LendingCrowd Review

LendingCrowd Review – Overview

History

LendingCrowd were launched in 2014 in Edinburgh, Scotland. In the 5 or so years they have been in business, they have lent in excess of £58 million from over 6,000 active investors. They are one of the few lenders left that still offer a loan auction. This means we can bid on loans in order to get the best rates. I actually enjoy watching how other people bid on loans. I like bidding at the last minute to get the best possible rate on a loan.

Regulation

LendingCrowd (AKA Edinburgh Alternative Finance Ltd.) are regulated by the UK’s Financial Conduct Authority (FCA) with full permissions under FCA number 670991. 

They gained FCA permissions in November, 2016. It’s important to note that the FCA is not the same as the FSCS (Financial Services Compensation Scheme), so capital is not protected as it would be in a bank.

Website – LendingCrowd Review

LendingCrowd provide good loan information on their website.

This enables us make an educated decision on how much to lend. And what interest rate we would like for the risk we are taking with the Manual Self-Select Account.

You can see what levels other investors are bidding at.

So you can see what rate the bulk of the loan money is sitting at, then place your own bid.

Manual Bid

I usually find when I manual bid the loans, I can get around 1% more than the average rate achieved for the loan.

Honestly it’s become as much of a game as an investment. However I do have quite a bit of capital invested, and over the last few weeks, I’ve been able to diversify into loans to over 360 different businesses, with no more than 0.50% of my capital invested in any one loan.

So sticking to the “Prime Directive” with diversification is easy to achieve.

Auto-invest

If you don’t have the time, or don’t want to manually invest, LendingCrowd do have two auto-invest accounts you can use:

The LendingCrowd Growth Account with a target rate of 4.9%. And the Income Account with a target rate of 4.6%. 

Neither account has any fixed term, however they do charge a 1% withdrawal fee when you want to withdraw your money.

I do need to point out here though that there is a 0.50% fee for selling loans in the Self Select Account too. If you keep the loans until maturity though there is no exit fee.

If you like the idea of higher rates, plus the lower fee, the Manual Self Select Account does have an auto-bid feature which will automatically place bids on new loans at a predetermined rate for you:

This way it’s almost like auto-investing, however you control the interest rate you want to get, and also the diversification level you want.

Summary – LendingCrowd Review

Overall I think LendingCrowd in Edinburgh is a great company and I hope they keep on growing as they have done so far.

I like their friendly, helpful customer service. And the stream of new loans which keep coming through.

I really hope that they don’t take away the manual Self-Select account (as some of the other P2P lenders have), as this enables me to get the very best interest rates, and it gives me something to do in the morning 🙂

• Unique Diversification  – LendingCrowd are based in Edinburgh so focusing on business in Scotland makes sense. This can give you options outside of London, enabling you to diversify more.

• Auto-Invest –there are auto-invest accounts if you don’t have the time to self select loans.

• Auto-Bid – if you can spend a little bit of time managing your investments, then using the auto-bid feature should provide a better return than the auto-invest accounts, plus no exit fee if you keep the loans until maturity.

• Manual Bid – you can get higher interest rates if you have time to watch the loans as they are live and place live bids.

• Website – very easy to use and understand.

• Diversification – if you use the Self-Select account, you can be sure that you adhere to the “Prime Directive” and diversify to your own comfort levels.

• Low minimum investment – £1000 to start. If your portfolio is still small, it’s still easy to invest with LendingCrowd.

• Financial Conduct Authority – (FCA) Regulated.

• IFISA available – for UK investors there is the LendingCrowd ISA for potential tax free investing.

Thumbs Down for LendingCrowd

• No Provision Fund –target  interest rates are based on an expected default rate. If rates exceed what is expected, returns could be less, or you could lose some or all of your capital.

• Smaller Company – with a shorter track record, they haven’t had to deal with a financial crisis yet, so we won’t know how they fair until the next one.

• Exit Fee – LendingCrowd charge a 1% exit fee plus any difference in interest rates for both iterations of their Auto-Invest accounts, and 0.5% for early exit from the Self Select Account. Similar to other lenders so nothing out of the ordinary.

• No Quick Access Account – depending on demand, you could have to wait a while to withdraw funds early.

Risk Factor – 5/10 – Medium

Is LendingCrowd safe? I consider LendingCrowd to be in the middle of the risk scale. Even taking in to consideration that some loans are secured, there is no Provision Fund. And they are still a young but growing company. 

I enjoy investing through LendingCrowd. I hope they continue on the road they are currently on.

U.K. residents with a U.K.  bank account and a U.K. address and phone number can invest with LendingCrowd. Contact LendingCrowd for further information.