RateSetter - P2P lending in Australia

[EliseHearts]

Hi everyone!

As an experiment, I am considering involving myself in some P2P lending, but discovered that there isn't much on offer for the amateur Australian investor.
The only valid option I could find is RateSetter https://www.ratesetter.com.au/

I was wondering if anyone has had any experience with RateSetter?
The fees seem a bit high, but I'm not sure.

Or, do you know of a different P2P lending platform that works well?

Thanks!
Elise

[andystkilda]

I've dabbled with Ratesetter since they launched in Australia.

I think they're a pretty good company. The returns you will get on there are far higher than any savings account - especially if you can lock some in there for the longer term options (3-5 years).

I am waiting for the volume to pick up a bit though, before I become more heavily involved. I understand that if you're lending in the 1 month or 1 year markets, your money can actually be locked in there for up to 1 year, or 2 years, respectively. This will only happen if they're unable to replace your lend amount with a new lender (unlikely but who knows right...).

[EliseHearts]

I understand that if you're lending in the 1 month or 1 year markets, your money can actually be locked in there for up to 1 year, or 2 years, respectively. This will only happen if they're unable to replace your lend amount with a new lender (unlikely but who knows right...).

What do you mean locked in? Could you please elaborate?

[andystkilda]

What do you mean locked in? Could you please elaborate?

If you lend money on Ratesetter in the 1-month or 1-year markets, you are supposed to received your full amount invested back + interest back at the end of the 1 month, or the end of the year with interest paid monthly for the 1-year market.

HOWEVER...

There is a clause which I believe states that if they are unable to replace your lend with another new person putting money up to lend out, your money can remain on loan until they do - i.e. for the 1-month market, YOUR PRINCIPAL CAN REMAIN LOANED FOR UP TO 1 YEAR before being returned to you if they are unable to replace it. For the 1-year market it can remain loaned for up to 2 years I believe in the same circumstances. I'd say these cases are very unlikely but they are possible, therefore if you're planning to lend on the 1-month market especially, and you may need access to the money in the next 12 months, Ratesetter may present some risk in terms of your money being stuck there.