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Lending Works Interest Rates: Up Yet Again

By Jane Rey on 20th July, 2015 | Read more by this author

This article is updated as and when Lending Works changes its rates. Last updated on 20 July 2015.

Lending Works* interest rates don't change often, but it can be worth paying attention when they do.

Today, the “super prime” personal loans P2P lending website has increased its interest rate in the five-year market from 6.4% to 6.6%. The three-year deal stays the same at 5.1%.

These are the rates after fees and expected bad debts – which are intended to be covered by a bad-debt provision fund, as well as insurance to cover losses from borrowers who can't pay due to accident or unemployment.

How Lending Works interest rates compare

Lending Works is currently about the same or slightly less than RateSetter over three years, and ahead of other P2P lending websites with three-year deals that position themselves as low risk, including Landbay*, Wellesley* and Zopa.

At 6.6% over five years, Lending Works is ahead of the crowd. RateSetter is the next highest paying, but currently its rates are staying doggedly below 6%. To see more on how Lending Works now compares to others, go to Safest Peer-to-Peer vs Savings Accounts.

Why the increase?

Lending Works sets interest rates for us lenders. Perhaps this increase was to compensate for Lending Works' first bad debts? But probably not.

More likely it is market forces: the balance of demand from borrowers and supply from lenders. This is the prime factor that controls the interest rates, regardless of whether the P2P lending website sets the rates or lenders do themselves.

Lending Works changes its rates irregularly. It has only done so a small number of times since it started back in January 2014.

If your money sits around idly

It can take days, or even weeks, to get your money out on loan, since it has to be allocated to borrowers. A three-week wait will effectively reduce the interest you earn in a year by a few tenths of a percentage point. That's because you won't earn 6.6% for the full year, but for three weeks less.

You will also receive loan repayments that will need to be re-lent, although Lending Works will do that automatically for you, if you want. You can read about Lending Works' automation options in Get A Regular Income From Lending Works.

However, an increase in the rate suggests – but doesn't promise – that Lending Works* is looking to get more lenders on board. This could mean that currently it's relatively easy to get your money lent out quickly.

More: to read about the risks and rewards of Lending Works and similar P2P lending websites, visit Get Started With the Safest Peer-to-Peer Lending Websites.

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