Looking beyond the target! How the big three P2P lenders have actually performed

TARGET returns are one of any peer-to-peer lender’s biggest weapons in the fight for Innovative Finance ISA money this ISA season, but their historical performance can also tell an interesting story.

Past performance is by no means an indication of how loans will do in the future, however, assessing this sort of data can help an investor choose where to place their money and give them more of an idea of how their funds may perform.

So how do the ‘big three’ peer-to-peer lenders stack up?

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Business lender Funding Circle advertises projected returns of between 4.9 per cent and 5.2 per cent on its lower-risk Conservative product and 5.5 per cent to 6.5 per cent on its Balanced product.

This is pretty close to what investors have actually been getting.

Funding Circle’s own historical data shows that loans funded in 2018 are set to return 5.1 per cent to six per cent.

Meanwhile, consumer lender Zopa says investors earned 5.9 per cent on average in 2018.

This beats both the 4.5 per cent advertised for its less risky Core product and the 5.2 per cent advertised for its higher-risk Zopa Plus account.

Read more: P2P lenders face tough credit conditions as insolvencies hit record highs

The third of the ‘big three,’ RateSetter, is slightly harder to compare as its rates change more regularly based on supply and demand.

It does, however, provide more up-to-date figures.

As of Monday morning, RateSetter’s data shows investors have earned 3.1 per cent in its Rolling Market product, 3.8 per cent in its one-year fix and 5.8 per cent over five years.

The platform says investors earned 4.4 per cent across all products last year.

In contrast, it is currently advertising rates of 2.7 per cent on its Rolling Market product, 3.9 per cent for one year and 6.3 per cent over five years.

All three lenders are focusing on different assets so aren’t directly comparable but this does show investors may at least be getting close to what is being offered in most circumstances, which can provide a bit more certainty when investing in P2P.

Read more: How do returns stack up at the big three P2P platforms?