FUNDING Circle’s upcoming shift away from manual lending will soon mean the three biggest peer-to-peer lenders in the UK only offer auto-bid options, but there is still plenty of choice for investors still looking to self-select their loans.
The manual versus auto-bid debate is important in P2P as it dictates the level of due diligence and diversification an investor will need to conduct.
All platforms will still need to check and approve borrowers, but auto-bidding allows an investor to let the platform spread risk and do adequate due diligence, whereas a lender selecting their own loans will also need to take on some responsibility to ensure they are not over-exposed to one business.
From 18 September, Funding Circle will join the two other P2P heavyweights Zopa and RateSetter in offering auto-bid options.
Investors will simply choose the rates they want and their level of risk and their money will automatically be allocated.
This system is also followed by consumer lender LendingWorks and property P2P platform Landbay.
Rates vary from 3.75 per cent on Landbay to 5.7 per cent on RateSetter, or will reach 7.5 per cent once Funding Circle rejigs its offering later this month.
But other platforms still offer manual options, with higher returns. This will mean investors have to take more responsibility for diversification and checking up on the business they are investing in.
Secured business lender Folk2Folk lets investors choose the location of businesses and particular sectors, although this may mean they struggle to place their funds. It offers returns of 5.5 per cent of 6.5 per cent a year depending on the loan-to-value.
Similarly, business lenders ThinCats and ArchOver will let investors choose loans and offer 8.5 per and up to nine per cent respectively.
Alternatively, other business platforms such as Crowdstacker are offering individual projects at 6.5 per cent, or investors could earn up to 13 per cent by selecting their own business loans on MoneyThing.
Read more: Are robo P2P services worth the extra money?
There are also property P2P lenders such as Lendy and LandlordInvest that let investors choose loans, offering up to 12 per cent.
Investors can select their own renewable energy projects, earning eight to 12 per cent on Abundance, or can get the best of both with Assetz Capital, which provides business loans with both an auto-bid and manual option.
There is still plenty of choice to invest in P2P both automatically and manually, but whichever route is taken, investors will still need to take responsibility to ensure they still understand what they are investing in and how much risk they are taking.