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December Lending Blues
Zopa, the world's oldest P2P lending Company, says its lenders set great store in transparency, so it has started to take steps to become much more open on when your money will be lent. This makes sense; we all become much more patient and complain less when we know how long we've got to wait in line for. More than anything, we just want to be told.
When you send money to a P2P lending website for lending, it can take many days before your money is in a loan working for you. Not always, and not at all P2P lending companies, but it's pretty normal. The wait normally means your money is earning nothing, rather than the 1% per year it would have been earning in a savings account.
According to Mat Gazeley of Zopa, the P2P lending company deliberately decided to improve its information to lenders on queuing time by the run up to December, in order to give lenders a heads-up in this difficult time.
Lending in December is not so easy.
Perhaps you might even find that some new money is unlent till the New Year.
Rates in January, after the Christmas binge, could well be higher to compensate, as borrowers realise that they've blown the Christmas bonus again and need to roll over.
It makes you wonder just how ethical and social P2P lending is sometimes, until you see the people who are using their loans for sensible purposes too: buying second-hand cars for work purposes, buying their own home with a large deposit, investing in courses to increase their salaries. All those things that make you better off in the long run so that you don't have to borrow again to fund your next holiday.
Last December my cash took, on average, three times longer to invest than the preceding months! Right now I'm doing okay somehow. And a default at FundingKnight has saved me from needing to re-lend those repayments, although I could probably have managed it,
For those of you who are at the rear end of a queue, this is perhaps a time to wile away an idle hours looking for unusually good deals on Funding Circle or another platform where there is a large secondary market. Or to read my ramblings late on a Thursday night.
But my next blog is going to be especially focused and non-rambling. I've got a great one coming up…