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Assetz Capital’s New Easy Access Account Paying 3.75%
Assetz Capital has just introduced a new account allowing lenders like you and me to remove our money easily, called the Assetz Capital Quick Access account.
The business and short-term property loans P2P lending website believes that this will enable us to exit loans within 24 hours during normal market conditions.
While many other P2P lending websites offer an early exit, we generally have to pay a penalty or other costs. As far as I know, only Landbay* offers the same cost-free rapid exit.
In return for easy access, the interest rate Assetz Capital will pay is expected to be at least 3.75% per month, although it could vary above that.
The account automatically spreads our risks across lots of borrowers and it is protected by a bad-debt provision fund and the loans are secured.
Here are the details we have, but note that I have a lot of important outstanding questions that Assetz Capital has not responded to yet. If and when it responds I shall update this article.
Early exit is not a guarantee
Quite a few of the more established P2P lending websites now boast exit within 24 hours or at least within a few days – usually at a price.
However, we're not guaranteed to get our money back quickly. It usually depends on there being other lenders willing and able to lend and take over our loan parts.
During a poor economy, when lenders are more concerned about bad debts, we might find that many more lenders are trying to sell than to buy.
Depending on how the P2P lending website works, we might either suffer severe delays in exiting or we could have to sell our loan parts for less than you paid for them, e.g. we get back £900 even though we lent £1,000.
Assetz Capital has stated that it maintains a “high level of liquidity to facilitate the quick access”. This seems to indicate that the P2P lending website itself puts money aside to help allow you to leave early, but it's not clear.
How the interest rate compares
Assetz Capital pays at least 3.75% although the rate can vary from month to month – and we have no details as to what causes those moves or how much.
Lenders are able to lend in exactly the same loans by picking them individually through Assetz Capital's website. It's likely that lenders will get considerably higher interest rates by doing so, but thWay® has not received any details. On the downside, exiting swiftly might be more complicated or take longer.
The only other account that I know of that offers fee-free/cost-free/penalty-free easy access is from Landbay, which pays 3.56% per year if you re-lend the interest (and 3.5% if you don't).
In Landbay's easy-access product, since you're lending to landlords who have variable-rate mortgages, your interest rate will track interest rate movements up and down too, based on the Bank of England base rate plus 3%.
How bad debts compare
4thWay® has not received any data from Assetz Capital yet to allow us to see how well its borrowers have performed and we don't know anything about what sort of borrowers will be allocated to the Assetz Capital Quick Access account, or even what types of loans will be included.
Landbay has zero bad debts and zero late payments. It currently expects very low losses even in a financial disaster. (Read Landbay: Just 0.3% Bad Debts In A Crash Economy.)
Easy way to spread your risks
The Assetz Capital account spreads our risks across many borrowers, but we have no further details on how many borrowers that is. We're awaiting a response.
Assetz Capital already offers auto-lending options, so if you're not bothered about potentially taking longer get your money back then you can spread your risks outside of the easy-access account and earn much higher interest.
Landbay usually spreads risks over at least 10 loans by reapportioning our money across existing loans when you lend. It wants to increase this to 20 and beyond.
Assetz Capital can repossess property
All the loans in Assetz Capital's easy-access account are secured, which means Assetz Capital can repossess and sell property if the borrower can't repay.
However, thWay® has no details of the quality of the security. We don't know if it's real estate or fixed assets like machinery, or whether it's something less tangible.
In the event the security is very tangible, like real estate, we also don't know what the average loan amount is compared to the valuation of the security.
We also don't know if Assetz Capital lenders are first in the queue to repossess and sell in the event the borrower has other lenders.
If we compare this with the only other P2P company with an easy access account, Landbay has known lines in the sand.
The loans are, on average, for 66% of the total property valuation, which is residential buy-to-let property. Landbay lenders are always first in the queue.
Landbay also only lends to experienced landlords who are earning, on average, 1.7 times more in rent than they are paying in mortgage payments.
Bad-debt provision fund
We have no details yet on how large the reserve fund set aside to pay expected bad debts will be for Assetz Capital‘s easy access account. This reserve fund is in addition to any security, intending to mop up any losses that aren't covered by property sales.
Currently, Landbay* has a bad-debt provision fund worth 0.6% of the total outstanding loans and it intends to shrink it to 0.5%, which still covers its expected losses during a crisis.
More: you can create your own bad-debt fund easily enough as shown in A Reserve Fund For Funding Circle Lenders.
*Commission, fees and impartial research: our service is free to you. 4thWay shows dozens of P2P lending accounts in our accurate comparison tables and we add new ones as they make it through our listing process. We receive compensation from Landbay, and other P2P lending companies not mentioned above either when you click through from our website and open accounts with them, or to cover the costs of conducting our calculated stress tests and ratings assessments. We vigorously ensure that this doesn't affect our editorial independence. Read How we earn money fairly with your help.