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Donald’s LendingCrowd Investor Story


Donald's investor story featured image

Donald shares his investor story and why he decided to try peer-to-peer lending with LendingCrowd

Like a lot of people I was getting frustrated with the interest payments I was getting, or I should say not getting, from my RBS savings account which was a pitiful 0.05%. It got me thinking what the point of this was as it wasn’t doing anything in terms of beating inflation which keeps going up. This made me reevaluate my options and I started to consider peer-to-peer (P2P) lending.

After some research, I saw that there were some good potential rates on offer upwards of 5.95% from P2P investing. These differ depending on the specific loan but I liked that there was plenty of choice for me and I was glad to be finally getting something punchier from my investments.

I’ll be honest that when I first came across P2P I was concerned about how risky it was because it’s pretty new and I didn’t like that P2P loans aren’t covered by the Financial Services Compensation Scheme.  But after some digging I realised that the risk is tied to the underlying loans and not these platforms. Knowing these platforms are secure and professionally run, with plenty of information on offer, made the process of investing in P2P easier and a lot more palatable, although I do understand it is not risk free.

 

I saw that there were some good potential rates on offer upwards of 5.95% from P2P investing

I went with LendingCrowd which is a platform focussed on loans for small businesses. What I liked about LendingCrowd is they’re authorised by the Financial Conduct Authority which gave me some peace of mind. I’m no expert when it comes to investment, but I liked that this platform allowed me to pick my own investments and mix them up. I diversified my money which put me at ease a bit about the risk you hear about in P2P lending.

I have been investing in P2P with this platform for some time and I’m particularly excited about the Innovative Finance ISA that LendingCrowd launched in February this year. There are only a few of these on the market so I’m happy my platform has launched one. This ISA would allow me to get an average return of 6%* (the loans are automatically selected and diversified on my behalf) with the tax efficiency I enjoy with my other ISAs. I am already considering transferring some of my pre-existing ISA money across into this new Innovative Finance ISA to take advantage of my remaining ISA allowance for the year.

It makes me wonder why people are still putting their money into savings account with such low rates when these P2P loans are on offer! I think these higher rates, combined with the tax savings this new ISA will bring, will encourage more people do the same as me and go for P2P lending instead.

 

*Your capital is at risk when you invest. 6% is a variable target rate net of ongoing management fees and estimated bad debts and before the 1% exit fee.

Article author

Heather Mackay

Heather Mackay

3 Comments

  • Avatar James says:

    I too like this p2p site, compared to others I use. Particular favourite feature is the ability to see financials and quiz the borrowers directly.
    You can set your own rates and my current average is c10.5%! At these rates and properly diversified means the occasional default still leaves you well ahead of deposit accounts.
    Only gripe is I want more please.
    Wouldn’t ever invest everything but a good part of a portfolio of investments.

    • Avatar LendingCrowd says:

      Hi James,
      Thank you for your feedback – we’re glad you’re enjoying investing with LendingCrowd and we appreciate you taking the time to post a comment!

  • Avatar Nigel Bailey says:

    I started with Lending Crowd just over a year ago (1917) because of the poor savings rates. I thought that P2P looked risky so I tried 2 other platforms for a year or so before finding LC. Once I saw that LC had the option to invest through an ISA it became a no brainer to give it a try. I started slowly and took advantage of the cash backs as they became available (what a great way to add to your savings). It was amazing to see that you could pick loans paying as much as 15% pa (before charges) on C+ loans via the self-select option, or take less risk and take around 6% on an LC auto selected spread of loans (this gives you a well diversified selecting of loans). One thing that I did’nt expect was that it would “FUN” to be able use all the tools and information that LC now provide to investors that gives you total control for self investors like me.
    I’ve also Iearned that you only get the top returns if you can spend time watching for the new loans and “get in early” to pick the best rates, AND be able to watch the loan auctions and adjust your loan bids when needed (a bit like a reverse e-bay auction process). I’ve had a few bad debts, but so far nothing significant so I’m well pleased with an overall return of more than 10%.
    BEWARE – It’s easy to get too enthusiastic about getting 10% on your savings because many people don’t. You need to careful to work out the loan risks and allow for some bad debts (money lost), allow for selling fees of 1%, and allow for the 1% on-going admin charge. Your actual and estimated rate of return is very clearly shown on your personal account information page on the web-site so you can monitor how you selections are working, or not.
    One of the most important features for me when starting out was the fact that you can get your money back quite quickly if you need it.
    As long as you look into this form of investing with your eyes open, and have some understanding of “risk”, this platform is a great place to put a portion of the your investments.

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If you invest through LendingCrowd you should understand that your capital is at risk.

LendingCrowd is the trading name of Edinburgh Alternative Finance Limited, Company Number SC468392, authorised and regulated by the Financial Conduct Authority (Firm reference number 670991). LendingCrowd and its products are not covered by the Financial Services Compensation Scheme.

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The company's registered office is 23 Manor Place, Edinburgh, EH3 7DX.

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