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Friday, 24 July 2015

Funding Secure - Yet another UK asset-based Peer to Peer Lending Platform

I’ve recently introduced you to two asset based platforms; Saving Stream (SS) and Money Thing (MT).  They both have a fixed interest rate of 12% and are somewhat similar in the way they work.

Saving Stream

SS normally lends for a term of one year but also has a secondary market that allows you (currently) to sell your loans easily at any time because there are not enough loans/value to satisfy the demand. Note that this situation could easily change.  SS loans are usually secured against property (bricks and mortar).

Money Thing

In contrast, Money Thing is a 6 month term with no secondary market.  Loans are typically secured against objects (or bundles of objects).  There is the hint of the pawnbroker here; think, artworks, cars and jewellery as well as the odd plane.

Funding Secure 

“Yes, but what about FUNDING SECURE?”  I hear you cry.  Well it’s sort of a cross between SS and MT.  Interests rates are normally 12 or 13% with a 6 month term, no secondary market and a mix of security against objects or land/property.  More accurately, Funding Secure (FS) appear to have started out with the pawnbroker model but are increasingly moving into land and bricks.

I’m currently investing modest amounts in the three platforms to see how I get on.  So far all three are fine and hopefully, with the relatively short terms, there won’t be too many defaults.  

The minimum investment in an FS loan is a mere £25 so you don’t have to gamble your life savings to give it a go.  Transfers from a current account (assuming a rapid transfer) become active on the site within 30min.

Better be Quick!

However, The problem with these platforms is you need to be quick.  Once a new loan appears, unless it is a biggy (£100K +) then a frenzied mob gobbles it up before your eyes (On FS, once the loan is live, you can see the amount left diminish before your eyes).

Do be aware that these platforms are all risky and I fear that in 6 months time I may be warning you to put all your money in Ratesetter or Zopa (with a much lower interest rate).

Fine Wines?

Incidentally I see the next FS loan is ‘Fine wines’ – a massive loan of £500 (asset value £800).  I’ll drink to that one! (But what if it’s ‘corked’?  That's one thing the valuation expert can’t check!)

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