Peer-to-peer lending with Unbolted. Higher returns

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.

Secured Peer-to-Peer Lending with Unbolted

Unbolted has an entirely unique and uniform approach to peer-to-peer lending.We lend against assets. These are items that either individuals or small businesses hold that have a resale value. Everyone is familiar with a mortgage against their property and today, more and more people are realizing that other items in their possession also have a value that they can borrow against.

As long as the potential borrower is a UK resident and has an asset that has a resale value, the Unbolted platform is open for them. Their credit rating is irrelevant as we are lending against the asset. The advantage for the borrower is that if they fail to pay back the loan, the most that they can lose is the asset that they have provided to Unbolted.
The advantage for the lender is that every loan is backed by actual collateral. That means the lender does not have to assess or depend on Unbolted to assess the credit worthiness of the individual. If you are a potential lender, the only requirement you need to comply with is again to be a UK resident.
Therefore, determining the value of the asset lent against is of primary importance. Unbolted uses a robust and principled approach to determine secondary market values.
The best place to determine the secondary value of an item is through an auction process. As a result, we partner with selected firms who are internationally recognized for creating or managing auctions for a particular category of assets. We use their mid-range estimate to determine the value of the asset in question.
Unbolted normally lends between 40% to 70% of the low auction estimate with the exception of gold, silver and watches where we lend up to 80% of their liquid market value. We think this is attractive for the borrower and prudent for the lender.
Unbolted does not accept any fees until the loan principal has been repaid.

If the Borrower Defaults

The asset, which is under the control of Unbolted for the duration of the loan, is put up for auction.

After the item is sold at an auction, the funds received - less the charges for selling it through the third party - are used to pay off the outstanding principal and interest.
Unbolted only receive their full fees if the lender receives their full interest and until then, Unbolted shares in the losses.