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.
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.