Why Mintos is better than most P2P lending platforms

I have been investing at Mintos since June 2017. A lot has changed ever since I started investing at Mintos. It is hard to keep track. While I have been active at other peer to peer lending platforms too, not a single one of them stands out as much as Mintos does, here is why.

1 Billion EUR

Mintos reaches a 1 billion EUR milestone at August 31, 2018. Mintos predicts that at the current rate, they will have funded 2 billion EUR loans by the 2019. We predict they will reach 3 billion EUR by the end of 2019.

Lending Club, a very familiar U.S. peer to peer lending platform, has funded 38 billion USD so far since its inception in 2006. This is very impressive. In 2017, Lending Club funded 8.9 billion USD in loans.

Mintos Ratings

Mintos Ratings were introduced on August 28, 2018. Many investors were excited by this event. Because we previously relied on machine learning algorithms we ran on the loan book or we used ExploreP2P’s Mintos Ratings. Neither was perfect, but at least we had an idea of the loan originator we were investing in. Many financial documents of those loan originators were outdated, and not everyone speaks multiple languages.

The first thing the investors wanted was to use the Mintos Ratings in our auto investment profiles. So we could finally stop handpicking, correcting and checking everything.

After EuroCent blew up, a lot of us investors are still nervous about smaller loan originators joining the platform, but the Mintos Ratings somewhat helps. But it’s important to know that, diversification of your portfolio is key. Since the question keeps coming back. I will explain what will happen in case of a default.

If you invest 10000 EUR at a fictional interest rate of 10% and diversify the capital with 10 loan originators, this would make that you invest 1000 EUR in each loan originator. If 1 loan originator defaults, you would assume you lose 1000 EUR or 10% of your portfolio, that is not the case.

If you assume that about 10% of the loans runs late and is bought back, you would only lose 10% of your capital with that defaulting loan originator. That is only 1% of your entire portfolio. You could minimize your losses further by diversifying more, and investing in long-term loans.

What’s the advantage of investing in long-term loans? Basically, you would end up with a more stable portfolio that already has a few successful payments. But it takes a few months to build. However, if you plan on changing your strategy, it would take you to sell the loans probably at a discount to get the money back,  so your money isn’t as liquid as it would be with short-term loans.

With short-term loans, you can change your strategy more quickly, but generally they may tend to default a little bit more. This is clearly shown by the high interest rates the borrowers are charged, which can be as high as 300%. You’re only getting 10-12% of that. But the advantage of this is, that you can pull out quickly when you get cold feet. But you could easily lose 4 times more as you would with a loan portfolio with longer terms.

If you visit the Mintos Statistics and Loan Originators pages, you can get somewhat an idea of well-performing loan originators. I am trying to develop a tool to get more accurate predictions based on the performance of the entire platform. But the burden of a full-time job and a family doesn’t necessarily help me.

The future of Mintos

I feel like Mintos is on the right track, a lot of feedback is being put into production very quickly. This is mostly because their employees are present in the right social media groups. They have engaged with us investors on multiple occasions, even their CEO Martins Sulte, for whom I have much admiration in how he is running the most innovative peer to peer lending platform to date…

Currently, I hope Mintos doesn’t stop at just being a peer to peer lending platform. They don’t need to stop there. They have a good business model which would allow them to expand in a different direction. Eastern European peer to peer lending platforms have grown on us more richer European countries, our trust is slowly but surely increasing.

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