Peer to peer loans trading – How our loan exchange can help investors

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Recently, our guest blogger, Katie, published her step by step guide to the FundingKnight loan exchange.

She was keen to point out that the loan exchange can be a great way to begin your FundingKnight journey.  After all, buying part of an existing loan (rather than bidding to get involved in a current auction) has several advantages:

You can start earning interest immediately

Since these loans are already live, your money starts working as soon as you “buy it now”.  No need to wait for an auction to end, no need to worry about getting out-bid and not having the chance to re-submit your offer.

It makes spreading your investment easier… and quicker

Most people agree that spreading out your cash (diversifying your portfolio) is a good idea.  It helps minimize risk because you reduce your exposure to any one loan failing.

But waiting for new loans to come on stream can be time consuming, particularly if you’re using a new platform with less loan traffic.

The loan exchange can help.

Instead of bidding on new loans, you can instantly buy parts of existing ones.  That gives you instant access to all the loans that were listed before you started investing and provides the perfect way to quickly spread your investment out thinly.

You can choose shorter investment periods

Existing loans have obviously been running for some time before you buy into them, in fact, some will only have months left to run – meaning that you enter loans knowing exactly what interest rate you’ll earn (assuming no defaults) and exactly when your investment will be repaid.

And of course, if you need to access your cash earlier than planned… you simply head back to the loan exchange.

Selling part of a loan is easy, too…

When it comes to selling part of your investment – perhaps because you want to switch to another loan or simply because you need to access your cash – we’ve tried to make things as simple as possible.

Rather than having to sell your whole loan in an “all or nothing” way, you can choose exactly how much of any investment you want to sell and whether you want to apply a discount or premium to the original price.

This flexibility can be useful if you want to invest a large sum into a loan but know that you’ll soon want to sell part of your investment and buy into newer loans to speed up diversification.

It’s a feature that Steve Lee – who featured in this  investor Q&A about peer to peer lending – singled out for particular praise.

We asked Steve, “are there any FundingKnight features you particularly like?” and this was his reply:

I’m impressed with the way that the loan exchange works, letting you buy and sell loan parts.  Say I have £500 to bid, I often want to do 5 x £100 bids at the same interest rate.  On most sites I have to do it manually five times and keep scrolling to the bid rate that on a tablet or phone is not easy. 

 

FundingKnight allows you to split up an investment and only sell part of it on the loan exchange, giving you the option to state exactly how much you want to sell at any one time.  In my opinion that makes it a superb solution, the best one available on any of the platforms I’ve used.

 

To visit the loan exchange, log on to www.fundingknight.com, choose Find a Loan from the menu on the left hand side and scroll down to see the loan exchange.  If you’ve not already signed up, register for free via the FundingKnight website and enjoy fee free crowdlending for investors.

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FundingKnight review: What makes us different for investors

being different

This week, a potential investor was kind enough to email us and ask what makes FundingKnight different?  She is keen to spread her investments over a wide range of products and wanted to know what unique differences set FundingKnight apart from other crowdlenders she uses.

We’ve sent a personal response with some answers but if one potential investor is asking the question, it obviously means that there are more of you out there who would like to know more about exactly what’s different about investing with FundingKnight.

So, here goes, a quick review of FundingKnight for lenders.  Feel free to check out the points below for yourself and gives us your thoughts – our door is always open to customer suggestions, tips and constructive feedback.

We lend to businesses not individuals

We arrange loans for businesses rather than people.

Why does it matter?  Deciding whether to invest in businesses or individuals is obviously a personal choice, but we think that the public information that’s available about businesses – such as accounts, cashflow analysis etc. – coupled with the internal and external credit checks we run, make it easier to assess whether a loan from a business is likely to be repaid successfully.

We offer fee free lending for investors

Investing through FundingKnight is fee free for investors.  There are no annual fees, account fees or hidden charges or costs, although of course, there might be tax to pay on any returns.  Many P2P lenders charge fees to investors..

Why does it matter?  It’s cheaper. Investors through us pay no fees, so the interest rate you bid is the interest rate you receive (pre tax and defaults).

We make it easy to sell part of your investment on our loan exchange

FundingKnight let you choose exactly how much of your portfolio you want to sell on the loan exchange.

For example,

You place a bid in a live auction, bidding to invest £1,000 in Apple Accounting Ltd. at 10% over 3 year loan period.

Your bid is successful, the auction completes and you now hold a £1,000 investment in Apple Accounting.  Each month you’ll receive a payment including capital and interest at 10% (prior to any tax and defaults).

A year later, you need to access some cash to finance some unexpected repairs.

You need £600 but you don’t want to cash in the whole of your investment, as you’d like to continue to receive 10% interest on the remainder.

With FundingKnight, you simply tell the system how much of your investment you want to sell, what price you want to offer it at and submit to put it live on the loan exchange.

One of existing investors, Steve Lee, recently called this feature “a superb solution, the best one available on any of the platforms I’ve used.”

You can invest everything that’s in your account

You don’t have to lend in ‘multiples’ on FundingKnight.  We do have a minimum investment of £25 but after that, you can add on whatever is left in your account to ensure that all of your cash is working as hard as it can for you.

For e.g. if you have £32.50 left in your account, you can invest it all rather than investing £25 and having to add more funds to release the remainder.

Finding borrowers and designing loans

Although we’re focusing on investors today, there are also several unique points about how we look after the businesses that borrow via FundingKnight.

  • We offer the chance to take upfront payment holidays, which can be very useful for businesses that need time for the loan investment to start flowing through into cashflow and profit.
  • We use forward – looking as well as historical information to assess applications and focus on how the loan will be repaid out of cash flow.
  • Investors will have access to a cash flow forecast for each loan, information that many P2P Lenders don’t provide.

Hopefully, that gives you some more detail about why crowdlending with FundingKnight offers a better way to lend money.

Please feel free to leave a comment with further questions or drop us an email at [email protected]