Going, Going... Gone? P2P Loan Auction Model In Play


Auction Hammer

Our friends (and friendly competitors) at Funding Circle have made an interesting move. Instead of inviting lenders to bid to lend money to borrowers, our fellow peer-to-peer business lenders have decided to fix the yield of a loan themselves. So the marketplace moves from an auction to becoming a shop – no haggle, no gaming, just an evaluation of yield versus risk.

Crowdfunding intelligence platform, P2P Banking puts it this way: "British p2p lending marketplace Funding Circle introduces a new model today. All new loans will be issued at fixed interest rates set by Funding Circle, reports P2P banking.

"Coming right after Funding Circle's fifth anniversary, and £792 million originated in loans to SMEs, the step to discontinue auctions is a major change in the way the marketplace operates."

"Spokesman David de Koning said that there were major drawbacks associated with the auction model for borrowers as well as lenders. Borrowers lacked certainty of the final interest rate until the auction period was over which led to some of them cancelling their loan application. Investors on the other hand experienced cash drag and sometimes had to make multiple bids to ensure they participate in the loan they wanted."

M&CLogo

Currently on the Money&Co. site is a B-rated loan with an average gross yield of 10.6 per cent. Some lenders have offered to extend credit at a lower rate, some at a higher rate. As and when the loan is filled, the lower bids will knock out the offers of more expensive credit. Is this all too complicated? Would you like us to offer fixed-rate deals (the shop as opposed to the auction?). Please use the Contact page to let us know.

Risk

By lending, capital is at risk. We have a conservative credit-analysis model and take a debnture on the assets of borrowers, but please read the risk warnings on our Home and Frequently Asked Questions pages.



FOLLOW MONEY&CO. ON TWITTER

Search news

You may put double quotes around your search to search for literals. Max. 4 words inside quotes (dashed words count as one word).

Allowed symbols: " ' & -

More news

2019
SeptemberAugust
July
June
May
April
March
February
January
2018
DecemberNovemberOctoberSeptemberAugust
July
June
May
April
March
February
January
2017
December
November
October
September
August
July
June
May
April
March
February
January
2016
December
November
October
September
August
July
June
May
April
March
February
January
2015
December
November
October
September
August
July
June
May
April
March
February
January
2014
December
November
October
September
August
July
June
MayMarchFebruary

Search blogs

You may put double quotes around your search to search for literals. Max. 4 words inside quotes (dashed words count as one word).

Allowed symbols: " ' & -

More from blogs

2019
2018
2017
2016
NovemberOctoberSeptemberAugustJulyJuneMayMarchFebruaryJanuary
2015
DecemberNovemberSeptemberAugustJulyJuneMayAprilMarchFebruaryJanuary
2014
DecemberNovemberOctoberSeptemberAugustJulyJune



Disclaimer: Money&Co.™ is the trading name of Denmark Square Limited, Company Number 08561817, registered in England & Wales, authorised and regulated by the Financial Conduct Authority (FCA). The company is identified on the Financial Services Register under Reference Number 727325. The registered office is 58 Glentham Road, Barnes, London, SW13 9JJ where the register of Directors may be inspected. Denmark Square Limited (ISA manager reference number Z1932) manages the Money&Co. Innovative Finance ISA.