What Happens If There Are No Bad-Debt Figures?

Not all P2P lending companies show enough information for us to estimate their bad debts accurately, nor do they provide their own forecasts.

We can understand why they might not do forecasts, especially for new P2P lending websites, as we wrote in Are Bad-Debt Forecasts Misleading?

However, it leaves us at 4thWay® in a bit of a pickle, because quite a few rows in our detailed comparison tables are based on bad debts or bad-debt forecasts:

How we account for this in the comparison tables

Here, if we are missing key bad debt or forecast information, we currently deduct heavy penalties from the interest rates. This can be five to 10 percentage points for developer loans or 20 percentage points for high-risk consumer loans.

These deductions might turn out to be unfair most of the time, but with a lack of history, data or information it pays to be particularly cautious.

Copyright BFGSL Ltd and 4thWay® 2014-2024. This peer-to-peer lending/IFISA comparison and ratings website is based on high-quality research, which requires investment. Please share content from our website by linking to it and not by copying it. See our T&Cs and Copyright Policy for more details and to buy additional rights. Acknowledge your sources.