Funding Circle Goes Higher Risk
Funding Circle* has just added an extra borrower grade: grade E. It has also renamed C- to D. So you can now lend in six categories of borrower: A+, A, B, C, D and E. You do not have to lend at the higher-risk grades…
Why Property Development Lending Is Riskier Than Most
We now have around two dozen different property P2P lending websites to choose from and probably around half do property development loans. Property development lending usually pays you more interest, and with good reason: the outcome of the loan is less certain. Let’s look at that uncertainty…
Pros And Cons Of Peer-to-Peer Lending Funds
Here’s an outline my current thoughts on the advantages and disadvantages of peer-to-peer lending funds: Potential advantages of peer-to-peer lending funds A fund that has real quantitative risk modelling expertise is going to have an edge over many of the P2P lending websites themselves, many of which, in this new industry,…
P2P Lending Already Available In ISAs
The latest news doing the rounds is that new legislation is soon to allow peer-to-peer investment funds in ISAs, which means tax-free lending. Thing is, ISA providers have been allowing this all along! Hargreaves Lansdown spokesman Danny Cox has confirmed this to us. And Andy Donald, speaking…
Lend Direct or Use P2P Investment Funds?
Updated on 23 June 2015. P2P Global Investments is a P2P investment fund that has just raised another £250m from investors, who had already handed over £200m at its launch in May 2014. The most interesting aspect of this is whether we should be lending…
Property P2P Website First Great National Disappears
First Great National (a P2P lending website, not a train operator!) has joined a small number of other P2P lending website casualties since the industry began in 2005. The other closed P2P lending companies we know about include GraduRates, YES-Secure and Quakle, which I wrote…
Crowdstacker: New P2P Business Lending Website
Crowdstacker is a brand spanking new P2P lending website that helps you lend to businesses. It offers you British businesses that: Are well established. Have a compelling business proposition. Pass Crowdstacker’s financial health checks, which includes fraud checks and checks on their market and industry trends…
What We Can Learn From Crazy Bond Prices
There was an article in the Financial Times this week about bonds (High time for greed to yield to fear). It was very oblique and unclear, since it was largely quoting analysts and investment banks, all of whom, in my experience and opinion anyway, generally refuse to stick…
P2P Lending: “This will not end well”
The Sunday Morning Herald, an Australian newspaper, recently had an article that started like this: “Is peer-to-peer lending out of control? There’s certainly some cause for concern.” It cited the industry’s rapid growth as one of the reasons for this worry. To back this up, it quoted…
P2P Lending Funds, Bonds and Shares
This is the first article in a new series for 4thWay®, covering investment on the edges of P2P lending. That means alternative ways to invest in the P2P lending sector without lending directly to borrowers yourself. These might either help you spread your risks, manage…
Five Ways To Spot a P2P Lending Bubble
With bond interest rates plummeting to near zero, it is only a matter of time before a lot of people lost money, as was explained in yesterday’s FT article Bond market fireworks flash warning signals. When bond interest rates drop, it means people are paying too…
Lending Works Suffers First Bad Debts
For most peer-to-peer lending companies, a bad debt amounting to a mere 0.15% is not noteworthy. But it’s different for Lending Works. Because this is the first time it has suffered at least one bad loan. Prior to now, its 16-month record of nearly 2,000 loans had…
10 Things To Look For In P2P Property Loans
It’s not always easy to spread your money across hundreds of P2P property loans, because the deals are bigger and fewer in number. To counter for that, you have the extra protection of being able to repossess and sell the property if the borrower can’t repay. That…
Simple Way To Improve Loan Selection & Lower Risk
Until more P2P lending websites have a longer record, searching for patterns to improve loan selection is not possible at most of them. But there’s one way to select loans that I think will work everywhere. Keen investors like to scour through past loans to…
P2P Lending: How To Dip Your Toe In
Sometimes I read in the financial pages what some commentators are saying on P2P lending and I’m quite unimpressed. The general message seems to be that if you dip your toe in with a small investment, you’ll learn quickly that it’s safe, and then you can go all…
Huge Buy-to-Let Success: Where Does It End?
Buying buy-to-let properties is a very different investment to lending to buy-to-let investors. But both are great investment opportunities in very different ways. Landbay is a P2P lending websites that offers loans to landlords with tenanted residential properties. 4thWay® rates it as one of the safest P2P…
RateSetter Now In A Pension
Low-risk RateSetter has overcome considerable regulatory barriers to become the first personal loans P2P lending website to allow its lenders to lend through a pension. Indeed, two pensions. Lending through a pension means you pay no tax on the income you earn. Pensions come with…
What We Learn From Loan Acceptance Rates
The loan acceptance rate can be incredibly useful for lenders like you and me, since it can be a strong indication that a P2P lending opportunity has strict borrower selection standards. If a P2P lending website accepts no more than around 20% of applicants, rejecting…
What Is The “Bad-Debt Rate”?
One of the first measures of risk in a P2P lending company is its historical – or “actual” bad-debt rate. This shows how many pounds of loans have gone bad as a proportion of the money lent. The bad-debt rate is variously called the “loss rate”, the…
Lenders On Crash Course to Get Burned!
This is the story of whacky individual lenders and their high-risk loans. The problem is that this doesn’t seem to be a rare event! I see this happen on numerous P2P lending websites. But I’m going to take FundingKnight as my example today. I only use…
