UKC

Anyone got any stories of their experiences of this?

http://www.moneysavingexpert.com/savings/peer-to-peer-lending#know

In reply to Frank the Husky:

I've just put £100 on ratesetter. Been on a few months, small amount of interest. Easy transactions (my money is automatically put back on the market at either my set rate or the current average whichevers highest). Doing it more as a taster and a way to stop me spending it but seems a good company

In reply to Frank the Husky:

It looks better than an ISA in regards to interest rates. But its not FSA protected, and for me its a big but...

In reply to Frank the Husky:

I've been putting some money into Ratesetter for 18 months or so.

It's not FSCS protected. They do have their own arrangements for missed payments (their "provision fund".) They give information on the administration of the fund, the current and projected default rates, and the size of the fund. After that you have to make a judgement for yourself on the security of your money. My uneducated feeling is that short term risk is similar to an index tracking stocks and shares ISA, as they're both only likely to see big losses if the economy takes a big turn for the worst. The difference with an index tracking ISA is that the ISA is likely to recover, whereas defaults under Ratesetter are lost.

If you're not sure about the term of investment, you should look into their liquidity / buy back options, it's got a pretty fair way of allowing you to retrospectively convert money from a high interest 5 year loan to a shorter term one if you need to pull money out early, with your profit being adjusted accordingly. Liquidity relies on new investment into the platform, which is not guaranteed. My feeling is that liquidity is going to be fine unless it all goes titsup.

Keep in mind that because you see such high returns compared to current FSCS protected schemes, you do not need to put a large fraction of your savings in there to make a big difference to the total income you get from savings.

I believe they offer borrowers a very good deal, both in rates and in penalty free early repayment. I am quite happy to participate in a scheme that's a good deal for borrowers and is taking business away from the high street banks. I've had enough of seeing their adverts for personal loans at 8.5% next to their current savers rate of 1.0%. Stick it to em!

I can't speak for other providers, but with Ratesetter, they do not pay tax on your interest, so if you don't currently do self assessment for your tax, you will need to start. It should take about half an hour to do SA if Ratesetter is the only reason you need to do it, if you keep good records and don't loose your login details each year.

In reply to Frank the Husky:

I put 500 quid on Bondora (www.bondora.co.uk) in March and my annualised return is currently ~20%. You can limit the amount you give to each borrower (50eurs in my case) and you can either choose the loans individually or set up up to lend money automatically (I went the auto route). I set my risk profile to medium. My girlfriend set her profile to high and has made 20% since July! She also chose not to reinvest interest payments.

Two caveats: (1) neither of us have taken any money out yet... you might lose a few percent if you want to take money out immediately because you end up having to resell the loans on the secondary market or just taking money out as its paid back (2) we have both put in small amounts of money. It will take longer to invest all your money (and equally to de-invest) with larger amounts.