Silly thought experiment "p2p leverage investing"

Upfront, I seriously don’t consider doing this. Never play with money you don’t have. It’s a what if question.

What if, you could get a credit for let’s say 4-5 percent from one p2p plattform (creditgate with about an A to AAA rating) and use that money to invest in another p2p plattform, that offers you greater return, like on mintos. It seems that average return on investment is at about 10%.

I mean, there are certain risks involved, like exchange rate (could also be in your advantage) and lower returns from mintos. But after all, free money. So it’s all about getting a large enough credit :slight_smile:

Why are you not considering taking out a margin loan on IB?
You can get rates at around 3% interest.

1.5% actually for CHF

Mmmm… no… Because…that:
https://explorep2p.com/alborg-petrol/ and that:
https://financiallyfree.eu/concerns-about-kuetzal-is-kuetzal-a-scam/#more-5248 and that: https://blog.mintos.com/update-on-aforti-finance-2/ and that:
https://blog.mintos.com/monego-no-longer-issues-new-loans-finitera-group-to-cover-investors-repayments/
I have more than 2300 Euros blocked that I cannot withdraw from Mintos (Hope that Monego is going to pay but not sure), people in Kuetzal are blocked for weeks without money…
Careful with P2P… Is talking somebody that had more than 50KEuros in loans…

Yes, I lost some bucks due to Aforti / Mintos (pretty much all the interest that made with the other loans). Oh and they still advertise some kind “Buy back guarantee” … straight out lies and pure nonsense.

Why lies? “Buyback guarantee” is a promise given by loan originator, not platform. Originator goes insolvent, obviously they can’t honor the guarantee. So essentially these kinds of loans are just unsecured business loans to originator companies and you have to pick companies very carefully. Or do you have examples where originators continued operating while refusing to cover defaults of their buyback-guaranteed-loans?

Then they pick fairly horrible business partners. Either way nothing that I want to deal with going forward.

It’s a shady industry in general. Your 20+% interest loans are backed by consumers paying 200+% to loan sharks for pay day loans.

The practice of lending money on an unfair rate is called usury, and is forbidden by some religions and also by many governments, which set a maximum rate allowed by law. But this is a good example of how good intentions end up hurting the people you tried to help. Yes, it is mostly ridiculous to take out a loan on 20% and the people who do it are not smart. But life shows that if they cannot legally obtain a loan at a high rate, they turn to loan sharks / mobsters. And if they don’t pay back, it can end bad. So I would say, I’m not against p2p lending, if only the lenders are aware of their risk.

Coming back to original question, I believe that the practice you describe (taking advantage of different interest rates on two different markets) is called arbitrage. On paper, you can make money with it, but it comes with risks, like execution risk, liquidity risk etc. It’s like making opposite bets on two different betting platforms.

I’m aware of the risk. I have some of my money on swiss p2p plattforms. Creditgate is not too bad, but the intrest rates are on the low end (they have solidary accountability) . They recently changed their risk rating adding more AAA. Which they lost some trust in me going forward. Crowd4Cash has higher interest rates, but in general looks less professional to me. About 5.5% IRR. No defaults on Crowd4Cash for 2y now (in about 15 projects).

As someone pointed out, the buy back on Mintos only applies to the loan originators. Mintos is basically Uber for loan originators. If they go out of business it’s over. There are some others, that offer “real” buyback… Robocash seems to be one of them. go over to the wealthy finn, he has many reviews on those plattforms.

Oh and by the way, since we are here: https://www.trustpilot.com/review/ibanwallet.com

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Rapido Finance and Aforti

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