How expensive are P2P lending platforms
P2P lending comparison: peer-to-peer platforms in the test
You already know that there are a large number of P2P platforms and of course it is not easy to keep track and decide which provider offers the best conditions for you. But is there such a thing as objective criteria by which one can decide which platform really offers fair and favorable conditions and which one should be avoided?
- Platforms on which P2P loans are brokered are on the rise: More and more providers have flocked to the market in recent years. P2P (i.e. peer-to-peer) models enable loans and investments in loans outside of the traditional banking system.
- When comparing P2P providers, factors include the number of available loans, the minimum investment amount, the level of fees, the registration process, whether buyback guarantees are offered, the auto-invest function and the existence of a secondary market.
- In order to give you some overview in the jungle of P2P providers, we compared different P2P platforms with one another on seven criteria. If you want to invest in P2P loans, you can orientate yourself on these. Also note our general tips for investments and the information on the risk when investing in P2P loans.
- The clear winner of our test is the Latvian provider Mintos. So it's worth taking a look at this P2P platform. But the Estonian competitor Bondora has also blossomed in recent years and has a good offer.
Overview of the P2P providers
Important criteria for P2P platforms
We have tested various providers so that you can find the right platform for you. And so that we get meaningful results, we have defined seven test criteria in advance. We examined which platform met the relevant criteria and to what extent and were able to identify the strengths and weaknesses of the individual P2P providers.
Warning: P2P loans are risky
In contrast to banks, P2P lending providers do not have any deposit insurance. It must be expected that loans cannot be repaid by borrowers and the money invested is thus lost. Even the buyback guarantees of some providers cannot provide complete protection, as the guarantor can also go bankrupt.
High return = high risk. If you decide to invest in P2P loans, we recommend that you only invest a small part (max. 5%) of your assets in such a risky asset class.
In order to better understand our test, let's first take a look at our test criteria and briefly explain why we consider them to be particularly important.
Number of available P2P loans
The number of loans offered differs from platform to platform, but is largely responsible for whether an investment is successful in the long term or not. The reason for this is very simple: the more loans are offered, the easier it is to diversify the entire investment amount. If there are problems with one loan, for example because there is a risk of default, the other loans will compensate for a possible default with their return.
Minimum investment amount
This plays a big role not only for newbies when investing in P2P lending, but also for more experienced investors.
The lower the minimum investment, the more opportunities you have to diversify your risk. This point also has a positive effect on your diversification.
While you can only divide your investment of, for example, € 1,000 over 40 loan projects with the three German providers, a diversification of € 1,000 investment with Mintos would already be possible on 100 loans.
The fees have a significant impact on your returns when investing in P2P loans and therefore, if the conditions are otherwise similar, you should always prefer the platform with the lower fees.
If you first want to find out whether investing in P2P lending is even better for you, you will of course benefit from the simplest possible registration process so that you can get started right away.
So if you don't yet know whether P2P is the right form of investment for you, you should prefer a platform that makes registration as unbureaucratic as possible.
If a borrower has not paid his loan installments for a certain period of time, some providers offer a so-called buyback guarantee.
Loans that offer a buyback guarantee are then bought back by the P2P provider if the borrower is in arrears with his payment for a predetermined period of time, for example 30 days.
In this case, you will get your investment in this loan back from the provider. Most of the time, you will even get back the interest that would have accrued during this period.
This option is a very attractive one for reducing risk.
Auto-invest and portfolio builder function
This function is offered by all tested platforms and can save a lot of time. On the basis of predetermined criteria, the auto-investor automatically invests a certain investment amount in P2P loans that meet your criteria.
This function is very practical and time-saving if you don't want to manually select every loan yourself.
You have to give the auto-investor your personal opportunity-risk profile. Of course, more options allow better control of the investment.
On the secondary market, you can offer loans that you have already invested in for sale or buy P2P loans from other investors.
Selling your loans makes sense, for example, if the loan has a long term and you want to liquidate early, i.e. get money. In this case, you don't have to wait for the term to expire, but can instead sell the loan to another investor ahead of time.
Customer base & traffic
Three P2P lending providers in the test
Mintos is headquartered in Latvia and convinces with innovative approaches and a very large number of investable loans. During our test, there were more than 4,000 loans available for investment.
Another big advantage is that the minimum deposit per loan is just 10 euros and unrounded amounts can also be invested.
The high number of loans and the low minimum investment make Mintos the provider with whom your investment in P2P lending can be broadly diversified. The possibility of investing in several countries and a wide variety of loan types (personal loan, business loan, mortgage loan, etc.) also contributes to this.
If you want to invest at Mintos, you can be pleased that there are currently no fees. Only when trading on the secondary markets is there a fee of one percent.
The secondary market is worth every penny, however, as you can trade credits with surcharges or discounts through Mintos, to date the only provider in the test. This allows you to get rid of unpopular loans a little cheaper than your original investment in the secondary market, or to get a bargain as a buyer.
Incidentally, Mintos also scores points in the registration process, because it is enough to fill out the online form. If you want to have the money paid out to your current account, you have to upload a copy of your ID card or passport to the platform for gel-washing reasons. However, you cannot avoid this step with any P2P provider approved in Germany.
You can also invest in loans with a buyback guarantee through Mintos. These loans are clearly labeled. If a borrower is 60 days in arrears, you will get the amount you invested in this loan, including interest, back into your Mintos account.
Mintos is also far ahead of the other tested platforms when it comes to auto investors. Only Twino allows similar fine-tuning in automatic investing.
All in all, Mintos convinces in all seven test criteria and thus becomes our clear test winner. As already described in our video and guide "5 rules for investing correctly in P2P loans", we recommend diversifying P2P providers, even if broad diversification is possible through Mintos alone.
Auxmoney is the market leader in Germany in the P2P area and offers a large number of different loans. In our test, Auxmoney was the clear market leader for this criterion. The minimum investment is € 25 and the deposit can only be increased in multiples of 25. As with all other German providers that we have tested, the fees with Auxmoney are 1% of the investment amount.
Unfortunately, Auxmoney made its registration process very cumbersome. You have to open an account at the partner bank BIW AG and have it activated using the Post-Ident procedure. However, once you have opened your account, all of Auxmoney's options are open to you.
If you are looking for security, you have to do without a buyback guarantee with Auxmoney, but you can invest in P2P loans with security such as a house or car.
Unfortunately, no German P2P platform offers its investors the buyback guarantee or the secondary market. One strong point that speaks for investing in Auxmoney is Auxmoney bonus scoring. Auxmoney creates a credit check for every borrower with a result between AA as the best credit rating and E as the worst.
To create this grade, Auxmoney uses over 300 criteria such as the Schufa score or the borrower's salary level. The Auxmoney Score enables you as an investor to estimate the risk of your investment in the respective loan.
In our test, Auxmoney performed best among the German platforms. If you want to use multiple platforms, as described in our article "5 rules for investing correctly in P2P loans", we recommend using Auxmoney in combination with Mintos.
Like Mintos, the Twino platform is based in Latvia and has only existed since 2015.
Twino also has a large number of loans and can score particularly well in the area of very short-term loans (with a term of one month or more). Thus, the platform is a good introduction to investing in P2P loans, as you as an investor do not have to tie up your money as long as on comparable platforms. In addition, with Twino you also have a very large selection of P2P loans with a buyback guarantee, which starts after 30 days of default by the borrower.
When it comes to the minimum investment, Twino is in no way inferior to its Latvian competitors. Again, the minimum deposit is only € 10. In addition, there are currently no fees that burden your return.
As on Mintos, you can put your loans back up for sale on the Twino secondary market. However, it is not possible to offer these with a surcharge or a discount. The loans are then simply put back into the primary market and are available there for other investors to invest. In this respect, Twino is behind Mintos.
Even with the auto investor, small compromises have to be made to Mintos with Twino because it is less easy to fine-tune. Nevertheless, the auto investor is top and can realize almost all wishes.
Registration is also quick: fill out the online form, upload a copy of your passport or identity card and you're done.
All in all, Twino is an absolutely innovative platform that only lags Mintos in a few points and is particularly appealing with very short-term loans. Due to the greater variety of loans, the slightly better auto investor and secondary market, Mintos is the test winner for us.
Our advice on P2P lending
We have listed some guides for you that deal with everything related to P2P loans and P2P providers:
frequently asked Questions
- Which criteria should you pay attention to when comparing P2P providers?
The following seven criteria were very important for us in the test in order to check the quality of a P2P provider: number of available loans, minimum investment amount, fees, registration, buyback guarantee, auto-invest function and secondary market.
- How risky are investments in P2P lending?
Investments in P2P loans are generally counted among the risky asset classes. Anyone who invests here should be aware that the money invested can be completely lost. Because the higher the risk, the higher the return. The relatively high potential for returns makes the P2P area attractive for investments. That is why we advise you to spread the invested money widely, to diversify on different P2P platforms and to consciously distribute the investments over various safe or risky asset classes.
- What is P2P lending?
P2P is an abbreviation for peer to peer, in this case it means from private person to private person. In the case of a P2P loan, a private investor invests in the loan of a private borrower.
- P2P lending: what are the benefits?
P2P marketplaces make it possible to invest money in a wide range of P2P loans. This enables investors to reap high returns (of course, at the corresponding risk). Various additions such as auto investments or secondary markets complete the offer. For borrowers, on the other hand, P2P platforms offer the possibility of obtaining a loan outside of the classic banking business.
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