In Germany p2p lending service Smava.de will increase its fees in February. Smava management said the fee increase is necessary to build a sustainable business and points out that now 20 months after the launch the value proposition of Smava has been verified. Median ROI is given as 9.4% with 90 percent of lenders (best and worst 5% cut off) earning between 4.7% and 12.9% ROI per year.
Old fee structure:
Lenders: no fees
Borrowers: 1% of the loan amount
New fee structure:
Lenders: 4 Euro (approx 5.30 US$) for each successful bid
- 2% of the loan amount, minimum 40 Euro, for 36 months loans
- 2.5% of the loan amount, minimum 60 Euro, for 60 months loans
This increase will more than triple Smava’s revenues from 8,000 Euro per month to 27,700 Euro per month (estimate based on 800,000 Euro loan volume per month; 5,500 Euro average loan amount; average bid amount 330 Euro; 50% of loans for each loan duration).
While the fee height is tolerable for most lenders, I am somewhat sceptical whether Smava is attractive enough for borrowers under the new fee schedule and will be able to continue its required growth.