Loanpad Review

By 4thWay Specialist on 18 March, 2021 | Read more by this author

Here's the Loanpad review from one of 4thWay's specialists:

4thWay's Quick Expert Loanpad Review

Auto-spread your money across loans backed by property 2-3 times greater than the loan size

Loanpad Review: their best-rated product

Loanpad's Premium Account/Premium IFISA received an Exceptional 3/3 4thWay PLUS Rating

This account has been paying 4% interest after bad debts.

Read about the 4thWay PLUS Ratings, compare more peer-to-peer lending accounts or visit Loanpad*.

When did Loanpad start?

Established in 2018, lenders have lent around £36 million.

What interesting or unique points does Loanpad have?

Loanpad* partners with a family firm that's done development lending for 40 years and more recently with another firm with a huge amount of experience. Lenders through Loanpad buy the safest slice of these loans, so that the property's must typically by about 50%-65% of the valuation before lenders can expect to lose any money. The partner firms keeps the riskier part of every loan, taking the first loss above yours of approximately 33%. That's massive.

With lenders' money automatically spread across all existing loans, and regularly redistributed, the risks are better contained here than at any other P2P lending or IFISA provider.

Loanpad during COVID-19

As of March, 2021, we have received data and information related to performance during COVID-19. Loanpad lenders are suffering some late loans. However, lenders have a very safe position, so they won't come close to losing money. It's unlikely that lenders will suffer even a small loss in any loan, i.e. they can expect to receive all their money back, plus interest.

How good are its loans?

Loanpad limits its loans to 50% of the property valuation and the average has been 40.60% as of March 2021. Loanpad told us its intention was to improve on its already astounding starting point of 35%, and so it is starting to make headway.

With developments, Loanpad initially caps the amount lent to 50% of the initial, starting valuation of the undeveloped property. Developers receive their money in tranches as they successfully complete each phase.

Once a development is over three-quarters complete, Loanpad caps the amount lent at 50% of the hoped-for sale price. Development loans that have reached this stage currently average 32.60% of the hoped-for sale price, which is half as much (twice as good) as normal for these kinds of loans.

No other P2P lending site offers security cover this good across every loan on its books.

How much experience do Loanpad's key people have?

Loanpad's key decision maker was a property lawyer who built up lending contacts, such as Loanpad's initial first partner firm. His property-law experience covers the whole range, which you don't usually get in-house in P2P lending.

On lending experience, the key decision maker worked as CEO of a property lender for two years. This is less experience than I would usually want to see, but it is absolutely acceptable with these loans, where the experienced partner lenders taking a large chunk of skin in the game along with the riskiest loan slices.

Loanpad review: lending processes

Loanpad's role is to assess the partner lenders and take the lowest-risk chunk from them. The idea is that partner lenders will choose borrowers more carefully than a loan broker, due to their skin in the game.

In assessing loans, Loanpad considers top-quality property security to be paramount. Loanpad emphasises getting loans on properties that will be easy to sell, such as two-bedroom flats in a town centre as opposed to farms.

Any checks on borrowers are focused on trustworthiness, with financial and credit checks being part of that.

How good are Loanpad's interest rates, bad debts and margin of safety?

Loanpad pays 3%-4%, depending on how quickly you'd like access to your money. For any one loan to cause a loss, something really extraordinary would have to happen. It's realistic for lenders to expect to make money with Loanpad* in all market conditions, including a severe recession and major property crash.

The interest rates are highly satisfactory for the low risks involved.

Personally, I don't see why anyone would choose the Loanpad Classic Account over Loanpad Premium, as it means earning lower interest rates without lower risk. Still, both accounts pay a decent premium over the best, equivalent savings accounts currently available.

These accounts would sit well as an anchor to any diversified portfolio of P2P lending accounts or IFISAs.

Has Loanpad provided enough information to assess the risks?

Loanpad has been very open with us, providing the great volume of data, facts and personal access we need to assess it on an ongoing basis.

Is Loanpad profitable?

As far as we know, Loanpad hasn't yet reached profitability, but I expect it to achieve this soon. It has a large pipeline of loans to grow with, as it attracts more lenders. We have no figures, but I believe it could very quickly have a sustainable business, if it contains its costs this year.

What is Loanpad's minimum lending amount and how many loans can I lend in?

The minimum lending amount is £10, which is spread across all live loans and redistributed daily as new loans are made. I believe lenders will be sufficiently diversified across enough loans almost immediately, even bearing in mind the currently low volume of loans.

Does Loanpad have an IFISA?

Loanpad's lending accounts are available as IFISAs.

Visit Loanpad*.

Loanpad has a cashback deal for new lenders of up to 1% cashback. That's not the most generous, but it's suitable for these lower-risk loans, in which the borrower also pays less. Read about it here.

Loanpad: key details of its Premium Account

4thWay PLUS Rating 3 PLUSes is best.What does the 4thWay PLUS Rating tell you about the risks and rewards?	Interest rate after bad debt 4.00% Here we show the P2P lending site's own estimate (or 4thWay's if theirs are not appropriate)
	4thWay Risk Score 4/10 Lower Risk Scores are better. How is this different to the 4thWay PLUS Rating?
Description: £36 m in development property lending & short-term property (bridging) loans under 50% LTV against initial property valuation since 2018, with interest reserve fund, auto-lend, auto-diversification & free early access in 60 days. IFISA available. £150 CASHBACK AVAILABLE - read the Quick Expert Review below Minimum lending amount £10 Exit fees - if you sell loans before borrowers fully repay No with 60 days notice; otherwise 1% Early exit is not guaranteed. Usually, other lenders need to buy your loans Do you get all your money back if you exit early? Yes Loan size compared to security value 40.6% (avg) and 50% (max); or 32.6% (avg) 50% (max) of future property value Reserve fund size as % of outstanding loans N/A, but there is an interest reserve fund worth around 1% of outstanding loans Company/directors lend alongside you/first loss No, but partner lenders take first loss of around 33%
Loanpad Quick Expert Review: auto-spread your money across loans backed by property 2-3 times greater than the loan size Established in 2018, lenders have lent around £36 million. Loanpad partners with a family firm that's… Read the full review here

Independent opinion: the opinions expressed are those of the author(s) and not held by 4thWay. 4thWay is not regulated by the ESMA or the FCA, and does not provide personalised advice. The material is for general information and education purposes only and not intended to incite you to lend.

All the specialists and researchers who conduct research and write articles for 4thWay are subject to 4thWay's Editorial Code of Practice. For more, please see 4thWay's terms and conditions.

The 4thWay^® PLUS Ratings are calculations developed by professional risk modellers (someone who models risks for the banks), experienced investors and a debt specialist from one of the major consultancy firms. They measure the interest you earn against the risk of suffering losses from borrowers being unable to repay their loans in scenarios up to a serious recession and a major property crash. They assume you spread your money across hundreds or thousands of loans, and continue lending until all your loans are repaid. They assume you lend across 6-12 rated P2P lending accounts or IFISAs, and measure your overall performance across all of them, not against individual performances.

The 4thWay PLUS Ratings are calculated using objective criteria that can be measured and improved on over time, although no rating system is perfect. Read more about the 4thWay^® PLUS Ratings.

*Commission and impartial research: our service is free to you. We already show dozens of P2P lending companies in our accurate comparison tables and we keep adding more as soon as they provide us with enough details. We receive compensation from Loanpad and other P2P lending companies not mentioned above when you click through from our website and open accounts with them. We vigorously ensure that this doesn't affect our editorial independence. Read How we earn money fairly with your help.

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