P2P Lending has been a constant part of my portfolio for close to 5 years now.
Since many of you keep asking me about my favorite platforms as well as where and how I would start today, I’m going to share my current personal top 3 with you and as well as my auto invest settings on each of them.
We’ll also quickly go over what the heck P2P lending is in the first place and why it could make sense to have some of your investments in this asset class.
Having said that, even my top 3 are far from perfect, so I’ll make sure to tell you where I see room for improvement. There is nothing wrong with you preferring other platforms by the way. In fact, I’ll mention my opinion on a few of them at the end.
Please don’t forget that none of this is investment advice, just my personal opinion based on my own experience as an investor.
What is P2P Lending?
Let’s start with the basics.
Peer-to-peer lending is a way for borrowers to borrow money from other individuals instead of banks, most of the time using two intermediaries: Lending companies and P2P lending platforms or marketplaces.
It’s a useful alternative source of financing for individuals or businesses that either have difficulties obtaining a loan from traditional financial institutions, need the money right away or simply need to borrow smaller amounts (eg. a few hundred euros, which banks are unlikely to issue loans for).
How Peer-to-Peer Lending usually works
- A borrower needs money and asks a lending company for a loan
- If the lending company approves the loan based on its risk scoring, it pre-finances the loan amount to the borrower
- The lending company then lists the loan on a P2P platform or marketplace
- Where we as investors are able to invest into the loan to earn some interest on our money, with the lending company keeping some skin-in-the game in the form of its own funds in each loan as well.
- In most cases, when everything works correctly, the borrower pays back the loan + interest + fees to the lending company, which then transfers principal and interest payments to the P2P platform, where the funds are transferred to the investor.
Something worth noting is that the borrower pays a higher interest rate to the lending company than what we get as investors in these loans. This way the loan originator has a cashflow buffer to buy back loans that are 30 or 60 days late from investors, due to its contractual buyback obligation.
My Opinion and Priorities as an Investor
In my opinion P2P Lending can be a great addition to a diversified portfolio, especially if you’re the kind of person that prefers investments that produce cash flow on a monthly basis.
I just wouldn’t make it your only investment. After all, P2P loans still carry plenty of risk – you’re not getting yearly interest rates of 10-15% risk-free here!
For me, I found a portfolio allocation somewhere between 10-15% to be the perfect amount. That’s also because I don’t need the cashflow right now as I’m still working. Who knows, this might change in a few years.
Now, before we jump straight to my favorite platforms for the rest of 2023, here are my priorities as an investor:
I need a reliable auto invest, as I don’t want to spend any time manually selecting loans. I want to be able to pre-define the kinds of loans I’m interested in and the platform’s auto invest should take care of the rest automatically.
If that’s not the case, I’m not interested. That’s because I’m confident I could get a much better ROI by actually working more instead of wasting hours every month manually selecting loans to invest in.
Whenever possible, I try to stick to loans issued by lending companies with a profitable business model, which they can prove via audited financial statements. This is important for the buyback obligation, where loan originators commit to buying back loans that are 30-60 days late.
My Top 3 P2P Lending Platforms
Alright, enough chit-chat, let’s get to my top 3 P2P lending platforms right now:
First we have Esketit, launched in 2020 by the founders of a well known, profitable lending group (Creamfinance), with over 10 years of experience in the space. It has quickly become one of the most popular platforms in Europe, with over 281 million euros worth of funded loans so far.
Esketit offers investments into short-term loans in the Czech Republic, Poland, Jordan and Spain and business loans to JMD in Latvia, which is used to finance its lending activities in Jordan. Interest rates currently range between 11-12% per year.
Note: Esketit also added loans from the external lending company Aksioma24 recently. I’m skipping those personally, especially due to the lower interest rate of only 7% p.a.
All the loans come with a buyback obligation by the lending company after 60 days, which covers both principal and accumulated interest.
Loans from the Czech Republic, Poland and Spain come with an additional group guarantee, something to keep in mind.
Since buyback obligations are only as good as the financial situation of the company that’s providing it, let’s have a look. By the way, the Creamfinance Group recently rebranded to Avafin, so don’t be surprised when you see that mentioned instead.
According to its latest audited financial statement, the group generated a net profit of 8,3 million euros in 2022, which makes me confident in its ability to buy back loans that are late.
Meanwhile, we also need to look at the lending company in Jordan (Money for Finance) especially since this one is not covered by the additional group guarantee.
According to its key management metrics for 2022 it was profitable as well, with a gross profit of 6,6 million euros last year.
Esketit also has a secondary market and a cash out function, where you can sell your loans to other investors in case you need access to your money before the end of the loan term. Under normal market conditions this has worked very well so far.
Back in November a German blogger put this to the test: Within only 8 hours, he was able to cash out 75% of his investments.
As for my own experience, I’ve been on Esketit since September 2022 and I’ve had zero issues since then.
That’s one more reason why it has now become my second largest account in the P2P lending space after Mintos, with 354,76€ of interest payments and 45€ in bonus payments that came from the cashback during the first 90 days. You can get that as well using my link to sign up.
I currently have an internal rate of return of 12,84% per year on the platform according to Portfolio Performance.
Esketit Auto Invest (Updated!)
Regarding the auto invest, I chose the diversified strategy, which invests into loans from all currently available countries – Jordan, Spain, Poland, Latvia and the Czech Republic.
This way I also make sure most of my loans are covered by the additional group guarantee instead of simply going after the highest interest rate by investing more in loans from Jordan.
This strategy also doesn’t include the much less attractive new lending company Aksioma24 and I hope it stays that way.
Update: Sadly this has now changed.
As of July 11th, Aksioma loans are also part of the auto invest. Since I’m not interested in these, I have now stopped the diversified strategy and set up two other auto invests, CreamFinance and Jordan:
The auto invest strategies have been working perfectly ever since I started on Esketit, reliably reinvesting free funds on my account.
That being said, not everything is perfect. Here is something you should still keep in mind regarding Esketit:
Most loans on Esketit coming from Creamfinance/Avafin and its founders is both a good and a bad thing. If things were to ever go wrong in any of the countries they are active in, they have a lot more control to act quickly and an incentive to keep investors on the platform happy – just as we’ve seen other big players like Peerberry do successfully for many years. Yet at the same time, the fact that Esketit is not independent from the lending companies means that there’s always a little risk as there could be a conflict of interest. In a worst case scenario, are they going to prioritize protecting investors or their business?
Anyway, I just wanted to give you the full picture. All in all, I’ve been very happy with my experience on Esketit, which is why it’s part of my personal top 3.
- Get a 0,5% bonus on all of your investments on Esketit within the first 90 days via my link.
Next, we have Mintos, the largest P2P lending marketplace in Europe, where a total of over 9 billion euros has been invested since its founding in 2015.
I’ve been investing here since 2018. With a balance of over 9.100€, this is currently my largest investment in the space.
In this case, we have a total of 59 external lending companies listing their loans on the marketplace, with interest rates for some of the best rated ones ranging all the way up to 15% per year and Mintos operating as the intermediary connecting investors and borrowers.
Thus, each loan originator’s financial position matters individually for the buyback obligation that is offered on most loans.
Also, the fact that Mintos is simply acting as a loan marketplace has both pros and cons:
- On the one hand, Mintos has an incentive to make sure that lending companies repay investors to keep them happy and in cases where that doesn’t happen, they take legal action on behalf of investors.
- But on the other hand this means Mintos has no control over what lending companies do – for example, if things go wrong with loans from one loan originator in one country, they can’t use the payments from other unaffected loan originators or countries to make up for the difference and make everyone whole. Meanwhile, this is something that platforms like Peerberry are able to do for example, by only listing loans from their affiliated companies.
And while I’ve received 3.166€ in interest payments on Mintos so far, I’ve still made a few mistakes, which is why I have around 2.900€ in overdue payments right now:
My first mistake was not diversifying properly throughout 2018-2019 and as a result, I ended up with a large chunk of my Mintos portfolio invested in a single lending company, Capital Service in Poland.
That same lending company ran into financial problems in 2020 due to the crisis, as did a few others. However, this money is not lost. Mintos and Capital Service set up a repayment plan, so that money should be fully recovered.
In the Overdue section you can see the expected recovery percentage for the other cases as well, including loans in Russia, which are currently impacted by sanctions.
Anyway, according to Mintos, I should be able to recover over 2.200€ of the 2.900€ that are currently overdue, but it could take a while depending on the case.
Considering everything that happened since 2020, I would be ok with that. Either way, I’ll keep you updated.
Still, the last few years made me change my investment strategy. I’ve now shifted my focus to 4 large groups of lending companies that are only available on Mintos:
- The Eleving Group
- Sun Finance
All of them have a long history in the lending sector and they are profitable according to their latest financial statements, which is important for the buyback obligation. You can see my current auto invest settings on Mintos in detail in this recent video:
I’m not saying my strategy is bulletproof, this is simply what I feel the most comfortable with right now on the marketplace.
It’s perfectly fine if you prefer a different strategy, who knows maybe even a simple automated one offered by Mintos.
If I had to pick any of the automated ones right now, it would probably be the conservative one, which only includes lending companies with good ratings.
My only issue based on my own testing a few years ago is that you’re not able to select a minimum interest rate or a maximum duration, so you’re likely to invest into loans that you wouldn’t have bought otherwise. On the plus side, you might be able to cash out more easily under normal market conditions.
Speaking of cashing out, the marketplace has a secondary market, where you can sell your loans early to other investors if you need access to your money before the end of the loan term. Just be aware that you pay a 0,85% fee when you successfully sell a loan.
Since Mintos is licensed and regulated as an investment brokerage firm, they’ve been working on adding the ability to buy ETFs as well, maybe already in the next few months. I was actually able to give them a bit of feedback when I met the team at the Finfellas conference in Riga last month.
I’ll make sure to test it properly and give you my personal opinion once ETFs are available.
Either way, for me Mintos still deserves a spot in a well-diversified P2P portfolio, which is why it’s part of my top 3.
- Sign up to Mintos via this link and invest 1.000€ or more before 31.08.2023, to get a €50 instant bonus and 1% cashback on your average investment in the first 90 days.
Ok, let’s move on to my third favorite platform, Robocash, which was launched in February 2017.
Since then, investors financed a total of over 600 million euros worth of loans on the platform.
What’s interesting is that most of that growth actually came in the last two years, as the platform became more popular.
Similarly to Esketit, on Robocash you’re also exclusively investing into loans from a single lending group, in this case the Robocash Group, which has been operating since 2013.
The platform currently pays up to 12% interest per year on its loans in the Philippines, Singapore, Sri Lanka and Kazakhstan and only 8% on its short-term loans in Spain, which is why I’m personally skipping those.
Generally speaking, the longer the loan term, the higher the interest rate:
And if like me, you have an account balance of over 5.000€, you can get a loyalty bonus that adds between 0,3-1,3% interest per year to each loan you’re invested in.
Since these loans come with a buyback obligation after 30 days and a group guarantee including any outstanding interest, we once again need to take a look at the company’s financial situation.
According to its latest audited financial statement, the group generated a net profit of over 13 million dollars in 2022, which is great to see.
As for my personal experience investing on Robocash over the past two and a half years, I honestly have zero complaints.
Of course interest rates could be a bit higher, but I do think the platform still offers a good risk to reward, due to the strong backing by the Robocash Group.
As a result, I’m perfectly fine with yearly interest rates of 10,5% for loans with a duration of 6 months for example, in my case with an additional 0,3% per year from the loyalty bonus.
That’s also because my investments here require zero maintenance after setting up the auto invest.
Speaking of that, here are my settings right now:
I set my minimum investment per loan from 1-100€, I only buy loans with a minimum interest rate of 10,5%, a loan term of 1 day up to 3 years and I want the full amount of loan repayments and interest payments to be automatically reinvested.
By the way, don’t worry if you don’t see available loans – just set up your auto invest and it will buy new loans as soon as they’re added to Robocash. It’s actually the only way to invest here, you can’t buy them manually.
In addition, Robocash has a secondary market without fees, so if you click on “My Investments”, you can actually sell your loans early to other investors.
This is great to have especially if you bought a lot of long-term loans due to the higher interest rates and it turns out you need access to your funds before the end of the loan term.
All in all, I’m very happy with Robocash, which is why it’s my third largest investment in the P2P lending space:
I earned a total of over 963€ in interest since January 2021 and according to Portfolio Performance, I have an internal rate of return of 12,31% per year on the platform.
In my opinion Robocash does a great job when it comes to communicating with investors as well. If you check the news section on their website, they’re doing webinars to answer investor questions quite frequently and they regularly give financial updates regarding both the Robocash Group as well as how individual markets are performing.
Of course it’s not all rainbows and unicorns here either:
- First, as I mentioned, the interest rates are currently a bit below the P2P average, especially if you’re after short-term loans. Which on the other hand shows that the group is in a good position financially (also when looking at its statements) and doesn’t need much funding right now. That being said, I’m still getting 10,5-12% interest per year on my money here, so I can’t complain.
- And second, obviously the platform and the group are not independent from each other – which again can be a good or a bad thing. All I can say is that so far since their launch in 2017 they’ve managed to keep investors very happy on the platform, as there were zero repayment issues, even though the last couple of years have been very challenging for most of the P2P industry.
Ok, so that completes my current top 3 in P2P lending.
If I had to pick a fourth one right now, it would be Income, another loan marketplace with a different security model in addition to the standard buyback obligation compared to others like Mintos.
It’s currently my best performing active investment in P2P lending, with an internal rate of return of 13,34% per year.
That’s also because most of the loans I invest in pay 15% interest per year on Income. You can see my auto invest settings here:
Having said that, Income did suspend one lending company (Clickcash from Brazil) last November.
It was one of the smaller ones with an outstanding principal of only 182.000€ when Income started recovering the funds. They’ve been making payments on a regular basis though, and investors are still receiving the full amount of interest for the delay period, unlike in some recovery cases on Mintos.
And to put things into perspective, ClickCash only makes up 1,18% of loans outstanding on Income right now.
I’m confident these will be fully repaid, including outstanding interest, especially after talking to the Income CEO and founder Kimmo Rytkönen at the Finfellas conference recently.
That’s where I also found out that they’re planning to add new lending companies in the coming months, so I’ll most likely be growing my account here further.
- Get a 1% bonus on your average investment balance on Income after 30 days using this link.
Spot number 5 in my P2P portfolio would currently go to Lande, where I invest into secured loans in the agricultural sector, which I personally feel more comfortable with than loans backed by real-estate in the current economic environment.
Similarly to how real-estate loans work, these loans don’t come with a buyback obligation, but are backed by assets instead. In case a borrower isn’t able to repay a loan, this collateral, oftentimes land or machinery, can be sold to repay investors.
The downside of this is that recoveries can take a while, since you don’t have a lending company buying back the loan from you if it’s 60 days late for example. The upside is you don’t have to rely on a lending company in the first place, as the loans are fully collateralized.
After selecting a few loans manually to get my money fully invested in the beginning, I’m now reinvesting repaid loans and interest using the basic auto invest, as I’m able to diversify a bit more by keeping the minimum investment at 50€ per loan.
I kind of wish the advanced auto invest, which allows more settings would work with a lower minimum investment than 250€ as well, in that case I would be using that one.
- Get a 1% bonus on all of your investments on Lande within the first 180 days via my link.
What about PeerBerry?
I constantly get asked what I think about PeerBerry. To be honest, a few years ago when I first looked at them, I simply didn’t feel like they added anything over the options I already had in my portfolio.
But they’ve become one of the most popular and stable platforms in Europe with a high degree of investor satisfaction, so kudos to them.
They’ve clearly done an excellent job when it comes to communicating with investors, with zero issues apart from loans in the Ukraine and Russia – and even there, they’ve now recovered 81% of the amount already – more than any other platform with loans in these war-affected countries.
I might have been a bit too critical in my review a few years ago. Still, my personal reason for not adding them now either is that the interest rates offered at the moment are relatively low and thus I see no good reason to over-complicate my P2P investments further.
But feel free to share your own experience with PeerBerry in the comments below!
As you can see, none of the platforms I mentioned today are perfect, not even the ones in my top 3. This is also why I never mention just one platform when somebody asks me for recommendations based on my experience.
Just like in the stock market, where I diversify over a large number of stocks via ETFs, I try my best to diversify my investments in P2P lending as well among different platforms or marketplaces, lending companies and countries.
You should also keep in mind that this sector still carries plenty of risk. The so-called “buyback guarantee” when loans are late is only as good as the financial situation of the lending company that’s providing it.
I personally limit P2P lending to 10-15% of my own investment portfolio, even though I appreciate the high interest rates and the monthly cash flow these investments provide.
But that’s just my personal preference and you’re of course free to do things differently!
Anyway, that’s it for my long-overdue update on my favorite P2P lending platforms!
- My Investment Tools
A list containing all my investments in P2P Lending, the brokerage accounts I use to buy ETFs, my speculative investments in Bitcoin and my free bank accounts. It even includes the tools I use for blogging and YouTube.
- P2P Bonus Offers
A collection of all the best, currently available bonus and cashback offers in the P2P lending space. Regularly updated.
Disclaimer: Investing involves risks of losses. You should always do your own research before investing into anything. Also, some of the links are affiliate links, which help support me, the website & YouTube channel. I only link to services I use myself, none of them are sponsored.