While researching the p2p lending market I stumbled upon the German based Crosslend platform. They offer p2p loans to borrowers in Spain, the UK, Netherlands and Germany and appear to be a highly ambitious platform with founders that have an extensive background in FinTech.
As they were a relatively new and small p2p lender in the beginning of 2016, that wanted to grow fast, they were offering a 10% bonus for every euro invested up to the 31st of March 2016. This sounded like a great deal to me and so I decided to try it out….
Europe cross-border lending
Like Mintos and Bondora, Crosslend is a pan-european p2p lending platform that uses market inefficiencies across european countries to create a win-win situation for both borrowers and lenders. As they state on their website:
“It’s our vision to reduce the gap between supply and demand within traditional lending in the European market by connecting borrowers from high-interest-rate countries with investors from low-interest-rate countries through our unique cross-border marketplace lending platform. We’re bridging Europe’s credit divide to create fresh opportunities for people on both sides of the coin.”
This form of interest inequality and arbitrage is one of the reasons p2p lending in Europe has such high potential as opposed to single country p2p lenders in for example the USA or the UK.
Opening an account with Crosslend (March 2016)
In March 2016 I opened an account by registering on the Crosslend website which was quick and easy.
Crosslend works a little bit different than for example Mintos or Bondora as they have a short video verification process to check your identity. After this is done Crosslend will open an investor account for you with their partner bank, the German biw Bank. This is a real bank account through which you will make all your investments and receive your payouts. It takes a couple of days to get it all set up as the bank needs to send you your account details and login credentials and codes by ordinary post. For me it took about a week to get it all up and running.
Once that was done I could start making my first investments in the loans offered on the Crosslend platform.
How Crosslend borrowing & lending works
On the Crosslend platform potential borrowers can apply for loans from 1,500 to 30,000 Euro for loan terms ranging from 6 to 60 months.
When a loan is granted to a borrower on the Crosslend platform it is purchased and acquired by Luxembourg based Crosslend Securities SA and securitized by a series of ‘notes’. Notes are debt securities which can be purchased by investors each with a denomination of €25 which is the minimum investment per note/loan. When a borrower makes their loan repayments, CrossLend Securities SA makes the corresponding payments of interest and principal pro rata to the holders of the notes and this money is deposited on your biw Bank account.
Crosslend’s loans are graded in risk classes A to G, HR.
A graded loans have the lowest risk and lowest interst rates (around 4%) while HR are on the complete opposite end of the spectrum with high risk and high potential interest payouts (around 17%) Crosslend checks submitted proofs of income for all borrowers.
Making my first Crosslend investments
After having finished the registration and verification checks of Crosslend I deposited my first sum of €900 on my account by wiring the money from my Dutch bank account to my Crosslend linked biw Bank acount with a free SEPA bank transfer. It took one day before my money arrived.
Subsequently I started hand-picking loans (or notes as Crosslend calls them) on the website as Crosslend does not have any auto-investment tools. I used the following criteria for my loan choices:
- Loans from a variety of countries (Spain, UK, Germany, Netherlands) for diversification purposes
- interest rate above 10%
- Maximum loan duration of 36 months
I don’t want to tie up my money for too long hence my aversion for loans of 60 months.
- Loans among all risk categories from A to HR rated but slanted towards more E, F and HR loan investments
With a €25 minimum investment per loan and a 1% fee charged by Crosslend on origination it means that the minimum cots per loan is €25.25.
My original deposit of €900 allowed me therefore to invest in 39 loans. It took me a couple of weeks to find 39 loans as the amount of loans available was with 48 pieces pretty low. However after logging in multiple times in March each time I found new loans had been added to the platform. After a couple of weeks I managed to find 35 loans that fulfilled my criteria.
Crosslend investment results after 8 months
Now after 8 months my Crosslend dashboard shows the following results:
As you can see the projected annual return rate of my loans is 15.59% and my initial €900 has grown to €1162.67. It has to be noted that part of my total revenue is the 10% bonus Crosslend awared on investments made in March.
All in all I am happy with the returns so far…let’s hope it keeps on going like this. Will keep you posted!