Last week Kuflink added a secondary market to their platform, allowing investors to buy and sell existing loans. Giving more details on how it works, Kuflink said:
Lenders can list most loan parts on the market, although some restrictions apply – loans in default or less than a month from their redemption date are not eligible, for example. Loan parts must be sold for par value.
The platform will charge a nominal 0.25% administration fee to the seller, whereas the market is free to use for buyers.From the Kuflink Press Release
Trying it Out
I had a look at how it works over the weekend. To access the secondary market, you just select from the main dropdown near ‘my investments’, which brings you to the buying screen:
I clicked ‘view more’ where I was able to buy the loan part:
It didn’t give me the ability to buy a chunk of a loan part, so as far as I can see it would only let me buy the whole £1500 loan part pictured above, not just say £100 of it. It was the same when I tried to sell a loan part, I didn’t see an option to only sell a part of it:
Once I clicked ‘Sell Now’ and accepted the terms it listed the the loan in ‘my listing’ and sent me an email confirmation.
To delist it again it was just a couple of clicks. So it was pretty easy to list my own loan part for sale.
Many of the loans on Kuflink were relatively short, so it was never a deal breaker for me to have a secondary market. It would be better for them to add the functionality to sell a part of a loan part, but it is definitely a welcome step to be able to buy/ sell at all.
Many P2P platforms already have a secondary market. In my experience, it is sometimes tempting to ‘overbuy’ into new loans thinking that you can just sell out later if/ when you need the money. In reality if a loan goes bad or there is a whiff of bad sentiment you could be waiting a long time at the end of the queue. So I won’t be changing my investing strategy with this: I will just invest in what I would be happy to hold to term anyway.
The views expressed here are not to be taken as investment advice. Both capital and interest are at risk when investing in Peer to Peer loans. Please consult with a financial adviser if you have further questions tailored to your personal circumstances.
I have invested as a P2P lender in some loans on the Kuflink platform. I have not received any payment for writing this blog post, but I do receive a payment if you join up via any of my ‘refer a friend’ cashback links.