Are you thinking about dabbling in some P2P lending?
I have been, and last year I took the plunge with Lending Crowd after perusing this handy comparison of P2P platforms in New Zealand. Here’s a little recap of my experience so far.
Signing up to invest in P2P loans with Lending Crowd was relatively straightforward. I did have to upload copies of my ID as part of the Lending Crowd investor application, but it was basically instant. There are other finance options, when choosing a loan.
Once you’re all approved, you need to deposit some money so you can start investing in loans – $500 minimum.
Step 1: Click the Deposit Funds option in your Lending Crowd account. This will bring up all the details that you need in order to do a bank transfer – moving your funds from your bank account into the Lending Crowd account, and ensuring they are applied to your individual investor account.
Step 2: Take those details and do the bank transfer.
Step 3: Funds are sent to Lending Crowd, and applied to your investment account.
Then the fun part: Choosing some loans to invest in!
Loans go FAST on Lending Crowd. I started my application on a Friday afternoon, and could see that the one available loan on the market was close to fully funded. I checked in a couple hours later that evening, and it was gone.
Luckily, I got an email early the following week letting me know that email notifications were now available. Sweet, I thought. I don’t have to keep logging in all the time to check if new loans have come on the market! I promptly signed up to get new Lending Crowd loan alerts by email.
A spate of about 5 loans trickled in the next day. But I didn’t have time to actually log in until night time, and by then only 2 were left and both very were close to funded. I’ll sleep on it, I thought. But by morning, both were gone.
The following evening I received another email, and logged in about 10 minutes later. In that short time, about $3k of the $16k loan had already been funded! I pitched in for $50 and left it at that.
The day after that I received another email in the afternoon and logged in immediately (as in, within a couple of minutes). The $3.4k loan had already had $500 in funding. This was a B2 (highest risk )category with 18.74% interest rate!
That was pretty much how it went. You have to get in quick to get in at all. I kept playing the game over the next few weeks. and committed all my $500 to various loans, mostly in $50 lots each. But by the end of the month, I had 3 buys reversed, leaving me with $150 still to invest. (I assume those loans did not wind up going through for whatever reason.) I had to find new loans to invest in, and so even though I created my account in late September, I wasn’t fully invested until about the end of October. I started getting my first repayments in November.
So far, I have had one loan repaid early – in 4 1/2 months instead of 36 months. That loan was at an interest rate of 10.96%. I wound up earning $1.64 on that $50 loan, so it looks like I made 3.3%.
According to my Lending Crowd dashboard, to date my net average return (an annualised rate) is 11.79%.
I’m basically leaving that alone now and just checking in every so often. It’s been a fun experiment.