LendingCrowd’s secondary market is known as the Loan Exchange. Secondary markets are very important for peer-to-peer lenders like us as it gives our investors the chance to free up capital while also letting new or existing investors diversify their portfolio across many loans allowing them to spread their risk. Read this post to find out more about how LendingCrowd’s Loan Exchange works. (Remember your capital is at risk.)
1. Track record
All the borrowers on the Loan Exchange have a track record of keeping their loan repayments fully up to date. You will be able to gauge the extent of their track record by checking the term of the original loan against the number of repayments made to date.
2. Earning interest as soon as you invest
You will start earning interest immediately after you are successful in buying a loan part. The interest rate shown in the Loan Exchange is a weighted average of all the loan parts available for you to buy. It will be adjusted once you select the amount you want to invest. Each interest rate is calculated using the outstanding capital and the remaining term of the loan part. This is re-calculated continuously due to investor activity and is comparable to the original interest rate secured by the borrower. You will earn this interest rate assuming you reinvest capital repayments at the same rate during the life of the loan. It is a great way to make the most of the funds you have available for investment.
Looking at the Loan Exchange today (mid-August 2015) we currently have 23 different loans on the Exchange with indicative interest rates ranging from 7.06% to 12.30%. These loans are to established businesses from a wide range of different sectors such Manufacturing, Engineering, Technology, the Games industry and Retailing. Investing across the range of loan parts available will you enable to diversify your portfolio and spread your risk. Check back regularly to see new loans as they are added.
The Loan Exchange gives you the opportunity to create liquidity within your portfolio as you can sell your loan parts at any stage during the lifetime of the loan (please note however that if a borrower starts to experience repayment issues we may have to remove the relative loan from the Exchange until matters are satisfactorily resolved). This will give the chance to continually refresh your portfolio depending your risk appetite.