Peer-to-peer lenders are refining their platforms to cater for a growing demand for credit
RateSetter, one of the few Australian peer-to-peer (P2P) lenders enabling retail investors to participate in the lucrative consumer and business credit marketplace, is not letting a lack of competition stop it from introducing new initiatives.
Investors in P2P loans enjoy superior returns – think 5% to 8% – compared with bank accounts, including term deposits. But this comes with increased risks, as investors in P2P loans do not enjoy the federal government guarantee over deposits up to $250,000 that covers banks, building societies and credit unions.
RateSetter (ratesetter.com.au) has expanded into clean energy loans, changed the rules for early withdrawals and is improving its educational offering for investors. It also plans to launch an app by the end of the year.
Investors can start with as little as $10, and at the time of writing, interest rates ranged from 2.5% for one month to 7.7% for five years.
SocietyOne, the first P2P lender to set up shop in Australia, has still not changed its business model to enable retail investors to participate. Only institutions and high-net-worth individuals and self-managed super funds (with over $2.5 million in net assets or at least $250,000 in gross earnings a year over a minimum of two years) can invest via the lender. A spokesperson says potential retail investors can register their interest online at societyone.com.au but there’s no estimate of when they might be able to invest.
ASX-listed Wisr (wisr.com.au) is another P2P lender that accepts retail investors, although Andrew Goodwin, chief financial officer, describes it as a “neo-lender” rather than a marketplace lender. He says it has an ecosystem model, offering genuine benefit to its customers and promoting financial wellness, for example, by showing people their credit scores and providing tools to enable them to pay off debt sooner.
TruePillars (truepillars.com), which boasts an average annual return of 12.35%, offers retail investors the opportunity to fund business loans with as little as $100. You need to register to invest and set up your investment instructions, and the platform will invest your funds in loans that match your criteria. As the borrower makes their monthly loan repayments, you will receive distributions equivalent to your share of the loan.
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