Lendermarket review 2020
Check out our Lendermarket review, and see if the platform is for you.
Overview of Lendermarket
We find the return compared to the safety favorable.
Lendermarket is beginner-friendly.
Lendermarket has made safety measures.
Investors get an average return of 12%.
We Don’t Like
Summary: Lendermarket does overall look like a great platform. It is created by a big lending group and offers buyback guarantee, auto-investment features and more. All loans on the platform offer a fixed annual interest rate for investors. However, this might lead to a disconnect between the risk and the return on some loans (learn more about this here).
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Last updated: May 7, 2020
Introduction to our Lendermarket review
Lendermarket has recently gained traction in the P2P investment community. But is it really worth using their platform? We decided to investigate.
So if you are considering investing through the platform, we recommend that you read this Lendermarket review first. Because here we take a look at whether or not it’s worth using them. We promise you will get a better feel for the platform through our review.
Our Lendermarket review ended up being a bit long. You can, therefore, choose to use the navigation below to find exactly what you are looking for. Of course, you should also be welcome to read the entire review. However, we will make you aware that the review only expresses our own opinion. Therefore, do not consider the content of this Lendermarket review as financial advice.
Learn about the following in our Lendermarket review:
What is Lendermarket?
Lendermarket is a P2P lending marketplace where investors can invest in consumer loans issued in Europe. The loans are covered by a buyback guarantee, which will be explained later in this review.
Lendermarket was established in 2019 and is the sister company of Creditstar. The company behind Lendermarket is registered in Ireland, which is probably due to tax efficiency reasons.
At the time being, you will only be able to find loans from Creditstar on the platform. These loans are already issued, and you are in practice investing in parts of the loans. This allows Creditstar to get more liquidity to issue even more loans.
Since 2016, loans from Creditstar have been available on Mintos – another P2P platform you can learn more about in our Mintos review. However, Lendermarket was seemingly created to diversify the funding of Creditstar. But there might also be a chance that Creditstar loans will be discontinued on other platforms as Lendermarket grows in size.
In the following part of our Lendermarket review, we will explain some of the main features on the platform, and why they are important for you as an investor.
1. Buyback guarantee
There is a buyback guarantee on all loans on the platform. The buyback guarantee will come into play if a loan is more than 60 days overdue. Here, the lending company will have to buy back the loan from you as an investor. This includes the invested principal as well as the accrued interest.
This feature is especially beneficial to you since it is expected that some short-term loans will default. So in your day-to-day investing, you won’t have to take those losses.
However, in the case that the lending company behind a buyback guarantee goes bankrupt, the guarantee itself gets useless as there is no one to cover the loan anymore. Therefore, you must remember that a buyback guarantee is only as solid as the one behind it.
2. Lendermarket auto-invest
One of the many good things about Lendermarket is its auto-invest feature. This feature allows you to put your investments on autopilot which means that you can invest without having to select new loans to invest in every time one of your existing loan investments expires.
In order to use the Lendermarket auto-invest feature, you can follow the steps below:
- Create an account
- Make sure you are logged in
- Click “Auto Invest”
- Click “Create New”
From here, you can set up an auto-invest strategy that suits your investment goals:
When using the Lendermarket auto-invest tool, you must first and foremost choose a name for your particular auto-invest settings.
Then, you must provide the total amount of investments you want the particular auto-invest setting to invest for you, as well as how much it must maximum invest in each loan.
We recommend that you select reinvesting, as your funds will then be reinvested automatically. However, usually, it is best to just leave “include loans already invested in” off.
You must also determine what interest rate you are going for in regards to the loans, as well as what remaining term (in months) you are looking for.
With regards to “remaining term”, we have experienced getting some loans with under one month, when we have put one month as a minimum. Therefore, we also recommend that you try to apply your auto-invest settings with a small amount of your portfolio to see if everything is working as you want it to before you invest all of your funds through auto-invest. You can always make changes later.
The countries are self-explanatory, but we recommend that you invest with loans with buyback guarantee.
To start using your Lendermarket auto-invest settings, you must check the two boxes at the bottom and click “save and activate”.
Do you want to know more about Lendermarket auto-invest? Then check out their website for more information.
What rate of return can you expect?
On Lendermarket, you will usually be able to get a fixed return of 12% on all loans on the marketplace. But sometimes they offer campaigns which will give you a higher yield. For example, they had a +2% interest campaign when we initially wrote this Lendermarket review.
The fact that you will get a fixed rate on all loans on the platform can cause some problems regarding your risk-adjusted return. To explain this, let’s take a look at some Creditstar loans on Mintos. On the first image, we sorted for the highest interest rates:
And on the following image, we sorted for the lowest interest rates:
As you can see, the loans offer different interest rates for investors depending on the type, duration and origin of the loan. In our opinion, this makes perfect sense, as there are different risk profiles on different loans.
However, the same loan types that are offered with different interest rates on Mintos, are offered with a fixed interest rate at Lendermarket. Even though it seems simple and appealing that loans have the same fixed return, we fear that this might have caused that loans on Lendermarket don’t have a proper risk-adjusted return.
If you compare the return on both Mintos and Lendermarket, it will vary from time to time where you will get the best return for similar loans. In some periods, Lendermarket offers the best rates for Creditstar loans, and in other periods, you will find the best return for Creditstar loans on Mintos.
So before you invest on either of the platforms, we recommend that you take a look at both of the platforms loan lists and compare the return on similar loans issued originating from Creditstar. You can check out Mintos here, and Lendermarket here.
Who can invest via Lendermarket?
It is possible for both private individuals and companies to invest at the Lendermarket platform.
To create a user as an individual, you must meet the following requirements:
- Be a least 18 years old
- Having a bank account in the European Economic Area or Switzerland
If you meet the above requirements, it is easy to get started at Lendermarket. Just follow the steps below, and then you should quickly be up and running:
- Create an account
- Add funds to your account
- Invest in loans from the loan list
It is also possible for companies to invest via Lendermarket. When you sign up on their website, simply select “company” instead of “individual” in the signup form. This will give you a slightly different registration form. But from here, the user creation process is straight forward.
While it is not everyone that can use Lendermarket, it is quite easy to find out whether or not the platform is available in your country. If you go to Lendermarket’s website, you can simply click “register” and then under “country of residence”, you can search for your country. If it shows up, you can invest. You won’t have to provide any information like your email, so if you are unsure if you can invest, we recommend that you investigate this before you spend more time reading this review.
Do you meet the requirements to sign up as an investor at Lendermarket? Then press the button below to get to their website. From here you can quickly create yourself a free account and get started investing:
How safe is Lendermarket?
One of the most important things when investing your money online through Peer-to-Peer lending sites is that security is in order. Therefore, in this Lendermarket review, we have taken a look at the security on their platform. We have looked at the following 2 areas; how safe the investments are, and how solid the company is.
How safe are the investments?
The first thing we looked into when creating this Lendermarket review, is how secure the investments are.
Loan originator risk
All loans on Lendermarket come from the lending company Creditstar. So when you are investing in loans on Lendermarket, you are exclusively exposed to risk from one loan originator.
This is not very good for diversification, which is why you would probably benefit from using multiple Peer-to-Peer lending sites.
However, Creditstar has existed since before the financial crisis in 2008 and has been profitable for many years in a row.
On Lendermarket, you will be able to get your loans covered by a buyback guarantee. This means that your investments will be bought back, if the borrower doesn’t repay before the loan is 60 days overdue. But as previously mentioned in this Lendermarket review, a buyback guarantee is only as solid as the one behind it – which in this case is Creditstar.
How solid is the company?
Lendermarket is a very new company that started operating in May 2019. Therefore, it is also difficult to come up with a complete assessment of how solid the company really is. However, they are a part of a big profitable finance group which is a huge plus.
We, therefore, believe that Lendermarket has good conditions for becoming a large P2P platform.
Conclusion of our Lendermarket review
As a conclusion to our Lendermarket review, it is our opinion that they are a fairly secure platform due to the fact that they are managed by a profitable finance group. It is also clear that there has been done things on their part to secure investors on Lendermarket.
Our main issues with Lendermarket consist of them offering little to no diversification options. However, it can be a great 2nd or 3rd platform for your P2P portfolio.
At the same time, we don’t believe that you will receive an as good risk-adjusted return as you could as we have previously mentioned in our review here.
However with that said, we do actually believe that Lendermarket is here to stay, and that we will see the marketplace take a large chunk of the European P2P market in the next few years.
Did you enjoy our Lendermarket review? Then consider signing up with Lendermarket. You can do so by pressing the button below. From here, you will be taken directly to Lendermarket’s website, where you can sign up as an investor: