Don’t invest unless you’re prepared to lose money. This is a high-risk investment. You may not be able to access your money easily and are unlikely to be protected if something goes wrong. Take 2mins to learn more.

Estimated reading time: 2 min

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

What are the key risks?

You could lose the money you invest

Many peer-to-peer (P2P) loans are made to borrowers who can’t borrow money from traditional lenders such as banks. These borrowers have a higher risk of not paying you back.
Advertised rates of return aren’t guaranteed. If a borrower doesn’t pay you back as agreed, you could earn less money than expected. A higher advertised rate of return means a higher risk of losing your money.
These investments can be held in an Innovative Finance ISA (IFISA). An IFISA does not reduce the risk of the investment or protect you from losses, so you can still lose all your money. It only means that any potential gains from your investment will be tax free.

You are unlikely to get your money back quickly

Some P2P loans last for several years. You should be prepared to wait for your money to be returned even if the borrower repays on time.
Some platforms may give you the opportunity to sell your investment early through a ‘secondary market’, but there is no guarantee you will be able to find someone willing to buy.
Even if your agreement is advertised as affording early access to your money, you will only get your money early if someone else wants to buy your loan(s). If no one wants to buy, it could take longer to get your money back.

Don’t put all your eggs in one basket

Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well.
A good rule of thumb is not to invest more than 10% of your money in high-risk investments.

The P2P platform could fail

If the platform fails, it may be impossible for you to collect money on your loan. It could take years to get your money back, or you may not get it back at all. Even if the platform has plans in place to prevent this, they may not work in a disorderly failure.

You are unlikely to be protected if something goes wrong

The Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover investments in P2P loans. You may be able to claim if you received regulated advice to invest in P2P, and the adviser has since failed. Try the FSCS investment protection checker here.
Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated platform, FOS may be able to consider it. Learn more about FOS protection here.

If you are interested in learning more about how to protect yourself, visit the FCA’s website here.

For further information about peer-to-peer lending (loan-based crowdfunding), visit the FCA’s website here.

Frequently Asked Questions: Investing

What am I actually investing in when I lend through Unbolted?

You are lending directly to an individual or business. Your loan is secured against a valuable asset (like jewellery, watches, or gold) that the borrower has provided as collateral. If the borrower does not repay the loan, Unbolted will sell the asset to recover the capital and interest owed to you.

What are the main risks of lending through Unbolted?

The biggest risk is that a borrower defaults and the sale of their asset does not cover the full loan amount and interest. While we lend conservatively against the value of the asset, market fluctuations could affect the sale price.

There are also additional risks that may lead to a loss, such as:

A pledged assets turns out to be stolen or counterfeit, leading to lower or no realisation on sale. We carry out detailed checks on every asset we lend against, but there is always some residual risk;
A borrower may litigate leading to difficulty and/or dealys in selling the assets; and
An operational error or a theft may lead to a loss of the pledged asset. We maintain comprehensive insurance cover to mitigate such risks.

How is Unbolted different from other P2P lending platforms?

Our lending is exclusively asset-backed, focusing on short-term pawnbroking-style loans. This means every loan has tangible, valuable collateral held in our possession.

How do you value the assets that secure the loans?

Our in-house experts and external partners have deep experience in valuing luxury goods. We assess items based on current market data, auction records, and condition. We lend a percentage of this valuation, known as the Loan-to-Value (LTV). The LTV varies from loan to loan and may range from 50% to 80%, depending on how quickly and easily the assets can be sold at the expected value.

What if the asset sells for more or less than the loan amount?

Surplus: If the asset sells for more than the total amount owed by the borrower, the surplus funds are returned to the borrower.
Shortfall: If the asset sells for less than the amount owed, you may lose some of your capital and/or interest. We at our discretion, cover the loss in your capital but this is not something we guarantee in all cases. Our Loan Performance Table (updated daily) shows our historical performance on defaults and recoveries.

What are the fees for investors?

We do not charge investors any direct fees for lending or account management. Our revenue comes from the interest rate spread between what the borrower pays and what the lender receives. This is clearly shown on every loan.

How and when do I get paid?

Interest and capital are typically repaid at the end of the loan term when the borrower repays or if the loan defaults, on sale of assets. Once the funds clear, they are credited to your Unbolted account and can be withdrawn or reinvested. We primarily offer short-term loans and so you should expect to receive payments on most of your loans within a 6-9 month period; but where we run it into challenges in selling the assets, it may take a considerably longer time to recover your funds.

Is there a secondary market if I want to exit a loan early?

As most of our loans are short-term in nature (6 months), we do not typically offer a secondary market.

Who can invest in the platform?

Invidiuals: You must be over the age 18 and hold a UK bank account. You will also need to complete an Appropriateness Test to ensure you understand the risks involved before you can invest.
Companies: Only UK incorporated companies with UK bank accounts and UK resident Directors can invest on our platform. Companies are also restricted to investing in loans made to businesses.

How is the interest rate on my investment determined?

We set the investor interest rate on the loans to ensure our investors earn a fair return for the investment risk they accept, considering credit and liquidity risk. We review this regularly and the interest rate offered on new investments are published clearly on the website.