Peer-to-peer marketplaces in a nutshell
While 2019 saw marketplaces for real-estate and business loans gain a lot of traction, P2P loans are still the most obvious way to invest in loans. Moreover, as in early 2020 several P2B (peer-to-business) platforms proved to be scams, I expect that many investors will return to less risky, more transparent investments.
There are many peer-to-peer lending platforms reviewed on Alternative investments; choosing between them may be a daunting task. This task is getting even harder in 2021, as there’s a growing trend for loan originators to leave marketplaces such as Mintos in order to create their own platform. It was the case for Placet Group (with Moncera) and CreditStar (with Lendermarket) last year. StikCredit followed suit in February 2021 with a platform called Afranga, as well as Creamfinance with Esketit.
With this article, we will compare most of these platforms in detail.
Advantages of individual loans over real-estate and business loans
One main advantage of peer-to-peer loans is their safety – at least, when investing in loans from trustworthy originators -. Indeed, as they’re pretty standard, the risk are easier to evaluate, and they often come with a buyback guarantee . It makes individual loans an obvious choice for beginner investors.
Also, liquidating your portfolio is seldom a concern as most platforms offer a secondary market . It means that in most cases, you’ll be able to resell your loans quickly, should the need arise.
Drawbacks of these investments
The interest rates for individual loans are usually lower than what you’d get for more speculative real-estate or business investments. Also, as we’ll see, several loan marketplaces offer loans coming from dubious originators. Investing in these may result in a large capital loss.
Peer-to-peer platforms overview
We’ll compare the following platforms :
Afranga was created by Bulgarian loan originator StikCredit. It offers medium and long-term consumer loans with very high interest rates – around 16% as of August 2021 -. In addition to the great interest rates, the strong selling points of this platform are its great ergonomics and neat appearance.
Bondster is a loan marketplace similar to Mintos, Viventor, PeerBerry and Iuvo. It provides short-term and medium-term loans with rates of 13% or higher; all individual loans are covered by a buyback guarantee.
Iuvo‘s main strength is their focus on loan originators’ reliability. While Mintos features more than sixty of them, there are only ten at Iuvo, thanks to their very strict onboarding criteria.
All loans on Lendermarket are originated by subsidiaries of the large financial group CreditStar. As of August 2021, interest rates are higher than for competitors Moncera, Robocash or ViaInvest : at least 14%. However, as we’ll see, the lack of a reliable audit of CreditStar is a large negative.
Mintos is the largest P2P loans marketplace reviewed on Alternative Investments. They feature an unrivaled number of originators, and the loans amount on the platform is unsurpassed. The downside of this very large choice is that configuring auto-invest may be hard for beginners. In addition, several loan originators defaulted in 2020, which will lead many investors to lose part of their invested capital.
Moncera was created by two former employees of loan originator Placet Group. This financial group is regarded as very reliable; for example, it got the highest ratings at ExploreP2P’s ratings for Mintos originators. The price to pay for this financial solidity is lower interest rates – generally below 10% – compared to most competitors.
Omaraha has by far the worst interface you may ever come across when investing in loans. In addition, the loans supply has greatly decreased, making it hard to increase large sums. So you may wonder, why bother ? The reason is simply the unrivaled performance of the platform; the combination of a partial buyback guarantee and very high interest rates has boosted my XIRR to levels close to 20% !
Although PeerBerry can’t compete with Mintos when it comes to loans volume, this loans marketplace features a large array of loan originators. Most of them are part of Aventus Group, a large and profitable lending group. In addition, the website’s ergonomics has improved a lot and is now on a par with most competitors, if not better.
While Robocash‘s interface isn’t as streamlined as Lendermarket’s or Afranga’s, this platform is still an excellent choice for investors. Indeed, it offers a high level of transparency, and its parent group is very solid.
Swaper is a direct competitor to Robocash or Lendermarket. Their website is very user-friendly and the interest rates are higher than for most competitors. Unfortunately, the platform’s transparency is very low, as very little detail is provided regarding the platform’s loan originator.
ViaInvest follows the same model as Robocash, Swaper or Afranga; that is, the platform and loan originators belong to the same group. In spite of the dated interface and sporadic cash drags, the platform’s reliability make it a great way to diversify a P2P loan portfolio.
Several platforms previously reviewed on the website were removed from this comparison for various reasons :
- Ekassa stopped admitting new investors once the Covid-19 epidemics broke out
- DoFinance resumed their offer after a pause, but their current situation is uncertain.
- I also excluded FinBee as I’m in the process of liquidating this portfolio. In a nutshell, FinBee works reasonably well but isn’t transparent enough.
- Viventor‘s situation is worrisome. Their main loan originator is in financial troubles, and the platform itself may not survive 2021.
- Finally, Bondora is also missing as I withdrew all my funds there, due to a very poor performance and concerns regarding the platform’s future.
Different criteria will be used to compare these marketplaces.
We’ll first examine the platform’s performance. Then, we’ll tackle the loans themselves, by analyzing the volume of loans provided on the platform. The reliability of the loan originators as well as the availability and conditions of a buyback guarantee will also be asserted.
We’ll then compare two useful features commonly provided by platforms website : namely, the secondary market and auto-invest feature. Finally, we’ll finish by examining the platform ergonomics.
Let’s first check the returns I get from the different platforms (as of August 2021).
In this regard, Omaraha is way ahead of the pack. Indeed, in spite of a decrease in 2020, my portfolio’s XIRR is still above 18%, and one can currently invest in partially secured loans yielding around 26% annually !
Next comes Afranga and Lendermarket with returns around 14% – I even expect the performance for my Afranga portfolio to reach 16% soon -. Robocash, Mintos and Swaper are next (between 12.5% and 13%).
They’re followed by PeerBerry and ViaInvest (around 11.5%), then Moncera (slightly above 10%). Finally, Bondster and Iuvo come last, with performances below 10%.
Mintos has by far the largest volume of loans. Thanks to their 60 originators, the loans supply is huge.
The volume on most other platforms tend to fluctuate somehow, as do interest rates. As a result, several of them suffered from sporadic cash drags – or at least, there will be times where the only available loans will have low interest rates -.
This especially held true for ViaInvest throughout 2020 and early 2021, where the demand for loans greatly exceeded the supply. Fortunately, the situation has greatly improved and the loans volume is now large enough.
In addition, investing in loans with decent interest rates is also getting harder and harder at Moncera. There’s a large supply of 8% loans, but loans with higher interests are very scarce. This situation lead several investors to start withdrawing funds from the platform.
Reliability of the platform and loan originators
The amount of information provided by the platforms regarding their own financials as well as their loan originators vary somehow. However, 2020 saw a noticeable trend towards more transparency.
Several platforms now provide ratings for their originators – although the objectivity of these ratings can be questioned -. In addition, the excellent Explore P2P provides independent ratings for Mintos, PeerBerry and Viventor originators.
As Mintos features a very large number of loan originators, it’s not surprising that their quality vary greatly. Several of them have defaulted, which will incur losses for investors.
At the other side of the spectrum, Iuvo only features a small number of originators (currently height). They’re all profitable companies; moreover, they are required to invest at least 20% (usually 30%) of their own capital in the loans, whereas this amount is usually 5% for most other platforms. This large amount is a strong incentive for them to issue quality loans ! Unfortunately, in spite of this stringent selection, several lending companies present on Iuvo ran into financial troubles.
The reliability of PeerBerry’s originators tend to vary, but most of them are actually part of a large financial group (Aventus Group), which is very profitable. It makes them safer than smaller, independent loan originators. Until now, PeerBerry’s investors didn’t suffer any loss related to the platform’s lending companies.
Robocash’s loan originators are part of the Robocash Group, which is largely profitable. The same holds true for StikCredit’s Afranga and ViaSMS Group’s ViaInvest, although these two competitors are smaller and less profitable.
Swaper follows the same model, as loans originators belong to the parent company Wandoo Finance Group. However, unlike the previous platforms, their financial reports aren’t publicly available.
Although Moncera only features loans from originator Placet Group, these two entities aren’t related – other than the fact that Moncera was founded by two ex-employees of Placet Group. Still, Placet Group is regarded as very reliable, which makes Moncera an excellent choice for peer-to-peer loans.
Finally, Lendermarket is kind of a special case : all loans are originated by subsidiaries of the large CreditStar group, which provides audited reports. The problem lies in the audit’s quality : indeed, the reports got audited by a second-rate auditing firm, which later got its license revoked. This obviously casts a serious doubt on their seriousness. A reliable audited report by KPMG is expected by the end of August 2021.
Loans on most platforms come with rather standard buyback conditions; it covers both principal and interests after a delay of one or two months. There are two exceptions to this rather uniform behavior :
- Omaraha’s guarantee doesn’t even cover the whole principal; investors will be compensated between 60% and 80% of the remaining principal after a 3 months delay. If this seems very bad, the reasonable default rate for highest-rated loans mean that the poor buyback conditions are more than compensated by the high interest rates.
- Iuvo only guarantees the principal, which means you won’t lose money if the borrower defaults, but in the worst case you won’t make money either.
Please keep in mind that the buyback guarantee is actually offered by the loan originator, not the platform. It may thus be only empty promises if the lending company defaults ! Always invest in loans from reliable loan originators in order to prevent putting your capital in danger.
Several platforms offer very simple auto-invest interfaces. For example, Swaper’s auto-invest screen is a model of simplicity.
Setting up Lendermarket’s auto-invest is also extremely easy, thanks to a well-designed configuration screen.
Similarly, thanks to a recent redesign, PeerBerry’s auto-invest screen has become very easy to use. In addition, this platform now offers “investment plans”, which are ready-made auto-invest configuration.
In the same vein, Afranga’s and Moncera’s auto-invest are very user-friendly.
While still usable, Iuvo’s auto-invest is less readable and more complex. It’s also the case at Bondster, because of the large number of available criteria.
The drawback of Mintos’s very large array of loans is that the auto-invest screen may be intimidating for beginners – or even intermediate investors -. Here’s what the part of the screen dedicated to originators looks like :
And that’s just for less than ten originators; the actual screen lists more than sixty !
Another example of a complicated auto-invest screen is Robocash’s; indeed, the lower quality of the translation makes it harder to configure this handy feature.
Having the opportunity to resell your loans before term is a standard feature for P2P marketplaces, and many of them offer this feature.
One notable exceptions is Omaraha, where you’re stuck with your investments until their maturity. It’s also the case at PeerBerry and Lendermarket.
Most other platforms offer a secondary market that’s free of charge. However, once more, several variations or restrictions have to be noted :
- After being free for a long time, Mintos secondary market now has a 0.85% fee
- Robocash only allows to resell long-term loans. However, this restriction will be lifted in April 2021.
- Bondster doesn’t provide a secondary market, and has rather restrictive terms for early exit
- Selling your loans on Iuvo’s secondary market will incur a 1% fee
- Moncera offers to buy back loans directly. After buying a loan, investors benefit from a “cooling-off period” of 14 days, during which it’s possible to resell loans without fee. Later, it’s still possible to resell loans, which incurs a fee of 0.5%. In both cases, accrued interests are lost.
- Afranga secondary market is under development. According to the FAQ, it’s possible to sell a portfolio to the platform, but it’s likely be incur a fee.
By far the hardest peer-to-peer lending platform to use is Omaraha. It looks ugly, and basically any operation you want to carry will require you to think hard before you figure out how to do it.
Robocash also lags behind other marketplaces in terms of usability, mostly due to a low-rate translation. However, they recently redesigned their homepage and the result is promising. Let’s hope the investors’ cabinet will undergo the same transformation ! Similarly, ViaInvest’s website would require a redesign : it’s hard to read and not user-friendly.
On the other hand, Lendermarket, Swaper, Afranga and PeerBerry’s websites are extremely easy to use and look just great. Using them is a real pleasure !
Although it’s a matter of personal taste, I find Iuvo’s website less appealing visually; however, it’s still easy to use – which is the most important aspect -.
Finally, although Mintos’ auto-invest screen is very hard to configure, the newly introduced strategies (which replace the very popular Invest & Access) are extremely easy to use for beginner investors.
Choosing the right platforms will mostly depend on two criteria :
- How familiar you are with peer-to-peer platforms. Indeed, some platforms are by far more user-friendly than their competitors !
- How conservative your are in term of risk – and thus, of returns -. The safest loans from the most reliable loan originators at Iuvo yield around 8% annually, which is half of the highest returns at Mintos !
Platforms suitable even for beginner peer-to-peer investors
Beginner investors may have a hard time choosing between the large number of loan originators present on marketplaces such as Mintos. As a result, we recommend to start investing through platforms where all loan originators belong to the same group. The following platforms are considered as the most reliable.
I considered including Lendermarket in this selection as well. However, the concerns about their audit prevented me from doing so.
Apart from the lack of a secondary market, it’s hard to find negative aspects. Afranga‘s Interest rates are among the highest for secured loans, and StikCredit is a reliable originator. In addition, the platform’s ergonomics allow even beginner investors to invest easily.
Robocash‘s website could clearly be improved in term of design and ergonomics. However, it’s a solid platform with great returns and a high level of transparency.
Similarly, ViaInvest‘s website badly needs a redesign. In spite of this, the platform’s reliability and actual returns make it a great complement to Moncera and Robocash.
It’s a pity that rates have decreased so much ! If they stay at the current level, it will be hard to justify investing through Moncera when reliable alternatives such as Afranga or Robocash exist. Still, conservative or beginner investors will be reassured by the extreme reliability of the loan originator Placet Group.
Platforms which require some experience
Next are two loan marketplaces which are great for investors who already have some peer-to-peer experience. Thanks to their great selection of loan originators, choosing which loans to invest in is much easier than when using competitors such as Mintos.
The reliability of loan originators from Aventus Group is a huge plus for PeerBerry. In addition, the way they handled the Covid-19 crisis was greatly appreciated by investors. On the minus side, the interest rates fluctuate throughout the year.
Investors in search of a very reliable platform should look at Iuvo; indeed, their selection of loan originators means that they’re much less likely to run into financial troubles than many of their competitors. Of course, the downside will be decreased returns compared to more risky loan originators !
Platform recommended mostly to experienced P2P investors
The last two platforms of our selection are harder to use (especially Omaraha), or potentially more risky (when selecting unreliable Mintos originators). However, experienced P2P investors will enjoy Omaraha’s increased returns and Mintos’ diversification opportunities.
Mintos‘ auto-invest is more geared towards intermediate or advanced investors. Speculative investors will also take advantage of the high-yield loans offering 17% interest rates (as of January 2021)… but they should keep in mind the risks associated with less reliable originators !
Finally, investors who want to squeeze every possible penny out of their loans portfolio may want to spend some time mastering Omaraha. However, I’m unsure whether it’s currently possible to invest large sums through this platform.