However, Funding Circle has a Secondary Market so you can offer some of your loans for sale, at any time, at a premium (or discount) according how attractive the rates are.
It is really ‘Horses for Courses’. Ratesetter is relatively safe but paying the rate for a five year loan means five years or a penalty.
With Funding Circle you bid for the rate and can then sell your loans at any time. However your 5 year rate on Ratesetter is protected while on Funding circle the final interest rate you achieve depends on how many defaults you have and how much cash is subsequently recovered.
Liquidity in Asset-based high interest platforms
If you put money into some of the high interest platforms like Saving Stream, or Money Thing (both pay 12%), the terms are short, typically 6 – 12 months, and there is also secondary market making them relatively ‘liquid’. Of course, these newer platforms also carry greater risk in spite of being secured against assets. Currently it is very easy to sell loans but hard to buy. Future events could easily change that.
‘What happens in a future financial crisis?’
Clearly you then have a much better chance of eventually getting your money back from Ratesetter than some of the other platforms.
The sensible solution appears to be a portfolio of platforms/loans with the most money in platforms like Ratesetter/Funding Circle and a smaller amount invested in a basket of high interest platforms (if you want some excitement!)