Bondster is a p2p lending marketplace from the Czech Republic, offering 13% returns to its investors. It acts as an intermediary between lending companies (loan originators) and investors.
How does Bondster work
The loan originators publish their loans on Bondster and they free up capital to issue new loans to their customers. Investors get a nice interest paid on their investment.
Most of the loans available are unsecured consumer loans (99%) and a few business and mortgage loans. All unsecured loans are protected by a buyback guarantee covered by the loan originators.
The loans have a loan term from 1 month to 5 years. Since there’s no secondary market, for loans with maturities longer than 1 year, investors can sell back their loan to the loan originator, for a 1% fee. You can only do that after 1 year passed since they invested in a loan, so it’s a bit hard to exit your investment.
The minimum investment in a loan is 5 EUR and the average return for investors so far has been 9.12% for CZK loans and 12.34% for EUR loans.
Since 2017, its 3500 investors managed to fund loans worth over 25 million EUR and received almost 1 million EUR in interest payments.
A few operational details
Bondster is owned by CEP Invest Private Equity, a private equity investment firm that invests real estate companies, IT startups and also invests in capital markets.
One of their main loan originators from the Czech Republic is ACEMA Credit Czech, one of the country’s largest mortgage lender. From what I currently see on the platform, their loans amount to around 1% of the total available loans.
Bondster says its main criteria for choosing loan originators are financial stability, reputation and ethical approach to lending. That’s a bit rich, ethical approach to lending. 90% of their loans come for Kviku, charging up to 365% interest to their borrowers and Lime Credit Group, charging their borrowers up to 1200% interest rate.
On loans issued with a buyback guarantee, the loan originator buys the defaulted loans back from the investors. This happens if the payments are late by more than 60 days. On loans with collateral, if they default, the loan originator handles the debt collection process, but investors will be charged a 15% fee.
In case of loan originator default, Bondster takes over the loans issued on their platform and manages them for the investors.
To protect investors from platform default, Bondster keeps investor funds in separated accounts at Czech Komerční Banka.
Becoming a Bondster investor
Both individuals and companies can register as an investor on Bondster. Anyone from any country can register as long as they have a bank account within the EU. A good reason to use a Revolut account.
You’ll need a passport copy and a bank statement to prove the bank account is yours.
The first time I entered the website, I thought it was a really old one. Weird fonts, lots of information crowded in a single page, page reload on every action, it all felt like 2010. When I found out the website launched in 2017, I couldn’t believe it.
Since then, I’ve gotten used to the interface, and it kind of doesn’t feel that old anymore.
The primary market
I like that besides the standard loan type, originator, buyback guarantee and interest rate I can also see how much I’ve already invested in a specific loan.
One thing that throws me off is that Bondster uses the “Minimum term” column instead of specifying the actual loan term.
If I go into the loan details, I can see that the loan has still 57 months until it matures.
So, the “Minimum Term” is not the loan term. Instead, it is the period after which I can sell my investment back to Bondster for a 1% fee. Since Bondster doesn’t have a secondary market, this is the only way I can exit early out of my investments.
I don’t know if that’s a useful feature or not. 99% of the available loans have a loan period of 12 months or less.
The auto-invest has plenty of filters to choose from. You can also create multiple auto-invest profiles and put them in cascade. For example, if the first one doesn’t catch loans with a 13% interest rate, the second one will invest in loans with a 12% interest rate.
I didn’t do much tweaking on my auto-invest profile. I excluded Lime loan originator because of their high APR, chose to invest in current loans with a 13% interest rate and a loan term higher than 2 months. I’ve done most of the settings just to make sure I don’t invest in payday loans.
The auto-invest tool runs every hour and picks up any new loans. Since my investments here are still new, I haven’t got the chance yet to test if this is true.
My portfolio and account summary
I can see the status of all my investments, and I can choose to sell my investments that have an exit clause if at least 1 year has passed since I invested in them.
A more high-level overview of my investments I can see on my summary page. It shows the expected annual return, the percentage of loans late and so on.
I’ve only started investing a few months back, so I’m still waiting for my returns to pick up.
Conclusions on Bondster
I initially thought I could use Bondster to diversify my portfolio with loans from the Czech Republic. I couldn’t be more wrong since only about 1% of the loans available are from Czech loan originators. Most of the loans are either from Kviku, a loan originator also present on Mintos and Viventor and Lime Credit Group, a loan originator that left Mintos earlier this year.
So, if I’m looking for loan diversification, Bondster is not the right place. However, since Mintos started dropping its interest rates in September, I found out something interesting. Kviku offered Mintos investors a 9% interest rate and Bondster investors a 13% interest rate, for the same type of loans (personal loans up to 12 months). And I took a part of my funds from Mintos and invested them in Bondster, in Kviku loans.
It could be interesting to watch how their offers vary from platform to platform and choose the most profitable one.
For now, even though I don’t especially like the platform, I’ll keep a part of my funds here.
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