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Saturday, 11 July 2015

An Introduction to Lending via Assetz Capital

Assetz Capital, Green Energy Income Account

The first Asset-based lending platform I tried was Assetz Capital.  In this type of platform the sum lent is secured against a tangable asset such as land, property or even at artwork or a plane.  I built up my Assetz investment to around £3000 with an average interest rate of 11%.  This included £500 in their Green Energy Income Account. 

The target interest of this account is 7% and it is invested in a range of green products such as windfarms.  It also includes a contingency fund to protect the lender from defaults.  This fund appears to have high liquidity as you can normally withdraw your money almost immediately (I’ve tried this and it works).

This fund is an attractive option for those who like to keep lending relatively safe, have (hopefully) instant access and a good interest rate (7%).  This compares favourably with Ratesetter where the five year rate is currently falling and today stands at only 5.5%.

Assetz Capital, Manual Loan Investment Account

The rest of my money is in the Assetz Manual Loan Investment Account.  You can browse the Loan Book and buy any loans not fully invested.  Interest rates are typically 9% to 18% and the term of the loans are anything from 6 months (bridging loans) to 5 years.  You can also specify if you wish to increase or decrease the size of your existing loans.  This creates a secondary market where you can generally get your money out or buy into new or existing loans as they become available.  Arguably there is less risk of ultimate loss of capital as all loans are secured against assets such as property.  It is still prudent to diversify and spread your money across the platform rather than putting all your eggs in one basket.

With Assetz you will find some loans are labelled ‘Investments Paused’.  This means the loan can no longer be bought or sold due to irregularities in borrower repayments or a default.  This currently means that these funds are inaccessible to the lender.  However the contract with the borrower often stipulates that the interest rate then increases so you can hope that eventually, even if the asset needs to be sold, you will be adequately rewarded once the issue is resolved.

Note that there have recently been some misgivings from Assetz lenders as to the number of loans that are ‘paused’ and I personally currently have 5 of my 20 or so Assetz loans paused.  However, this issue is currently being addressed by Assetz and I personally remain confident in the platform.

I’ve more recently joined Saving Steam, Ablrate and Money Thing and I’ll describe these platforms in future posts.    

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