My Peer-to-Peer Lending Experience

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Nick Moules
24th September 2012

Julian Wells, rebuildingsociety.com’s Marketing Adviser and Head of Introducer Channel, is a personal advocate of the peer to peer lending model after making a series of mini investments over the past two years. In this post he talks about his peer to peer lending experience and why he believes the peer to business model has the potential to be even more fulfilling.

“Have you put any of your savings into peer to peer lending yet? The chances are you haven’t, and if you have then it was most likely because someone you know encouraged you to.

That’s human nature. We’re all more likely to try something new if we know someone who has already done it and had a good experience.  I first tried this form of lending just over 2 years ago and I’ve had a great experience, so much so that I thought I’d blog about it.

When I first heard about peer to peer lending I was sceptical. Why would I lend my money to other people who I’ve never met rather than putting it in the bank? What if they don’t pay me back? But someone I knew and trusted said they’d been doing it for a few months and were enjoying rates of over 6%, so I decided to give it a go.

I set up an account with a well known provider and put in place a monthly standing order of £50. I configured my account so that my risk profile was aligned to my personal preferences, and then I sat back and waited.  Within just a few days all my money was lent out within the parameters I had specified. I set up an autolend facility, so that whenever my standing order was credited, the money was immediately offered to borrowers who fit my lending criteria.

This was over two years ago now, so how’s it going?

After a few months I could see things were going well, so I started to invest more money as and when I could afford to. I currently have over 300 active borrowers, none of whom has borrowed more than £10 from me. I’m averaging just short of 7% interest rate on my investment, and to date I have never had a bad debt. That means everyone who I have lent to has paid me back. Not bad after 2 years.

It feels satisfying to get such a good return, but there’s also something a bit impersonal about the fact that I know I’m lending to people but I have no idea who they are. So now I’m looking at business peer-to-peer lending as an alternative option. It’s attractive as the returns are likely to be the same, or possibly better, and I can pick and choose the businesses I lend to. That means i can opt for those who are in industries I know about, or are local to me and I can support.

Peer-to-peer lending (also know as peer to business lending) can offer a more engaging, social way to make money, and I think it will take people’s enjoyment of peer to peer lending to a new level.”

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