What's the average yield on a peer-to-peer (P2P) loan? How do you get a quick, fast P2P loan? What does P2P borrowing entail?
All these questions – and many more – are answered on site in the Knowledge Hub at the foot of most pages (Click on "About P2P", "About Crowdfunding").
For lenders looking to get a good return on capital by lending to carefully vetted companies seeking funds for growth, the answer to the first question is: "An average of over 8 per cent gross, 7 per cent net of our charges." All loans on site can be held in an Innovative Finance ISA and the proceeds enjoyed free of tax. How to do that? See below...
Loan Latest - And Innovative Finance ISA Process Guide
Our latest offering is an A-rated five-year loan of £100,000 with an 8 per cent yield; it is secured against property, and is currently 61 per cent filled. This, like all other offerings on site, can be held in an Innovative Finance ISA (IFISA). So here's our guide to the process:
Step 1 Register as a lender. Go to the login page, and go through the process that the law requires us to effect. This means we have to do basic checks on you to comply with money-laundering and other security requirements.
Step 2 Put money into your account. This is best done by electronic transfer. We can also process paper cheques drawn in favour of Denmark Square Limited, the parent company of Money&Co.
Step 3 Buy loans in the loan market. Once you've put cash in your account it will sit there - and it won't earn interest until you've bought a piece of a loan. It's this final step that requires lenders and IFISA investors to be pro-active. Just choose some loans - all loans on the Money&Co. site can be held in an IFISA - and your money will start earning tax-free interest.
The ISA allowance for 2018/19 is unchanged from last tax year at £20,000, allowing a married couple to put £40,000 into a tax-free environment. Over three years, an investment of this scale in two Money&Co. Innovative Finance ISAs would generate £8,400 of income completely free of tax. We're assuming a 7 per cent return, net of charges and free of tax here.
Once you have made your initial commitment, you might then consider diversifying - buying a spread of loans. To do this, you can go into the "loans for sale" market. All loans bought in this market also qualify for IFISA tax benefits.