Welcome to the P2P Platform Rating 2020. The first version was released in 2019 and has already helped you a lot. Since I announced an update relatively quickly based on your feedback, I received several emails over 2019 asking when it would be released. Now the time has come.
Please note as usual and here especially: The rating is based on my experiences, estimations and research. There is no claim to completeness. As always I am therefore dependent on your cooperation!
In 2019 I made the surcharge to a rating system for P2P platforms, which should make the choice easier and safer for readers. But let’s work on it together. Hence my request right at the beginning. If you are missing a rating feature or information seems outdated, just write it in the comments. That way we can discuss extensions and fill in gaps as always.
Please note that this is not primarily about security aspects, but the rating should help you to make a decision. But of course some points and the achieved rating of the platform will also provide more security.
Find out about my best peer to peer lending sites
Ranking is always something very personally. I evaluate things different to any other person. This is why a ranking or a “best of” is often very difficult. So I will try to make the ranking as objectively as possible. Therefore, I need to agree on P2P ranking factors, which can be reached by any platform, but are not reached until now.
To be honest I did not made the work myself. Lars has a platform ranking system on his website, which I adopted and modified for my personal requirements. As you know Lars is one the most influential bloggers about P2P lending in Europe and already made a lot of experiences. So I will try to use his experiences as a shortcut for myself.
Why do you need a P2P platform rating like this?
Especially new investors quickly get lost in the jungle of P2P loans. With a simple P2P platform comparison with nice filters that you can find on more and more websites, nobody is helped! The only help is P2P platform experience and a look behind the scenes.
From my insights of the last year I was able to create a rating that hopefully reflects the general market situation quite well and that should help especially beginners not to get lost. Sharing is caring and therefore I adopted the P2P platform ranking from Lars to put on my personal experiences for you!
Which peer to peer lending sites are the best for me?
Of course any platform has its marketing and says itself to be the best. I do not want to start with this open source knowledge. Mostly my investments will rely on the experiences of Lars P2P ranking system and as well on my personal goals.
This is why I deducted several ranking factors from Lars system in origin. Until now and on this website I am not able to rate the platforms in their long term performance. Additionally, I deleted all of the subjective ranking factors. In future times I will modify my ranking system, but for the moment I will take it as “less is more”.
My personal goals modified the P2P platform ranking
In fact Lars has more or less the same goals, as I have them now. At this point I am able to take the experiences out of his ranking. I need to make my own experiences, but I do not have to make to same experiences as Lars again. This is why I modified the P2P platform ranking a bit to see my own best peer to peer lending sites.
Goal #1: High interest with P2P lending
Reaching financial freedom means at first to get as much interest as possible. So I adopted Lars ranking factor of more than 10% interest per anno. But I was able to just choose those platforms out of his ranking with an interest above this level. So some platforms disappeared already in my ranking system.
Goal #2: Secured investments through buyback guarantee
Also, we all do not know how valuable those buyback guarantees are, I believe in their security. This is why I choose to give the platforms one point, when they offer buyback guarantees to their investors. Every other platform without those guarantees scores with a zero on this ranking factor.
Goal #3: Auto-Invest available
For me there is a really important indicator: time! I want to enjoy life and use my time. So for me it is really important to generate passive income beside my daily work. Therefore, I love the option of automated investing on platforms, so called Auto-Invest or Portfolio-Builder. The indicator here is my time invested on one investment, so every platform gets one point who offers the auto-invest-option.
Time will come and the P2P ranking will be modified
I have another 5 years to go for my financial freedom with P2P lending. So my requirements today will probably not match my requirements in one, two or five years. This is why I will update the P2P ranking, when it is necessary.
You are warmly invited to copy it and make modify it for your own requirements. If you have questions or any idea about it, please let me know and we will discuss it. As nobody is perfect I am open minded to change things, when they are relevant to me or the P2P ranking. At least it is important for anyone himself to find his own best peer to peer lending sites. As they meet your requirements, it will suit you best.
Overview of the P2P ranking factors for P2P lending
One of the most important rules for any investor is diversification. If you go all-in on one separate investment the chance as well as the risk is very high. If you lose, you will lose anything. Of course you will be maybe rich, when you are winning. The chances of winning are 50:50 in this case. For me this is a not acceptable high risk.
Through diversification I will try to add risks and chances. Out of this bunch the chances of winning and failing in total will disappear, but my portfolio will be left with a good chance-risk-relation. If one out of one P2P loan turns bad, you will lose anything. But if 1 out of 100 P2P loans turn bad, the risk “just” one percent. So I will spread my investments, to diversify as much as possible (and needed).
Diversification Among Countries
As you know, diversification is one of my main goals. I would rather accept some less interest rate, than less diversification. So Lars changed that point this year from “diversification loan originators” and I copied it to the diversification among several countries.
Especially diversifying in Europa outside the Baltics will be a big topic for me this year. I guess there is a big risk of just investing in those three countries in the Baltics, when you do not take care enough for it.
Diversification Loan Types
Just investing into business loans, consumer loans or factoring is a risk. Therefore I add “Loan Types” to my rating to diversify the investments. Also I like business loans very much, I think it is necessary to care about the other loan types. Additionally those different loan types offer different interest rates. The mixture in the end is most important.
More than five years of experience
A newbie on the market is more risky, than a “traditional” platform. P2P lending is quite new, whereas the oldest platform comes from about 2009 in my ranking. So experiences in the market of P2P loans are an elementary important ranking factor for trustworthiness. Just Bondora und Estateguru are that long busy in P2P loans. Any other platform is younger, whereas Mintos will close up next year.
I already mentioned that my own indicator is the ROTI – Return on time invested. Auto-invests do the work for me. As long as the adjustments meet my requirements, I am confident with using the auto-invest-option. Less time invest for the same interest-result means more time for income-producing-activities of even my family. But as you can see any chosen platform in my P2P ranking has an auto-invest. This is what makes a platform the best peer to peer lending sites, when my investments are running automatically.
Buyback guarantee available
No words needed, also I know, that those buyback guarantees are seen critical. It makes a poor credit ranking even better and therefore possible to be invested in. The value of those buyback guarantees will be shown in the next worldwide financial crisis. BUT I still think, that those buyback guarantees are something “more”, because nobody will invest in something poor by intention (I know, in 2008 some guys did, but on a way bigger market that P2P lending).
More than 10.000 investors on the platform
More investors mean more security – and possibilities. When you start investing in a P2P loan with you 500 investors the risk is higher, than an investment with 10.000 investors. The amount of 1.000 investors is to small for me. Bondora has about 70.000 investors, Mintos even 140.000 and Estateguru about 25.000 – I guess the suggestion of Lars with 10.000 investors are quite a good indicator.
Personal interest rate above 10%
This was one of the main factors for me. And after more than half a year I have my own data for me. I mixed this rating between those P2P platform I am invested myself with my own rating. All other P2P platforms I am not invested in, I copied the rating from Lars.
I marked those green, where I am invested myself. You can get it with a fast overview and make your own thoughts about it.
Personally invested more than 3 years
I am not new to P2P lending. And because of this I have my own experiences with investing, also I do not invested among 20 platforms. Of course this rating is somehow “unfair” as most of the P2P platform are not give this point. But hey, investing is a longterm goal. So all of those P2P platforms will get their point, as long as they stick to their performance and reliability.
This rating is of course very personally. But when visiting Riga I was able to met up with some people from the P2P platforms. And this is what gives me trust – or not. And there are additional factors, which influence my feeling. For example their information policy, which has been tested in the end of 2019!
Annual report available
Until today there are just a few platform with an annual report. As you can see it on every Investors Relation-Site from big companies those annual reports give the investors an indication about the business. The report published on the website is a quality attribute, which can not be ignored. I guess in futures time other platforms will follow to make an investor feeling even more safe about his investments.
Is there a secondary market?
Stories about Kuetzal, Aforti or Envistio are showing, that P2P lending is not safe at all. Also it is communicated somewhere and somewhen, there are a lot of risks. Still P2P lending is high-risk investing.
So if you want to get out of any investment, a secondary market is a good place to sell you investments. Therefore I think those P2P platform should be given an extra point, who are offering a secondary market. Of course this makes their business model more difficult, BUT we are the investors and we have to power to decide.
Costs and Charges
Most P2P platforms are offering investments without any costs. Some of them have costs on their secondary market. Therefore I would like to separate between those platforms who charge costs to their investors and those who do not. In the end all the costs are lowering the interest rate. Concentrating on my personal goals I want to have the highest possible interest rate, whereas costs will lower it.
Tax reports available
Diversify among a lot of P2P platforms means a lot of work, when you do your tax report. Every platform offering the possibility to get a tax report is getting a point as they save my own time to do it. That is great and I would love to have any platform offering this simple kind of report for their investors.
Have everything on one sight? Sounds great. And as we get used to just use our smartphone, some platforms already began to give apps to their investors. I think that is a great opportunity to have everything in one place.
Look and Feel-Factor (very personally)
The less I am working on a platform, the more important the usability becomes. Therefore I added this ranking factor, to rank those P2P platforms I am invested in. For now I will score every platform with a zero, but by mid of the year I will add some points here, when the interface convinced me.
Resume of my P2P platform rating
I hope I was able to give you a little direction with the rating, where the journey is going with the P2P platforms. My feeling is that the rating should match the current “feeling” pretty well and it is simply more useful than a simple P2P credit comparison.
Even if it means quite a bit of extra work, the rating will be dynamic. I will try to update it every year and add new factors as needed. Because the P2P platforms also read this blog regularly and will certainly not let some points sit on them, as they did not in 2019 ?
Secretly, of course, this is also a bit of my intention. Because in the end, together we will improve the whole landscape of the P2P platforms.