - 1k per year into Zopa from now on, just for spread

JunkTop
JunkTop

@BinaryMan

Thanks for getting back!

Yes, it seems that Zopa, RateSetter and Funding Circle are the most established players.

Are you declaring/paying tax on the interest?

Think I'll go with RS

New_Cliche
New_Cliche

p2p invester here... I have no problems with p2p so far.. Been making 12% returns for over a year now.. With that being said, the industry is still in its infancy and I dont find a problem with investing in it.. but always take caution, find a good provider and get good loans

Illusionz
Illusionz

@New_Cliche

12% seems a it high. Did you go with higher risk loans?

Gigastrength
Gigastrength

@Illusionz
My p2p platform provides 12%/yr with buy-back guarantee.
Which means they buy 100% of bad loans back from you and you get back full investment + gains.

It's Europe based platform created about a year ago and 35M invested to date. Of which 6M in June.

I have an insider and I know for sure they are buying multi milloin € software solutions to accumulate growth.

Is this too good to last?

Spamalot
Spamalot

@Gigastrength
Would you mind sharing the name?

farquit
farquit

@Gigastrength
@Spamalot
It's Mintos, isn't it?

Spamalot
Spamalot

@Gigastrength

Yes and no. All of these platforms provide better deals to borrowers than the banks.

However what if the default rate goes higher than expected? Sure, the safety fund will protect some of the investments but if it is the next 2008/2009, we will be in trouble.

Firespawn
Firespawn

@Flameblow
Been using FundingCircle for almost 2 years. Made £550 profit after bad debt and fees from £6500 (adding £40 a week). Fully diversified. No more than 1% in any business.

kizzmybutt
kizzmybutt

@Firespawn

Do you allocate to individual borrowers or does the platform do that on your behalf given the spec?

Firespawn
Firespawn

@kizzmybutt
I choose individual borrowers. I look at their financials/liquidity (albeit briefly) and if I like them, lend £20-£60.

FC does feature an autolender for those who do not wish to choose individual companies.

TechHater
TechHater

@Firespawn

Ah sounds like I chose the one of them all! Oh well, £1k at 4% for one year isn't that bad I guess.

StrangeWizard
StrangeWizard

@TechHater
Sorry i don't understand what you just said.

I'd recommend FundingCircle. We can get £50 each if I recommend you and you invest £1k. Pls hmu

FastChef
FastChef

@Flameblow
I use Mintos, tested it with 1k EUR for about a year, seems to be working all good.

Thinking about trying Twino soon. (But they only support TransferWise for deposits, no withdraws, which is a shame)

Was thinking about Saving Stream, but Brexit + all the talks about the UK housing market convinced me to let it go for now.

Soft_member
Soft_member

@StrangeWizard

Sorry, I meant to say I picked the worst one.

Actually RateSetter should give me a £100 bonus as I lent more than £1k. But if I decide to switch or allocate more, def going with your deal.

farquit
farquit

@FastChef

Yeah that's a good point. A lot of the loans seem to be given to developers, some are luxury apartments. I personally wouldn't want to have exposure to UK housing market at the moment.

w8t4u
w8t4u

@GoogleCat

Cool idea. I own some crypto currency but not a lot. Though how would it work exactly work? Given crypto is extremely volatile, relative to traditional fiat money in developed markets.

JunkTop
JunkTop

@Soft_member
Yours is more stable I suppose. My gross income would be 12% but it's down a lot after fees and bad debt. If you don't mind seeing bad debt all the time, it's good. Some people panic over silly things like that though. Post-Brexit I've moved out of a lot of debt and into UK equities because I feel that they're undervalued (also dat foreign exposure). Still, have about £6k in Funding Circle still. Twice as much in shares.

SniperGod
SniperGod

@JunkTop

Yeah, most of my investments are in equities too, maybe overall 30% UK exposure. I have a credit fund and soon a Japanese fund.

I also have some crypto, tiny amount of silver and the rest is cash.

Dreamworx
Dreamworx

@JunkTop
What!!

you have £6k in p2p but only £12k in shares?!

You should only be putting money into p2p when you have significant other assets.

ie £10k as emergency fund, £20-40k cash, £50k stocks/funds, £5-10k p2p

farquit
farquit

@Dreamworx

OP here. I think it depends on one's tolerance of risk. Obviously this guy wants higher returns, which leads to higher risk allocation.

SniperGod
SniperGod

@Illusionz
yeah high risk loans.. i chose them wisely tho.. took me 6 months to choose my current p2p loan portfolio..

Most people invest willy nilly, but i take all the variables into account, including where the borrower lives (ie: not niggertown)

whereismyname
whereismyname

@Spamalot
@farquit
Twino.eu

Stupidasole
Stupidasole

@Dreamworx

I'm only 20 I feel like I've diversified enough and am taking anappropriate level of risk. Cash returns are so poor. I keep about £2k in a TSB account giving 5% (any more yields nothing) and whatever msn l max you can have in a Help To Buy ISA ISA.

FundingCircle is very liquid if I ever really needed the money I could get it out in days. Sold £1000 of debt last week actually.

likme
likme

@Gigastrength
My p2p platform provides 12%/yr with buy-back guarantee.
Which means they buy 100% of bad loans back from you and you get back full investment + gains.

So what's the downside? You're getting fucked somehow.

BinaryMan
BinaryMan

@likme

They probably take a cut on the interest and also go after the default loans

SomethingNew
SomethingNew

@likme
Exactly my point - there seems to be no downside.
The only thing that could bring them down seems to be the inevitable crisis.
Their business ir growing exponentially.

They take a % for their services, but that's the money I never get to see so I don't care.

I wonder how businesses like this handle bear market.

Disable AdBlock to view this page

Disable AdBlock to view this page