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Get Started With The Safest Peer-to-Peer Lending Websites

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This page was last updated on 30 November, 2017

We have considered what characteristics can make P2P lending websites the “safest” for beginners to get started with.  This is not a precise measure, but to make this list a P2P lending website must:

  • Focus on lower-risk borrowers or great property security
  • Offer you the opportunity to easily spread your money across lots of loans
  • Have people who we believe have all the necessary banking skills and experience
  • Have sensible processes to select borrowers and deal with bad debts
  • Allow 4thWay® to analyse the results of each and every one of their loans and often also
  • Provide a bad-debt provision fund or other protections to help cover any expected losses.
  • Currently pay interest rates that strict banking tests show are high enough to cover a large spike in bad debts.
  • Our stress tests based on their detailed data of each loan ever made must also show that most lenders are unlikely to lose money overall, even during a very severe recession.

While there are no 100% guarantees with any investment, this level of apparent safety can make these lending options highly suitable for the majority of savers and investors, if you spread your money across many of them, particularly if you're worried about inflation (rising prices) eating into your savings or the volatility of the stock market.

Did you know you can save a lot of time by opening these accounts at once through 4thWay's Account Opener, and you get some great exclusive free guides that show you precisely how to get lending quickly and to lower your risks further at each specific P2P lending site for which you open an account.

Who are these safest peer-to-peer lending websites?

All the peer-to-peer lending companies listed at the bottom of this page have a fantastic track record and have been questioned, poked, and even provoked, many times by 4thWay's experts.

And they're also all dead easy to use, so that you can't easily make any mistakes yourself.

All while giving you far better interest rates than you can earn from the banks.

How do the safest peer-to-peer lending companies do it?

Before you learn about these P2P lending websites, here's how they have such a pristine record:

Prime borrowers

Some of the safest peer-to-peer lending companies have achieved this status by going for low-risk, prime borrowers.

They use the same techniques as the banks do to check out borrowers and sometimes they also use additional, modern techniques as well.

Quality property that can be repossessed from borrowers

Not all of the safest peer-to-peer lending companies focus on quality borrowers. Instead, their chief concern is going for borrowers who offer up property as security.Safest peer-to-peer lending: secured loans and security

For example, one offers loans worth no more than 80% of the value of a property, so that the properties are easier for the P2P lending company to repossess, sell and get your money back on your behalf.

Reserve fund to pay bad debts

In addition, most of the following P2P lending companies have bad-debt provision funds: that's money set aside to pay you back in the event that your borrowers are unable to pay.

All the funds have a 100% track record, easily covering lenders from all losses.

According to our international banking standard stress tests, in a very severe recession some of these pots might not cover all losses, but the vast majority of lenders should avoid losses due to the interest they earn.

Fraud checks and insurance

Naturally, these companies take fraud seriously and they all check out borrowers and security to ensure you're not being had. In some cases, there is even insurance against fraud too.

Plans set up to wind down your loans

If the P2P lending company itself goes bust, each of them has set up plans involving administrators who come in to run down your loans in an orderly fashion.

Regulated by the UK's financial regulator

All of the companies are regulated by the UK's Financial Conduct Authority under new peer-to-peer lending regulations. They only lend to borrowers in the UK and, in the case of property loans, they only lend against properties in the UK.

Other protections

The safest peer-to-peer lending companies are innovative in finding new ways to protect you.

One of those companies listed below has an insurance policy to cover you if one of your borrowers is unable to pay due to accident, sickness, loss of employment or redundancy.

Spreading your risks

Finally, if all the above protections fail, most of these peer-to-peer lending companies make it especially easy to spread your money across many loans.

It is absolutely vital to spread your money across lots of loans and peer-to-peer lending websites, and the more loans the better. This is so that most lenders will not suffer losses after taking into account the interest earned over the course of the loans, even during major downturns.

There's no such thing as “risk free”

All these protections help offset the fact that the money you are lending is not protected by the government's Financial Services Compensation Scheme in the way that savings in the bank are.

Since the money you are lending is not protected by the government's scheme, if your loans go so bad that you have to take a hit, you won't get your money back from the taxpayer – just like you don't when you lose money on the stock market.

A good risk-reward balance

While the risk of being poorer in five years is probably lower with all of the following P2P lending companies than putting your money in savings – due to inflation – they do have the additional risk that you could actually end up with less money than you started.

However, we believe that most people using these companies will be richer and better protected from all risks, including rising prices eroding your wealth.

How to assess their risks

We also have calculated 4thWay® PLUS Ratings, which were devised by our senior bank risk-modelling specialist, investors and a senior credit specialist from one of the big-four accounting firms.

Our ratings show the risks after interest earned of suffering losses from bad debts in a serious disaster like a great recession as big or bigger than in 2008, as well as a huge property crash leading to distressed property prices 55% below the property valuations.

The following peer-to-peer lending companies all have 4thWay® PLUS Ratings of 4/5 or 5/5 for at least one of their lending products. This means that we believe most lenders will recover from losses during a severe recession and property crash within three years – if you suffer any losses at all.

All the following P2P lending companies allow you to lend as little as £1-£100 the list is in alphabetical order:

Assetz Capital

  • Assetz Capital*.
  • Annual interest rates: currently up to around 8%%.
  • You can lend in: a wide variety of property and secured business loans.
  • History: hundreds of millions of pounds lent since 2013.

Safety features

  • Secured loans.
  • Modest bad-debt provision funds.
  • Automatically spread your money across loans.

Lending, withdrawing and exiting details

  • Easy auto-lend feature.
  • No early exit fees.
  • Minimum lending amount: £1.

Visit Assetz Capital*, use our Account Opener or read our Assetz Capital Quick Expert Review.

Funding Circle

  • Funding Circle.
  • Annual interest rates: currently above 6% even after losses.
  • You can lend in: small business loans. (Note that Funding Circle has stopped approving new property development loans, which were dragging down its record).
  • History: £3 billion lent in 10s of thousands of  loans since 2010.

Safety features

  • No bad-debt provision fund, but very low bad debts on its “Conservative” lending account and higher interest rates to compensate for risks.
  • Unsecured business loans.
  • Spread your money across hundreds of loans, with ease. Although the minimum lending amount is just £20, you do need to lend around £3,000 to £4,000 if you really want to lower your risks enough at Funding Circle. (But you can also lower your risks by lending less here and lending money in several other P2P sites, which is highly advisable anyway.)

Lending, withdrawing and exiting details

  • Easy auto-lend feature.
  • No early exit fees.
  • Minimum lending amount: £20.

Visit Funding Circle, use our Account Opener or read our Funding Circle Quick Expert Review.

Growth Street

  • Growth Street*.
  • Annual interest rates: currently around 5%.
  • You can lend in: business loans to profitable businesses, typically secured against their outstanding customer invoices.
  • History: tens of millions of pounds lent since 2014.

Safety features

  • Very low bad debts or late payments since inception.
  • Secured loans.
  • Huge bad-debt provision fund.
  • Loans to profitable businesses only.
  • Effectively spreads your risk across all outstanding loans regardless of how little you lend.

Lending, withdrawing and exiting details

  • Easy auto-lend feature.
  • No early exit fees.
  • Minimum lending amount: £10.

Visit Growth Street*, use our Account Opener or read our Growth Street Quick Expert Review.

Landbay

  • Landbay*.
  • Annual interest rates: currently just under 4%.
  • You can lend in: buy-to-let property loans to experienced landlords.
  • History: tens of millions of pounds lent since 2014.
  • Available in an IFISA.

Safety features

  • No bad debts or late payments since inception.
  • Secured loans, which are a maximum of 80% of the property value.
  • Bad-debt provision fund of 0.6% of outstanding loans.
  • Landlords must be receiving rent that covers the mortgage payments plus an extra 25%.
  • Automatically spread your money across loans, where possible. Expect this to be a lower number of loans, but due to the lower-risk nature of the loans not as many are required. (Lend more money regularly, re-lend interest payments you receive, or stagger your initial lending to spread your money across even more loans, and, of course, lend through other P2P lending sites to spread risks further.)

Lending, withdrawing and exiting details

  • Easy auto-lend feature.
  • No early exit fees.
  • Minimum lending amount: £100. (£5,000 in IFISA).

Visit Landbay*, use our Account Opener or read our Landbay Quick Expert Review.

Lending Works

  • Lending Works*
  • Annual interest rates: currently around 5%.
  • You can lend in: personal loans.
  • History: nearly £100 million lent since 2014 in thousands of loans.
  • Available in an IFISA.

Safety features

  • Record of the lowest bad debts in P2P lending to individual borrowers.
  • Bad-debt provision fund is big at around 3% of outstanding loans.
  • Other special protections: an insurance policy that covers losses when a borrower is unable to repay due to unemployment or accident.
  • The risk of losses is effectively spread across all outstanding loans – no matter how little you lend.

Lending, withdrawing and exiting details

  • Easy auto-lend feature.
  • Early exit fees of £20 or 0.6%, whichever is higher. Plus, when Lending Works transfers your loan parts to a new lender, you might have to compensate that lender if your loan parts are paying lower interest rates than those currently available on new loans.
  • Minimum lending amount: £10.

Visit Lending Works*, use our Account Opener or read our Lending Works Quick Expert Review.

RateSetter

Key details

  • RateSetter*
  • Annual interest rates: currently up to around 5%.
  • You can lend in: approximately 60% consumer loans, 30% business loans and 10% property development loans.
  • History: over £2 billion lent in more than 100,000 loans since 2010.

Safety features

  • Bad-debt provision fund is big at around 2% of outstanding loans.
  • No other special protections.
  • Mostly unsecured loans.
  • Effectively spreads your risk across all outstanding loans regardless of how little you lend.

Lending, withdrawing and exiting details

  • Easy auto-lend.
  • No early exit fees, although when RateSetter transfers your loan parts to a new lender, you might have to compensate that lender if your loan parts are paying lower interest rates than those currently available on new loans.
  • Minimum lending amount: £10.

Visit RateSetter*, use our Account Opener or read our RateSetter Quick Expert Review.

Zopa

  • Zopa*
  • Annual interest rates: currently up to around 4% in its lower-risk lending accounts.
  • Customer satisfaction: 9,8/10  from nearly 2,000 reviews on TrustPilot.
  • You can lend in: consumer loans.
  • History: nearly £2 billion lent in 100,000+ loans since 2005.

Safety features

  • Approximately 80% of loan applications are rejected.
  • Bad-debt provision fund is around 1.5% of outstanding loans.
  • No other special protections.
  • Spread your money across one hundred loans within 12 months, with ease.

Lending, withdrawing and exiting details

  • Easy auto-lend.
  • Early exit fees of 1%. Plus, when Zopa transfers your loan parts to a new lender, you might have to compensate that lender if your loan parts are paying lower interest rates than those currently available on new loans.

Visit Zopa* or use our Account Opener.

You can save time and open accounts simultaneously through 4thWay for all of them here.

Important differences between savings and peer-to-peer lending

  • Tick for savings! Savings accounts (including cash ISAs) are safer than even the safest peer-to-peer lending companies from a sudden crash and economic disaster.
  • Tick for peer-to-peer lending! However, you're far, far more likely to preserve and even grow your wealth with peer-to-peer lending, because the interest rates you can get with savings accounts and cash ISAs are, usually and on average, too low to keep up with rising prices.
  • Tick for peer-to-peer lending (sometimes). Many P2P lending companies will allow you to get out of your loans and get all your money back early without cost. (From those above, that includes Landbay) However, if lots of lenders want to leave at the same time, it could still take you a while.
  • Cross for savings. To get reasonable rates, you usually have to tie your money in for many years. You pay high penalties for leaving longer and fixed deals early.
  • Cross for savings. You can usually expect interest rates on savings accounts and cash ISAs to be lowered at the earliest opportunity. This will be as soon as a fixed period is over or when the bank has hit its new deposits target.
  • Cross for peer-to-peer lending. Not all the safest P2P lending companies will always remain the safest. This is the key difference that makes them not the same risk as savings accounts. Sometimes, these businesses will come under intense business pressure to weaken their safety standards and the less disciplined ones will do so. If you sign up to our newsletter, 4thWay® will keep you up-to-date on whether standards have slipped, so you can avoid lending in their newer, riskier loans.
  • Cross for peer-to-peer lending. Normally you can sell your loans easily and get your money back quickly. However, during severely bad circumstances, you might not be able to get access to your money for weeks or months, or to do so you might have to sell them for less than they're worth to another lender.
  • Cross for peer-to-peer lending. If you want to keep all your money on loan, you need to re-lend your loan repayments and interest. Although this is usually quick, it can sometimes take days and even longer. This effectively lowers your interest rate from the quoted rate, but probably just by a few tenths of a percentage point each year, on average.

Read our excellent guide to peer-to-peer lending.

Independent opinion: the opinions expressed are those of the author 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 experts and journalists 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.

*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 Assetz Capital, Growth Street, Landbay, Lending Works, and RateSetter, 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.

Today’s average interest rates

What is the “4thWay”?

There's the savings way, the property way, the stock-market way, and now there's the peer-to-peer lending way. The 4thWay® to save and invest.
Learn more.

What does 4thWay do?

We help people save and make more money, more safely when they cut out the banks and lend directly to other people and to businesses.

Why use 4thWay?

4thWay® is shaped by investors, bank risk modellers and a senior debt specialist, and we're governed by our users to ensure our comparison services and research are trustworthy and complete.

Why are Wellesley’s interest rates different?

Wellesley’s P2P lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Wellesley’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Important information before you visit Wellesley & Co.

Wellesley & Co. is primarily a P2P lending website.

But, when you visit the Wellesley website, you’ll see that it also offers “bonds”. Unlike its P2P lending service, its bonds don’t allow you to lend directly to 100+ borrowers.

Instead, you lend to Wellesley and it lends to other borrowers.

We have not risk-rated either of those bonds, but we expect that their structure makes them more risky, particularly because you’re lending to just one borrower.

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Why are Wellesley’s interest rates different?

Wellesley’s P2P lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Wellesley’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Important information before you visit Wellesley & Co.

Wellesley & Co. is primarily a P2P lending website.

But, when you visit the Wellesley website, you’ll see that it also offers two “bonds”, one of which is available as an ISA.

Unlike its P2P lending service, neither of these bonds allows you to lend directly to 100+ borrowers.

Instead, you lend to Wellesley and it lends to other borrowers.

We have not risk-rated either of those bonds, but we expect that their structure makes them more risky, particularly because you’re lending to just one borrower.

Got it

×

Why are Wellesley’s interest rates different?

Wellesley’s P2P lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Wellesley’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Important information before you visit Wellesley & Co.

Wellesley & Co. is primarily a P2P lending website.

But, when you visit the Wellesley website, you’ll see that it also offers two “bonds”, one of which is available as an ISA.

Unlike its P2P lending service, neither of these bonds allows you to lend directly to 100+ borrowers.

Instead, you lend to Wellesley and it lends to other borrowers.

We have not risk-rated either of those bonds, but we expect that their structure makes them more risky, particularly because you’re lending to just one borrower.

Got it

×

Why are Orchard’s interest rates different?

Orchard’s lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Orchard’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Got it

×

Why are Wellesley’s interest rates different?

Wellesley’s P2P lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Wellesley’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Important information before you visit Wellesley & Co.

Wellesley & Co. is primarily a P2P lending website.

But, when you visit the Wellesley website, you’ll see that it also offers “bonds”. Unlike its P2P lending service, its bonds don’t allow you to lend directly to 100+ borrowers.

Instead, you lend to Wellesley and it lends to other borrowers.

We have not risk-rated either of those bonds, but we expect that their structure makes them more risky, particularly because you’re lending to just one borrower.

Got it

×
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