My first time in P2P

My first time in P2P started with a loan 23.04.2010 Auxmoney. At that time no Autoinvest, Go & Grow or Buyback existed. You had to do your own research and risk management. Every project had a detailed description about the loan purpose and Income/Expenses report. Most requests were customer loans which ranged between 2.000 – 10.000€. I preferably invested in loans for education but there was literally everything around, cars, surgery for animals, helicopters, crazy business ideas. Reading the descriptions was entertaining and half of the return ;-).

Auxmoney:

Auxmoney is still around and the biggest German loan plattform which issued 280 Mio € in 2018. Still a joke considering the size of the German market. The usability was unique, because there was no Investment Account to deposit money. If you discovered a project, you had to bid on it and thereafter transfer the money within a 5 days. Hence you had to transfer money for each single investment. On the other hand returns were credited directly on your bank account once a month.

My Experience

My total investment was 9.300€ and I earned 1.639€ in interest. From 59 projects 3 defaulted, 4 recovered sucessfully and 2 are still in recovery. The total ROI is calculated at 4,46%. I was lucky to be one of the early investors and exited the plattform mid of 2013. Fun fact, I still receive regular payments from delayed loans! I doubt that many investors after 2013 made a positiv return.

My first P2P Investment in 2010

No investments since 2013, the last payment was scheduled for 2016 and still monthly repayments

Why did I stop do invest ?

Risk & Reward just did not match for me. The nominal interest was between 9-12% with a high default rate. Isepankur (Bondora) offered between 20-30% at that time.

It took way to much time to set up a loan after the money transfer. Several weeks where you did not gain any interest. Moreover the borrowers always had the option to cancel the project last minute. In that case the whole process had to be returned and your money was just stuck for weeks.

As additional security borrowers could sign a kind of buy back insurance In case of death or unemployment that insure should pay the full principal. Yet as one of the borrowers died Auxmoney refused to pay because there was no heir to claim the insurance. Sounded like a bizarr joke. It took half a year, dozens of emails, I even wrote the ombudsmann of the insurance company, finally Auxmoney paid but only as kindness…

To be honest I don´t know why Auxmoney is still around. From Investor site I doubt it´s possible to make positiv returns after tax.

My takeaway:

Rules can change anytime

Many topics I experienced on Auxmoney remind me of the situation at Mintos, DoFinance etc. today. Constantly changing AGBs, terms of Buyback changes, all this leads to distrust and in the long term will destroy the platform.

Mitigated Risks

Today risks are not that obvious and often mitigated. We have Autoinvest, G&G, I&A and of course buyback between us and the borrower. Back then it was all on you, if it goes wrong it was your on fault, no one else to blame. There are few platforms which enforce investments in single projects without ” safety net”. Platforms like Finbee, Estateguru or Lenndy just to name some. I´m quite confident these platform will come out stronger after the crisis.

Have a nice day and learn from my mistakes.

Regards Matt

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