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.

Summary

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.

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Disclaimer

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.