What are the best and worst P2P loans right now? Special Wartime Edition #18

Our pick of the best P2P loans

This post is part of a regular series where we highlight what we think are some of the best P2P loans available in the UK and Europe. These loans may have recently sold out. If they have, it is likely that very similar opportunities are available on each platform. Our goal is to highlight the types of opportunities that have been available on various platforms recently, and which types of loans offer the best (and worst) risk versus reward right now.

For this edition, we have attempted to select loans that either offer temporarily strong returns due to the market conditions caused by the Ukraine war, or provide an additional layer of downside protection.

Description

Why we like it

Link

Interest rate: 14% 
Term: 36 months
BUYBACK GUARANTEE
latvia

Interest rates available on Mintos have increased significantly since we last ran out list of P2P picks. The reason is pretty obvious – uncertainty caused by the Ukraine war, as well as rising rates. This loan is from Delfin, who are one of our highest rated Mintos lenders. We don’t think rates as high as 14% will be available for too much longer from such a high quality lender. Some investors will be wary of Latvia’s geographic proximity to Russia, but these risks seem to be fading given Latvia’s NATO membership, the strong co-ordinated response of Western governments,  and the growing difficulties being experienced by the Russian army in Ukraine. 

Loan 49288482-01

Interest rate: 14.5%
Term: 30 months
asset backed loan
LTV: 70%
bulgarIA

This is a good example of the loans that are available on P2P site HeavyFinance. HeavyFinance loans are interesting right now because they lend to farmers, most of who are experiencing rising incomes due to increasing prices for many agricultural products. This is due to inflation and supply disruptions caused by the Russian embargos. This loan is secured against a tractor and a loader with an LTV of 70%. The farm produces essential oils (a high margin crop) and was profitable in 2020.

Interest rate: 11%
Term: 24 Months
1st charge mortgage
LTV: 19% 
Latvia
 

LendSecured is another P2P site that is focusing on lending to European farmers. The number of loans listed on the site has been growing. We think loans like this one are very simple and offer an excellent return relative to the risk. The loan is to a farmer who is looking to expand by purchasing another nearby property. The property has a farmhouse in good condition, sheds and agricultural land. The valuation report is prepared by a well known firm with a good reputation. If you are interested in trying out some new P2P sites that offer solid returns with a lower risk profile, LendSecured is definitely worth considering.

LendSecured logo

Loan 49288482-01

Interest rate: 11%
LTV: 62%
Term: 12 months
2nd charge mortgage 
Tartu, Estonia 
 

Estateguru is now publishing a lot of new projects but we continue to think it is important to choose carefully. The risk profiles can vary a lot, even though interest rates are similar. Loans like this one remain our favourite – bridge loans secured on high quality residential real estate. Interest rates are now higher too – the last Estateguru we looked at with a similar profile had an 8% interest rate. Investors can now earn 11% due to market conditions. The borrower is a developer that has already repaid several loans on EstateGuru already. they are pledging their own house to raise funds. The loan is second rank, but the LTV is still low at 62%. 

EstateGuru logo

Loan 3388

Interest rate: 10%
Term: 9 months 
1ST CHARGE MORTGAGE
LTV: 77% 
United kingdom
 
 
 

This loan is no longer available – it sold out within minutes. But we are still listing it here as an example of the types of loans we think are pretty interesting that are available at Max Crowdfund currently. The loan is to a developer who buys properties, undertakes some light refurbishment, and then sells them to social housing companies. A social housing company has already agreed to purchase this collateral property at a price 36% above the loan amount so there is a very low risk of investors losing money upon a default. If you are interested in further opportunities like this we recommend opening an account and reacting fast when loans go live.

Max Crowdfund logo

Loan 856601

Interest rate: 15%
Term: 24 months
Personal loan
buyback guarantee 
Spain
 
 
 

Lendermarket offers loans from a lending company called Creditstar. Creditstar operates in many European countries and seems to be doing well – it announced (unaudited) profits of €7.1m for 2021 and have been growing strongly. All loans benefit from a group guarantee. We particularly like the loans from Spain currently. Why? Geographically it is located far from Russia and so therefore less likely to have disruptions from the Ukraine war. Secondly, we expect interest rates to fall in coming months for various reasons – so locking in an interest rate of 15% for 2 years is attractive.

Lemdermarket logo

Loan ES-2313406728

And here are two loans we DON'T like....

Interest rate: 13%
Term: 9 months
development loan
LTV: ?
spain
 
 
 
 

We are fans of Reinvest24 – they have had a lot of successful projects on their site and have a good team. However we are not sure that this project is one we would invest in. It is a project on the outskirts of Valencia (Spain) that they are undertaking together with a local developer. It lacks planning permission – in fact the local government needs to find and hire a new town planning official before they can even get that process underway. The loan term is 9 months, yet it doesn’t seem like there will be much progress on the development in the next 9 months let alone an exit. And the final concern – the project is only forecast to make a development margin (profit) of less than 3%. That is far below the normal margin required to perform a development project like this. It is best to lend on projects with high development margins – this is a buffer for lenders in case things go wrong.

Reinvest24 logo

Montesano stage 3

Interest rate: 12%
Term: 18 months
1st lien mortgage
LTV 65%
Country: GERMANY
 
 
 

How much is an old castle located on an island off the north east coast of  Germany worth? €1m? €20m? We are really glad that we are not the expert appointed by Estateguru to answer that question. The 42 page valuation report is very professionally done but if you read the details it’s pretty clear – there’s no easy answer. There’s no similar castles or other properties that have been sold recently. That’s why it can be risky lending against properties like this. You don’t know that the valuation is wrong until it is too late. An additional layer of risk is the historic nature of the property, which means potential for lots of hidden extra costs when developing the property and difficult planning issues too. Lastly – Germany is not short of willing bankers with large sums available to lend against solid projects. It’s hard not to feel that Estateguru is effectively a ‘lender of last resort’ for developers in Germany. That seems to be reflected in the performance statistics so far, with 57% of German loans funded prior to June 2021 having a late status.

EstateGuru logo

Loan 9367

If you are interested in any of the loans above, please make sure to read all the information provided by each investment site and make sure that they are suitable for you. While we aim to highlight potentially interesting opportunities, you must perform your own assessment of the risks and make your own independent decision on whether to invest, and whether these, or similar loans offered on each site are suitable for your investment objectives. All information is supplied in good faith based on information which we believe, but do not guarantee, to be accurate or complete; we are not responsible for errors or omissions contained therein. Explore P2P is not a financial advisor and no content can be or should be considered to constitute financial advice. All content provided is for informational purposes only.

9 thoughts on “What are the best and worst P2P loans right now? Special Wartime Edition #18

  1. Centrino Reply

    Hello Oscar,
    DIMITRIEV and I posted our concerns about Credistar 2 weeks ago.
    But you newer replied.
    Is there a reason for this ?

    Thank you !
    Regards

    • Jmn Reply

      They just published their Q1-22 interim report.
      * Creditstar will issue new bonds […] the bonds will be used to refinance maturing notes and further finance the Company.
      >> My comment: business as usual for Creditstar.
      * As the business is growing, Creditstar is considering increasing equity
      >> This, would be very welcome, rather than stacking bonds
      * Interest income increased by 1,02% in comparison to Q4 2022 (sic)
      >> Their accountant is either a timelord, or really bad at reporting
      * 2,017,000€ = Q1 2022 – Net profit
      >> This is definitively good, and, after all, the most important information.

      On a positive note, their rates are now at par with competitors (even Delfin issues loans at 15%/3Y on Mintos) and the pending payments have stabilized. I don’t change my opinion about them: Investable but on the high band of risk.

  2. Dimitriev Reply

    Regarding the Delfin loans on mintos, it maybe should me mentioned that Delfin is said to be likely to buy back the loans long before they reach their regular end. Securing a 14% interest rate for the next 36+ months seems to be a good idea. But when Delfin buys these loans back as soon as the interest rates drop, your 14% interest rate is gone. On the other hand, if the interest rates even rise (what might be unlikely) or simply stay on this level, your money is bound for such a long a time without any major advantages in return. The Delfin loans are short term loans when Delfin wants them to be, but they are long term loans when you don´t want them to be. Considering this, it might make more sense to invest in shorter term loans from the beginning. They come with only slighty lower interest rates.

    • Jmn Reply

      I faced this dilemma, since I fully agree Delfin has a very high chance to buy the high-yield loans back before their maturity. I doubt anyone will be current within three years. However I chose them rather than the shorter-term, lower yield one. To enjoy every day of high-yield until they get rebought, and because I believe the short ones will be bought too, just a bit later.
      To mitigate I’ve rather also bought Eleving loans from non-Moldova (read: away from the war) with a 15% yield. I consider the lender still robust, it has zero Pending Payment and will unlikely rebuy them.

      Among the high quality lenders (those with listed bonds) I always considered Creditstar as the badboy. Long Pending Payments, shady accounting, questionable cashback, higher rates than their competitor… For them this is business as usual. I invested a bit in their 15% ES loans (and some 16% EE) but the cashback condition are a lot more complex than the previous ones.
      You need to explicitly enroll, then invest, then keep your cash balance nul until the end of the campaign, including investment you made before. The rule used to be “Balance at the end >= balance at the beginning” but now it’s just “withdraw zero, invest all, every day”. I’ll tell you in late August if I could fulfill those conditions.

    • Hugo Reply

      Delfin is definitively one of the most “active” when it comes to rebuying when the rates go down, and the opposite when they go up. Honestly, it means they pay attention to the market and optimise it to serve their shareholders (which you can now be as they’ve gone public). If they didn’t do this, I’d be worried. The only reasons I would expect them to do this is low liquidity (not able to repay the loans) and/or not sure people would subscribe to the new, lower % loans. By actively rebuying/reissuing, they’re giving good signals, not bad.

      Is it bad for us in the sense that we have the churn of buying new (and likely lower %) loans? Yes. But can we enjoy it while it lasts, with a company that knows people will rebuy nonetheless due to their rating? Yes.

      In general, most companies eventually buy back the 14%+ loans that they issue (I’ve been in Mintos for a while and have seen about 3-5 waves of high interest rates), so why bother? On the other hand, there are some companies that don’t rebuy them that quickly/at all. Just checking in on my oldest loans, I have [email protected]% and [email protected]% from March 2020 that were never rebought (even though, in the meantime, they have issued loans at a lower %).

      My conclusion – aim for companies that don’t rebuy as much, but don’t compromise on diversification/go for worse companies just for that.

  3. Dimitriev Reply

    I also have some concerns regarding Creditstar. This website covered the issue with their 2020-report and the fact that KPMG was confirming this report only to a limited extend. I think that this actually is a huge red flag and should be considered much more. This website reduced Creditstar´s rating only by 4 points down to 61. I think that such “cheating” in its reports could even justify setting down the rating to 0. Recently, this website restored Creditstar´s rating to 64 after Creditstar had published its totally unaudited (!) report for 2021. After such issues with the 2020-report being confirmed by the auditor only to a limited extend, it seems to make not sense to have this compensated by a newer report which is not audited at all. I think we should stay careful with Creditstar. Also their high return rates are quite remarkable. So is the fact they have generous cash back campaigns almost all of the time.

  4. Centrino Reply

    Thank you Oscar.
    About CreditStar, I’m however a bit surprised that you consider their loans as good picks.
    You even mentioned their unaudited profits.
    And they are not even EU certified…
    The KPMG audit report had never been published…
    Do you have proofs that CreditStar is a safe enough LO?
    Otherwise, labelling CreditStar as a safe LO pure speculation.
    Thanks in advance for your reply.

    • Oscar Harrington Post authorReply

      Centrino we’ve been critical of Creditstar in the past, including their delays of releasing audited financials. The financials when they were released had a qualified audit opinion in relation to certain topics. Many investors will want to see the audited 2021 figures before they consider investing and that is understandable. However, those results will take time to be released. Even making some adjustments to the 2020 results, Creditstar is a stronger and more successful company than many that are active in the P2P space. The company does still appear to be performing well, and reduced the interest rates it paid on bonds issued in 2021 to professional investors. Within Lendermarket investment accounts, the rate of principal payments received back each month has returned to a normal level following the covid period, and the percentage of overdue loans is not higher than could be expected. Every investor will have a view but our view is that for a 15% yield the returns outweigh the risks, and the yields are likely to fall in future.

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