Peer to Peer lending-thoughts/experiences

[brennan.]

I was considering putting some savings into Harmoney which is a relatively new Peer to Peer lending platform here in New Zealand. it is in association with Trademe whom I trust and I couldn't find anything scary in their disclosure statement and FAQ'S etc. Has anybody used a peer to peer lending service to invest? Would be interested to hear peoples thoughts on the system in general.

Cheers.

[BradEL]

Trade me is a very reliable and respected firm, so I think that is definitely peace of mind for you if you do it

[lisaishername]

Put your savings into Gold. At least Gold is EMP proof if the commies ever attack.

[nuthin' fancy]

Originally Posted by brennan.

I was considering putting some savings into Harmoney which is a relatively new Peer to Peer lending platform here in New Zealand. it is in association with Trademe whom I trust and I couldn't find anything scary in their disclosure statement and FAQ'S etc. Has anybody used a peer to peer lending service to invest? Would be interested to hear peoples thoughts on the system in general.

Cheers.

I've had a quick look at the website and like the fact that you make a single investment but are exposed to a variety of borrowers. This looks safer.

I would want to understand their credit criteria for lending and clearly understand the situations in which you will lose some or all of your investment.

If the return is acceptable to you, go for it, but only as part of a balanced investment portfolio. You are being offered a higher rate of return than a bank because you are engaging in a more risky investment.

Rabobank offer 4.55%pa for 1 year, how much more are you going to earn in Harmoney? If you have $10,000 to invest and they are offering 7.5% (you'll have to tell me what they offer, I couldn't find it) is it worth the hassle to earn an extra $300?

[brennan.]

Originally Posted by nuthin' fancy

I've had a quick look at the website and like the fact that you make a single investment but are exposed to a variety of borrowers. This looks safer.

I would want to understand their credit criteria for lending and clearly understand the situations in which you will lose some or all of your investment.

If the return is acceptable to you, go for it, but only as part of a balanced investment portfolio. You are being offered a higher rate of return than a bank because you are engaging in a more risky investment.

Rabobank offer 4.55%pa for 1 year, how much more are you going to earn in Harmoney? If you have $10,000 to invest and they are offering 7.5% (you'll have to tell me what they offer, I couldn't find it) is it worth the hassle to earn an extra $300?

Thanks for the response mate, yea they say the risk adjusted return is around 12% and with the lowest loan duration being 36 months it might not be worth it with any less than say $5000, what do you reckon? They put borrowers into categories according to their risk level and show a percentage likelihood that they will default, and I'd obviously lose money, but one person can't fund an entire loan, only a maximum of 20% so with money spread across multiple loans i think it would be fairly safe, i could be wrong, would like to know other people's thoughts on that.

Cheers.

[nuthin' fancy]

If you invest $5,000 you will earn 7.45%pa more than having it safe in a bank.

You need to understand how they determine the risk profile of their clients.

This equates to $372.50pa.

If this suits your risk profile (i.e. can you sleep), investigate further. Is there an option to spread the investment across more than 5 loans?

Is there an option to invest in Harmoney (rather than providing funds for them to lend)?

[brennan.]

Originally Posted by nuthin' fancy

You need to understand how they determine the risk profile of their clients.

If this suits your risk profile (i.e. can you sleep), investigate further. Is there an option to spread the investment across more than 5 loans?

Is there an option to invest in Harmoney (rather than providing funds for them to lend)?

That's one thing that has me a little worried, the client can simply lie on the application and if its not detected then that person can be given a good "rating" on the site when really they can't afford the repayments at all.
I believe it is possible to have more than 5 loans on the go at once, that's one of the main reasons why I'm still thinking about it, at least i can try and minimize losses by spreading the money out. I'll have to look into the option of investing in the company itself instead the loans, but i think I'll give it a go, not with all my savings at first maybe I'll have a play around with $500 and see how it goes.

Thanks for your input, I'll update the thread with the good and the bad if and when they happen.

Cheers.