How I Explored P2P Lending – My Review Part I

This is part I of a guest post by British investor ‘GSV3Miac’.

About the author.. I spent 25 or so years in software engineering, programming everything from IBM mainframes to microchips in early Hotpoint washing machines. I must have been halfway competent (or not) since I wound up managing a software development group, a large IBM computer centre, workstations of networks and PCs. When my (American owned) factory shut down I spent the last year (in between managing the closure) retraining as an IFA. I qualified, but I never actually practised – I took my redundancy / pension and headed for the hills (of Shropshire). That was a while ago, so don’t expect me to know chapter and verse on the latest tax wrinkles! *grin*

How did I get into P2P (misnamed .. it’s largely P2B these days .. much of is headed for B2B!) lending? Blame my mother .. she died, and left me a sum of money which was not expected, and not really critical to my future. Having no children (there being, IMO, no people shortage on the planet) it is probably all headed for charities one day, so I thought I might as well have some fun with it. Before I did that, I had, of course, gone through the approved checklist .. i.e.

‘Emergency’ easy access cash account(s) .. tick.

Pay off the mortgage .. tick.

ISA(s) .. tick

Pension Provisions .. tick

Stock market investments / bonds / shares / funds ..tick

OK, anything left can be risked a bit. (I accept that stocks and shares and even cash has =some= risk attached, but now we are looking at ‘high wire with no net’ type options .. VCTs, EIS schemes, and yep .. P2P lending). If you want to plan for ultimate disaster (Ebola pandemic, nuclear war and global financial meltdown) then probably investing in long dated canned food, and an underground shelter on an island upwind from everywhere, is your best bet. More modest (and likely) risks can be mitigated by spreading your investments around a lot, and by being conservative in your assumptions of what you might get back.

I started my P2P journey (in 2013) with Funding Circle (henceforth ‘FC’) and ZOPA, both of which I had heard about from a friend, and I dipped my toes in rather gingerly at first. ZOPA had been going for some time, and I probably missed their best years (when you could decide who to lend to, and later when you could at least still decide at what rate you’d lend). ZOPA had just introduced their ‘safeguarded’ lending, and started fixing the rates, so even their name (‘Zone Of Possible Agreement’) no longer made sense. I stopped lending with them after less than 6 months .. the rates were just not attractive (and unpredictably so). On the plus side, the exit from ZOPA was fairly cheap and painless.

As an alternative to ZOPA I went to look at Ratesetter (RS), which still lets you set the rate(s) you are willing to lend at over 1,3 or 5 years (or monthly). No control over who gets it, but at least some control over what they pay; and (like modern ZOPA) there is a provision fund which should hopefully protect you from bad debts. Exit from RS can be quite expensive though, so best to lend for no longer than you are sure you can do without the money for. Basically they charge you the difference between the rate you would have got for the actual period you lent for, and the rate you got by lending for a longer period. I still like them, for simplicity with just enough control to make it interesting, and I lend / recycle in the 3 and 5 year markets depending on the rates at the time (typically I expect at least an extra 1% for signing up for the extra 2 years). Continue reading

How I Selected My Preferred P2P Lending Marketplaces – Part II

This is part II of a guest post by British investor ‘Pete’. Read part I first.

The number P2P / P2B platforms in the UK has increased quite quickly over the past few years and I have currently settled on 3 further UK platforms that suit my needs and I strongly believe will be with us long term. In saying this I am not in possession of any privileged information and I am not by inference making any adverse comment about other platforms.

In alphabetical order

Ablrate

One of the new platforms (launched July 2014) that I have chosen to invest in and so far I have had a very positive experience. Specialising in secured Aircraft leasing and Plant and Machinery I have had the chance to diversify into a market that I knew little about before I started on my ‘due diligence’. The market may be new to me but there is a wealth of responsive experience behind Ablrate and coupled with a website update and promised increasing flow of loans I anticipate that my exposure with Ablrate will continue to grow. One interesting ‘innovation’ available on certain loans is ‘Instant Returns’. With long draw down times on some loans the potential for ‘dead money’ is large, instant returns circumvents this issue.

Assetz Capital

I have been investing with Assetz Capital since the second quarter of 2013 and have built up a diversified £ five digit portfolio of secured loans which continues to grow1. As with Ablrate there is a good, responsive and experienced team behind the web site, something that has become more than apparent when dealing with the occasional distressed loans that we must all expect when investing. Assetz Capital have big plans for expansion (they have already grown considerably since I started investing) and a relatively recent change to the way loan parts are bought has removed a very large percentage of the ‘dead money’ scenario that many of us early adopters experienced, not universally liked, I for one view it as a very positive move that has helped to push up my return on investment. I look forward to new opportunities this year.

1 I do not invest by choice in the provision fund protected ‘Green Energy Income Account’ preferring to take on the risk in return for a slightly higher returns.

Wellesley & Co

Again I was one of the early adopters and took advantage of some very attractive introductory rates that were offered. The loan and repayment terms suited my needs perfectly for tax planning purposes. Since then the rates have unsurprisingly been lowered and whilst Wellesley & Co have expanded rapidly and their range of investments on offer has expanded I find myself already invested in those areas with other platforms so I am running full term with my current investments whilst keeping an eye open on what is on offer.

Bondora

I also invest in one non UK platform, Bondora. This would probably be regarded as the ‘odd one out’ in my list of platforms. Far more volatile than the other platforms that I invest in Bondora has expanded rapidly since I started investing in the second quarter of 2013. I have experienced several changes to the platform, some which I have liked and several that I have not. I have experienced new markets being opened up and some eye watering rates of default in these new markets. That said and in spite of the treatment of defaults by the UK tax man and the strengthening of the Pound against the Euro (@16% since I started investing) my return after tax has remained positive. I spend more time on this relatively small percentage of my total investments to keep the returns positive than I do on any of the others. Continue reading

Ablrate – Invest in a P2P Loan With an Aircraft as Security

Ablrate is a new p2p lending service that launched this month in the UK. Ablrate is short for asset backed lending rate, meaning each loan will be backed by an security. The management has long experience in aircraft financing and consequently the first loan on the platform is secured by an aircraft. This loan offers 10% interest p.a. (paid monthly).

International investors welcome

Ablrate is open to non-UK investors (except from the US). Investors are not charged a fee to lend. The minimum bid is 100 GBP (about 125 EUR). After I signed up I used Transferwise to transfer money to my Ablrate account to avoid high banking fees (instead of doing a direct bank wire since I know from experience that UK banks do deduct heavy fees on incoming international transfers).

The P2P Lending Marketplace

Ablrate will offer two types of loan listings. Fixed rate listings will close once the loan amount is fully funded (the first loan is a fixed rate offer). With auction offers the lenders will underbid each other with lower interest rates once the loan amount is reached until the auction term closes. Ablrate has a secondary market where investors will be able to buy and sell loan parts.


First loan listing. Comprehensive detail information is available on the platform after registration and authentication.

My first impression of the platform is good. Very much information is presented in the extensive FAQ, the lender brochure (see How It Works > For Investors > at bottom) and several videos which illustrate the process. I made my first bid and am now waiting on the loan request to fill for the next step. Continue reading