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Post by misalab on Jun 14, 2020 22:27:14 GMT
Hi everyone, I have just started learning about p2p lending and p2p paltforms. So I was wondering if there were some factors I should be looking for before I choose a platform. I know it is a broad and basic question but any information helps.
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cwah
Member of DD Central
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Post by cwah on Jun 14, 2020 22:36:04 GMT
Cv and past experience of management. Company house data about the company. Type of security Ability to repay from borrower
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Post by misalab on Jun 14, 2020 23:01:02 GMT
How important is liquidity? I have heard most p2p loans are not that liquid.
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Post by Ace on Jun 15, 2020 0:24:28 GMT
How important is liquidity? I have heard most p2p loans are not that liquid. That's really a very important question for yourself. I.e. how important is liquidity to you? If liquidity is important to you then P2P is very likely not a good option. The trouble is that no P2P platform can guarantee instant access to your funds. Some can demonstrate a record of always being able to provide quick access until now, but all will have Ts&Cs that say that this can't be guaranteed. The obvious current example of this is Assetz Capital's QAA (Quick Access Account). Until covid struck they prided themselves on the fact that requests to sell loans at par from this account had always been satisfied within one second. Then one day covid hit and liquidity dried up to a trickle. Some (Loanpad for example) can demonstrate that they have been able to provide instant (actually next day) access to funds throughout the covid crisis, but even then they can't guarantee that there won't be some other economic disturbance that would blow them off course. There are strategies that can be employed to improve your chances of access to some of your funds in an emergency. Diversifying over multiple platforms is one possibility. For example, had you split your funds across the two platforms mentioned above you would have retained access to half your funds. Another strategy would be to invest in platforms that have a variable priced SM (Secondary Market). You may have to offer a discount to access your funds in an emergency, but at least you have a higher chance of getting access, albeit at a price. Assetz Capital's MLA (Manual Lending Account) or ABLrate are a couple of examples where this has been possible throughout the crisis. Even then, if loans are suspended, as many are in times of trouble, they won't be tradable. But, if you're diversified over multiple loans, hopefully many will be tradeable. I use both the above strategies, more for spreading risk than for liquidity. I always keep more than a years worth of expected expenditure in FSCS or government protected NS&I accounts. I'm a big fan of P2P, but I wouldn't put money that I needed on a specific date in P2P unless I was confident that I had a backup plan to cover any liquidity issues.
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Post by Deleted on Jun 15, 2020 8:58:32 GMT
Hi everyone, I have just started learning about p2p lending and p2p paltforms. So I was wondering if there were some factors I should be looking for before I choose a platform. I know it is a broad and basic question but any information helps. I would avoid p2p completely, the recent disasters and some very dodgy "advice" on valuations suggests to me that P2P is a mugs game. I'm still ahead, but unless you have mystical powers of insight and financial accumen I would avoid it like the plague, especially when the stock market is so profitable.
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benaj
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Post by benaj on Jun 15, 2020 9:08:27 GMT
Hi everyone, I have just started learning about p2p lending and p2p paltforms. So I was wondering if there were some factors I should be looking for before I choose a platform. I know it is a broad and basic question but any information helps. Are you looking to borrow money from a P2P lender?
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Greenwood2
Member of DD Central
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Post by Greenwood2 on Jun 15, 2020 9:28:22 GMT
Hi everyone, I have just started learning about p2p lending and p2p paltforms. So I was wondering if there were some factors I should be looking for before I choose a platform. I know it is a broad and basic question but any information helps. There are currently many platforms in Administration, in Wind Down or in some sort of trouble due to the virus so it probably isn't a great time to invest. I would also avoid relatively new platforms with little track record. Read the threads on here and pick carefully! I'm not sure anyone is going to give recommendations to invest in any particular platform at present. Past performance and all that, has never been more true.
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cb25
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Post by cb25 on Jun 15, 2020 9:31:03 GMT
I'd be looking for calmer economic times or, if you're really set on investing in P2P now, a platform where you can pick the individual loans to put money into rather than 'black box' accounts as the latter will be putting a portion of your money into existing loans that have/are about to hit trouble.
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dave4
Member of DD Central
Cynical is a hobby not a lifestyle
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Post by dave4 on Jun 15, 2020 9:33:42 GMT
These times are unknown territories for p2p. The warning (you may lose some / all of your ££) has never been more important to heed. That said it still can reward. Welcome to our world. Tread carefully my friend.
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Post by wiseclerk on Jun 15, 2020 10:49:44 GMT
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Post by honda2ner on Jun 15, 2020 15:50:59 GMT
Just to add to all the other excellent posts:
Is the platform profitable?
Do you completely understand how the platform works in normal conditions and in crisis? If there are no details or if it's vague, assume the worst.
Don't become too familiar, I've invested into lots of different P2P platforms that have decided to change their ways of working and had to withdraw again as I'm not happy with what they have become. Just because they were ok in the past doesn't mean they still are, watch them all like a hawk, you owe them no loyalty.
It's all about risk vs return which is a decision only you can take but don't be swayed by things like website layout or advertising, you need to lift the lid and have a proper poke inside. Independent research is the only research that matters, platforms will only ever paint everything in the best possible light and need to be taken with a very big pinch of salt.
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Post by default on Jun 15, 2020 15:52:53 GMT
P2P has turned out to be a monster unleashed upon an unsuspecting public by a government that just did not care.
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cb25
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Post by cb25 on Jun 15, 2020 16:00:23 GMT
P2P has turned out to be a monster unleashed upon an unsuspecting public by a government that just did not care. Luckily Tony Blair's government (in power when Zopa started) is no longer with us
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starfished
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Post by starfished on Jun 15, 2020 16:25:50 GMT
P2P has turned out to be a monster unleashed upon an unsuspecting public by a government that just did not care. Luckily Tony Blair's government (in power when Zopa started) is no longer with us Next month will be 10 years since I first lent with zopa. My account there is now down to shrapnel since I stopped actively lending in 2017. However, what Zopa was then is a long way from what the p2p market now is. It was not formally regulated and there was no liquidity expectation. Looking back, I am wondering if the fight for formal regulation (which Zopa supported) was a mistake? It gave them access to more funds but clearly many misinterpreted what exactly "regulation" meant and it didn't bring the desired growth which is why Zopa ultimately has tried to turn into a bank.
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cb25
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Post by cb25 on Jun 15, 2020 16:44:06 GMT
Luckily Tony Blair's government (in power when Zopa started) is no longer with us Next month will be 10 years since I first lent with zopa. My account there is now down to shrapnel since I stopped actively lending in 2017. However, what Zopa was then is a long way from what the p2p market now is. It was not formally regulated and there was no liquidity expectation. Looking back, I am wondering if the fight for formal regulation (which Zopa supported) was a mistake? It gave them access to more funds but clearly many misinterpreted what exactly "regulation" meant and it didn't bring the desired growth which is why Zopa ultimately has tried to turn into a bank. I'm in Zopa, but the account has been in run-down for over a year as - even before Covid19 - I wasn't happy with the level of defaults.
Thinking back over changing times - I started with FC in mid-2011 (I believe they started in 2010), but withdrew all my money after about a year due to rising level of defaults. I went back in a year/two later, but as with Zopa the account has been in run-down for over a year due (once more) to rising levels of defaults.
If I had to put my finger on one thing that I think lead to the growth of P2P I'd probably go with the falling savings rates after the financial crash of 2008. Many people who might have been traditional building society savers suddenly found their returns impacted, so turned to property and/or risk assets (be that the stock market or P2P).
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