For better or worse I have discovered Ratesetter. A friend said they were going to give it a go so me being the person I am researched the hell out of it over an evening on the weekend (including cynical Reddit discussions, Product Reviews and a 500 post Whirlpool thread).
Having read through the disasters befalling our American comrades on Lending Club, I was heartened to discover the following differences which makes Ratesetter more appealing:
1) The provision fund - no lender has ever lost a $ of capital
2) That Ratesetter does a proper, thorough credit check, complying with responsible lending laws.
3) That some of the loans are secured where possible.
4) That the borrower pays all fees, charges, costs and Ratesetter's interest margin. As a lender you get the return you choose - the interest rate you decide to lend at. No deductions.
5) Centrelink as your main source of income will disqualify you. The average borrower is 42 years old earning $83,000 per year.
6) You can download the entire loan book and analyse it yourself! As a data nerd I love this.
I am dripping my tax refund and upcoming work bonus in over the next couple of months, figure 1-2% of my net worth is ok to use for starters.
Some self imposed rules:
1) That I would like to achieve a return of 3% above my mortgage offset account (i.e. 4.5% + 3%, soon to be a little more with recent rate rises).
2) At the first sign of trouble / increasing default rates and when the provision fund starts getting depleted I'll set it to auto withdraw. We haven't seen how Ratesetter Australia performs in a recession, so that will be the main concern.
For now, it is providing a useful distraction for me from Facebook and Commsec - the past couple of days have not been nice on the markets and I'm kinda glad I've found something to take my attention away from that crap social media rubbish.
Anyway, so far I have 6 x $250 loans at an average rate of 8.3%. I am ok with that, putting in $500 a day for the foreseeable future.
Anyone else had a crack at it? Keen to hear some experiences.