In this post I plan to update the P2P compare table and explain the reasoning behind this update.
Investment security rating issue
Over a longer period of time I understood that I need to change something in the way I compare investment security in different platforms. Currently, I have Buyback guarantee as a measure. I give 5 points if platform has Buyback or 0 if it does not.
However, there are platforms which for various reasons do not offer Buyback guarantee. As it is in the current comparison, I do not consider other means of securities, like collateral, personal guarantee or partial Buybacks.
This is somewhat like comparing apples with oranges.
Platforms are built differently when it comes to securing investor money. The differentiation has always been there, it is just me who discovered it later by stumbling across various platforms.
Most often we can talk about Buyback guarantees when we have peer to peer (P2P) consumer loan lending platforms.
There are also peer to business (P2B) loan platforms. I categorize them in two major subcategories – realestate and development project. There are also platforms which do something in between, but for generalization purposes I would like to put them aside for now.
To mitigate this flaw I introduced a column called “Relative investment security”. This column replaces Buyback guarantee column. Points are given 0-10 depending on evaluation of investment security.
It is called relative because I assume 10 is given for full buy back guarantee. This is debatable, subjective and my opinion only, therefore I put the term “relative”. In the worst case scenario every platform can go bankrupt (see Lendy’s story a few weeks ago). My aim is to use gathered information on loan types, internal ratings, public information availability on securing loans, platform history and defaulted loan history.
In other blogs I saw realestate crowdlending put in a separate table. I prefer to put platforms in one comparison table to keep it as simple as possible.
If you disagree with me, please comment. I believe two independent opinions are always better than one.
Personal experience update
This time I also updated the personal experience column. Generally, ratings are bit more closer to each other than I initially evaluated. This of course is subject to change over time.