Before getting into it, I would like to mention that my Lendermarket review is unbiased and only based on my own experience investing on the P2P platform as well as my personal opinion.
As usual, I’m going to be fully transparent about the amount I invested, my returns so far and my account balance on Lendermarket.
Today’s review will be slightly different, as it also includes some questions I asked Lendermarket over the past few weeks. So whenever you see quotes throughout the review, that’s Omayra Roig, the project manager of business developments at Lendermarket, answering my question.
I hope you’ll find the answers useful as well!
Lendermarket – The P2P Platform backed by Creditstar
Lendermarket was recently launched by one of my favorite loan originators on Mintos, Creditstar, in cooperation with an external team to manage the P2P platform. As a result, the platform only offers loans originated by Creditstar’s own lending companies. In this case, I don’t necessarily see that as a bad thing though.
The Creditstar Group itself was founded in 2006 and has been offering financial services (loans) ever since. It currently operates in 8 countries all over Europe and has been profitable for over 7 years.
Creditstar has its business headquarters in Tallin (Estonia), in addition to offices in each country where they offer their financial services.
The Lendermarket platform however is based in Ireland, which I see as a good thing. I like having a bit more diversification as far as where platforms are based, that way I’m less affected by regulatory changes in one country (eg. Latvia or Estonia).
Why did you choose Ireland for Lendermarket?
Ireland met the regulative criteria that the business development team established while working through various countries. And additionally, what was very important to us – an English speaking environment. As our working language is English within the company, then we preferred to establish the business in the country, where we’ll be able to interact with the regulator directly in English. Ultimately the choice of establishing the business in Ireland came down to multiple deciding criteria.
The Team behind Lendermarket
I already reached out to them about adding a Lendermarket team picture to the website, as I think it helps create a more personal connection between investors and the platform. Until then, you can get a look at the key people working in the Creditstar Group here.
Short-Term Loans with 12% Interest and a Buyback Guarantee
Lendermarket offers mostly short-term personal loans from Spain, Finland, The Czech Republic, Estonia, Poland and Denmark.
All the loans on the platform currently have an interest rate of 12% per year and come with a 60-day buyback guarantee.
Are you planning to add more investable countries in the near future? I saw that Creditstar is also active in Sweden and the UK.
Yes, we plan to roll out more investable countries in the near future (probably Q1 2020). In addition to the mentioned countries, there is the Monefit brand that Creditstar Group operates in Estonia.
In comparison, here are the yearly interest rates for Creditstar loans on Mintos (as of December 17th):
- Estonia: 10,5% (-1,5%)
- Finland: 9,5% (-2,5%)
- Poland: 9,5% (-2,5%)
- Spain: 9% (-3%)
For me, that was one more reason to try out the platform.
Why was Lendermarket created instead of offering more loans on Mintos?
The reason is very simple. We wanted to diversify Creditstar’s funding. Adding another source of investment helps maintain the stability of the Group.
What’s the advantage for an investor to invest in Credistar loans on Lendermarket vs. Mintos?
– Platform risk/exposure from the investors’ side – also good for diversification
– Currently, Lendermarket focuses only on loans originated by Creditstar’s operating entities, while Mintos has lots of originators. We’d like to think that we can provide better Investor Support and communications via Lendermarket, by being more focused on a single partner.
– The loans have a shorter term, which is highly appreciated by investors and higher interest.
The 60-day Buyback Guarantee
All loans on Lendermarket come with a 60-day buyback guarantee by the Creditstar Group. If a loan payment on Lendermarket is more than 60 days late, investors receive back all outstanding principal, plus accrued interest and late payment fees.
Additionally, on Mintos all Creditstar loans (except the ones from Estonia) have a 3 day grace period. Meaning that if one of these loans is paid back up to 3 days late on Mintos, you don’t receive interest for those 3 days as it’s within the “grace period”. If something like this happens regularly with short-term loans, it can have a significant impact on returns.
Luckily, there is no grace period on Lendermarket, giving it another edge (in addition to the higher interest rate), over buying Creditstar loans on the Mintos marketplace.
Still, what if…
Even with a buyback guarantee and solid financial statements by the Creditstar Group, I always like to ask this question:
What would happen in a worst-case scenario, in case of bankruptcy of Lendermarket or going one step further, of the Credistar Group? Would investors still have the claim to the loans and what would be the course of action in that case?
Regarding the theoretical circumstance of us having to shut down: For this matter, the Department of Justice and Equality of Ireland has in October 2018 granted an authorization to Lendermarket Limited to operate as a “Trust or Company Service Provider” in accordance with the provisions of the Criminal Justice (Money Laundering and Terrorist Financing Acts) 2010 and 2013. With a case reference of TCSP APP/1224/2018. According to the provisions, we hold our Investors’ funds in a trust account that will not be subordinated as assets in a bankruptcy.
Furthermore, according to the platform’s legal conditions, the Loan Originators will be obliged to make repayments directly to Investors, in case Lendermarket as a platform would cease to exist.
The default scenario of Creditstar Group in the foreseeable future is highly unlikely. However, if that were to somehow happen in theory, then yes, investors will still have claims to the loans that they invested in. In case of Creditstar Group’s default, there would still be a mechanism for Creditstar’s borrowers to repay for their obligations. And as the particular loans that Lendermarker’s investors invest into are pledged via Lendermarket to the investor, the flow of funds would be similar as in case of a regular business scenario.
My Lendermarket Experience so far
I added Lendermarket to my P2P portfolio on November 21st, 2019. In total, I deposited 2.000€ on the platform so far.
- 1.000€ on November 21st
- 450€ on November 26th
- 550€ on December 10th
Since I added the platform less than a month ago, I only earned 2,79€ in interest from a couple of fully repaid loans so far.
Over the long run, thanks to the monthly interest payments from the 12% interest loans and the power of compounding, I’m expecting an internal rate of return of around 13% per year on my money. That would mean an additional stream of passive income of around 20€/month, based on my current investment.
- I will also get some Cashback on my investment next month. You can get the same 1% Cashback on your investments during the first 60 days on Lendermarket by using my link.
The Auto Invest was very easy to set up and my money was invested right away. Here are the settings I used:
My Lendermarket Auto Invest Settings
Make sure the Total amount of investment is set higher than your deposit if you want the platform to automatically reinvest the interest payments you receive. I chose 25€ as Maximum investment per single loan. The minimum investment per loan is 10€.
Next, tick the box next to Reinvesting if you want the AutoInvest to reinvest for you. I left the Interest Rate the way it was set by default (starting with 12%) and entered 1 to 58 months as Remaining term, as I want the Auto Invest to pick up loans of all durations on Lendermarket.
It’s worth noting that the Auto Invest will also invest into loans that are less than 30 days long with this setting, 1 month is simply the minimum we’re able to enter in this field. I’m hopeful this will be changed to make it more clear.
So if you only want to invest into short-term loans for example, you could set the Remaining term from 1 to 3 months. The Auto Invest will then pick up all available loans with durations ranging from 1 day to 3 months.
I set up a single Auto Invest, so I added all available countries to mine and ticked the box with the Buyback Guarantee. That’s it, all that’s left is ticking the boxes next to the terms and clicking Save and activate.
If you want more control over exactly how much you invest into loans from each country, you could set up separate Auto Invests for each country.
So far I noticed that for most countries, loans seem to have a duration of a couple of days to one month, while loans from Finland tend to be up to one year long and Estonian loans up to a couple of years in duration.
Are you planning a secondary market?
As for the secondary market, at the moment we don’t have it in our pipeline, for that we’d need to see the supply-demand of it to analyze if it would be useful for the investors or rather it’d be too disruptive for the operations.
If like me, you’d also like Lendermarket to add a secondary market to its platform, allowing you to sell your loans to other investors before the end of the loan term, then I would appreciate it if you also reached out to them about it. The more demand they see for it from investors, the sooner it will be implemented!
There is a lot I like about Lendermarket and I’ve been very happy with my experience so far. Above all, I like that the platform allows me to invest into 12% interest loans by Creditstar with a 60-day buyback guarantee.
Creditstar has always been one of my favorite loan originators on Mintos. Here is why:
- Creditstar was founded in 2006 and has already been through the last financial crisis
- They are active in 8 countries all over Europe, providing some regional diversification
- They are transparent and share all of their financial statements (2018 Annual Report)
- The Creditstar Group has been profitable for over 7 years, which is important for the buyback guarantee
There are plenty of available loans on Lendermarket, especially for people that prefer short-term loans with durations of up to 30 days. I’m also looking forward to them adding loans from other countries where Creditstar is active, like Sweden and the UK.
I appreciate that the Auto Invest is reliable and as a result, I don’t have to spend any more time on my investment on the platform after setting it up once in the beginning. That’s something I’ve really come to value, as I already spend way too much time tracking all of my investments.
However, there is no Secondary Market yet. I’m hoping it will be added in the coming months, for investors that want to sell their loans before the end of the loan term for whatever reason.
Last but not least, I like the fact that Lendermarket is based in Ireland, giving me a bit of regulatory diversification compared to my other P2P platforms, most of which are based in Latvia and Estonia.
If you’d like to support me and test out Lendermarket for yourself, you can…
- get 1% Cashback on all of your investments during the first 60 days on Lendermarket by using my link. The Cashback is added to the account within 5 business days after the 60 days are over.