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How Much You Lose When You Can’t Lend Your Money

By Jane Rey on 23rd March, 2015 | Read more by this author

Generally, individual lenders get their money lent out swiftly. However, it doesn't always work out that way.

One 4thWay® reader wrote this month:

“I recently opened an account with LendingWorks, but no money has so far been lent out.  I did contact them and they said that they expected it would take 3 weeks to lend out my £5,500.”

These delays can happen when there are more lenders than borrowers.

Balancing the see-saw

As any P2P lending company grows, it will at times find it a challenge to ensure that there is a good balance between borrowers and lenders. There is a see-saw effect where they might be borrower-heavy at one time and lender-heavy at another.

During our email exchange today, Lending Works did not answer our question about how much lender money is currently sitting idle, waiting to be lent. Idle money is a clue as to how tilted the see-saw is at the moment.

However, a Lending Works spokesperson said that balancing the see-saw is a challenge they “are handling well, generally”.

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How much interest you'll miss while you wait

Over the past two months, Lending Works' lenders have grown faster than borrowers, but Lending Works is immediately adding new channels to get borrowers that will “speed up the machine”.

A delay of three weeks will cost you around 1/18th of the interest you're due to earn in a year. At Lending Works' five-year rate of 6%, then, you might have around three-tenths of a percentage point in missed interest. 3/10ths is £3 per £1,000 you lend.

But your missed interest grand total on all your lending will be considerably lower if you already have money on loan or if you lend regularly. Plus, you could find that some of your idle money does get lent before the three weeks is up.

Get forecasts on when your money will be lent

A Lending Works spokesperson said: “The team is soon going to launch a new…queue dashboard that forecasts how long it will take [you] to lend money.”

Zopa, another of the safest P2P lending websites, introduced a similar forecast for its individual lenders in December. Zopa has found that lenders find it less frustrating that some of their money is not currently being lent out so long as they're given a reasonable timetable.

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