Mintos Review: 2 years since I started investing

Mintos is the biggest p2p lending platform in Europe, with 5+ billion € in funded loans. I’ve been investing in Mintos for the past 2 years with great results.

Mintos was one of the first p2p lending platforms I’ve invested in. I didn’t know much about p2p investing, and Mintos let me invest only 10 EUR to try it out.

I started to like it and invested more. For the past 2 years, this is what I learned about Mintos.

Mintos highlights

  • Launched: 2015
  • Headquarters: Latvia
  • Loan types: Personal Loans, Mortgage Loans, Business Loans, Car Loans, Invoice Financing, Short-term Loans, Pawnbroking Loans, Agricultural Loans
  • Loan terms: up to 20 years
  • Loans funded: 5.2 billion EUR
  • Investors: 300,000
  • Interest rates: 75 – 20%
  • Fees: secondary market fees
  • Minimum investment: 10 EUR
  • Currency: EUR, GBP, USD, RUB, SEK, DKK, etc.
  • Secondary market: yes
  • Auto-invest: yes
  • Buyback guarantee: yes
  • Accepted investor countries: all countries (except the US and UK)

First steps with Mintos

I was new to p2p lending and all the terms were new to me.

Luckily, it was easy to onboard. I needed an email address, a copy of my passport plus a utility bill for KYC (know your customer) checks, and then I was in.

I needed a EUR bank account to deposit funds to my Mintos account. They were fine with me using my Revolut account, and my first 10 EUR were transferred in a day.

Now I was ready to invest. Mintos bombarded me with terms I didn’t quite understand: the primary market, secondary market, loan originators, buyback guarantee.

Unraveling the mystery

It turned out Mintos is an intermediary. It acts as a marketplace where other lending companies (loan originators) sell loan parts in their portfolio to investors like me.

It works for every party involved. Mintos takes a commission for facilitating the transactions. Loan originators free up capital they can use to lend to other borrowers. Investors earn interest for the invested funds.

The loan originators come from all over the world and they specialize in different types of loans. Most of them issue consumer loans, higher interest loans offered to people that can’t get a bank loan. Others are managing business loans or invoice financing. Some of them have loans backed by physical assets (cars, real estate, etc.) while others offer unsecured loans at higher interest rates, and cover defaulted loans from the profits of the ones that don’t default.

In order to attract investors, most loan originators offer a buyback guarantee. If the borrower fails to pay their installments in 60 days, the loan originator would buy back the loan from the Mintos platform and handle the borrower default procedure by themselves.

Mintos rates these lenders from A to D (around 10 levels) based on company health, financial status, quality of loans.

My first investment

Mintos lets me invest either manually in individual loans, either automatically, through an auto-invest profile or through their custom Invest&Access product.

I wanted to get accustomed to the platform, so for the first few months I invested manually in all the loans in my portfolio.

The primary market

Primary market loans - showing interest rates, loan originators, loan terms, amount available for investment and a link to more details about the loan
Primary market loans – showing interest rates, loan originators, loan terms, amounts available for investment and a link to more details about the loan

The primary market contains all the loans offered by the loan originators and there are hundreds of thousands of loans available. Each loan has additional details about the borrower, payment schedule, collateral (if any).

You can filter the loans by interest rate, loan term, currency, loan originator, loan originator risk ratings, type of loan, with or without a buyback guarantee, and a lot more.

I have a few saved filters I use when navigating the primary market:

  • safe loans from lenders rated A or A- by Mintos
  • higher risk loans, with lenders rated down to B, with higher interest rates
  • another filter with business loans, agricultural loans and invoice financing, which I rarely use to invest in

I only invest in EUR denominated loans, and mostly in loans with a buyback guarantee, and these settings are also included in my filters.

The secondary market

I rarely used the secondary market in the first half a year. And I rarely use it even now. Its purpose is to offer liquidity to investors that need their money fast and what to get out of the platform, even if they sell their loans at a small loss.

As with a free market, the prices on the secondary market vary based on demand and offer. It’s heavily influenced by either market sentiment or interest rates on the primary market.

When interest rates on the primary market drop, because there are more money ready to invest than loan originators need, it could be a good time to sell some of the high interest loans in your portfolio with a premium on the secondary market. Or buy loans with better interest rates from the secondary market.

When lots of investors want to drop out of Mintos and sell their investments on the secondary market with considerable discounts, it’s also a good time to buy.

Auto invest

After a few months of fiddling with manual investments, I finally got bored with it and decided I should set up an auto-invest profile and let it reinvest all the available funds for me.

For my auto-invest settings, I’ve used the following criteria:

  • only invest in loan originators with A and B ratings (lately, only in A-rated ones)
  • loan originators should pay late fees when the loan is late with their payment (you can see these details on the loan originators page)
  • the grace period should be less than a week (some loan originators use the grace period as a way to not pay any interest for 15 days)
  • loan term higher than 2 months (I’m not too fond of payday loans)
  • interest rates higher than 13%
  • invest between 10 and 20 EUR in each loan
  • every loan should have a buyback guarantee

Invest & Access

A key principle in p2p lending is to diversify your portfolio. Never invest all your funds into a single loan, or a single loan originator. It’s better to invest 500 EUR in 50 loans than in 1 loan.

Invest&Access is Mintos’s response to the ultimate diversified portfolio. It spreads your portfolio into as many loans as possible, and from as many loan originators as possible.

Such diversification comes at a price, and in the end the returns are a lot smaller than by using a simple safe auto-invest profile.

In return for smaller returns, Mintos promises the option to cash out almost immediately (24 hours) in normal market conditions. It specifically says “under normal market conditions” because, in order to cash out, other investors need to buy the loans from your portfolio.

While I like the idea of an Invest&Access portfolio, Mintos’ implementation of it is still lacking, and the results are a bit disappointing. It invests in all loans available, even in high-risk loans or loans with interest rates so low nobody would touch them otherwise. For the instant cash out to work, Mintos would need a higher portion of investors to use its Invest&Access product. In its defense, it’s still a new product, and it will get better in the future.

My portfolio

After the first months of fiddling with Mintos, I’ve moved 3500 EUR to my account, set up an auto-invest profile, and left it grow.

I’ve taken out half of my portfolio in October 2019, during a period of low interest rates, and invested it in other platforms. When the Covid-19 crisis started and interest rates began to rise again, I considered it was the right time to move back more funds into Mintos.

my mintos portfolio evolution between June 2018 and May 2020
  • Last update: May 2020
  • Started investing: June 25th, 2018
  • Current value: 4207 EUR
  • Profit: 813 EUR
  • Net annual return: 12.68%

My annual return sits at 12.68%, and I’m mostly invested in A-rated loan originators, with a decent distribution between them.

I don’t consider my portfolio 100% safe, but I’m also not running for the highest interest rates. All my loans are covered by a buyback guarantee, are issued in EUR, and the loan originators, according to Mintos, have a low risk of default.

What could go wrong

P2P lending comes with risks that other more conventional types of investments manage a lot better. If I was a bit more conservative and more risk-averse, I’d consider investing in p2p lending a big mistake. Since I like a bit of risk, I am currently investing in it.

Platform risks

Mintos is a large platform, with almost 300.000 investors registered and more than 5 billion EUR worth of loans funded. They were profitable in the last few years and they publish their financial statements each year.

However, if they go bankrupt, are my funds safe?

The loan contracts are between investors and loan originators, and in theory, if another administrator takes over, it could continue servicing these loans.

There are a few things I don’t like:

  • my funds are not kept in a wallet in my name, rather in a common pool with all other investors funds
  • in case of data loss, I have no idea if Mintos has a data recovery plan
  • Mintos only releases unaudited financial statements, so they could write whatever they wanted in there without any checks

Loan originator risks

There are 60 loan originators available on the platform. While Mintos gives them a rating, it wouldn’t be the first time a rating drops form B (relatively safe) to D (defaulted) in a matter of weeks.

Up until the end of 2019, only 1 loan originator defaulted (Eurocent). Since then, the list grew to 7. Part of this is the current crisis, but for the most part, it’s caused by the rapid growth of Mintos in the past 2 years and their will to grow at all costs.

If a loan originator defaults, it doesn’t necessarily mean I’ll lose my funds. They enter a bankruptcy process, their loan portfolio is taken over by an administrator, and eventually some funds would get back to me. Mintos sends constant updates on what happens with the loan originators, timelines, what sums get transferred to investors, etc.

I’ve only invested in loan originators rated A or B, and I also kept track of them, as their ratings change periodically.

Depending on the loan originator, you can invest in loans through a direct or indirect structure. With the direct investment, you are tied directly to the borrower. If the loan originator defaults, Mintos will transfer the loan to another loan originator of their choosing and you’ll continue to receive the payments on the loan. With the indirect investment structure, your claim is against the loan originator, so you’ll need to wait for the loan originator to liquidate their assets before you receive your funds.

Currency risks

Mintos lets you invest in an insane amount of currencies: EUR, DKK, GEL, RON, SEK, MXN, USD, GBP, PLN, RUB etc.

They have higher interest rates and suffer from higher currency fluctuations a lot more than stable currencies like EUR, GBP, USD.

I only invest in EUR loans, but even with that, I can still suffer from currency risks. Most loan originators offer their loans in EUR currency to Mintos investors, but they issued the original loans in different currencies, depending on the country they operate in.

Liquidity risks

The loan terms offered on the platform range from 30 days to 20 years. If you wish to free up your funds before the loans mature, you can always make use of the secondary market and sell your loans to other investors.

And this works most of the time, unless we’re in full recession, with investors too scared to buy and more interested in selling. In March, when all p2p investors panicked and sold everything, the number of available loans on the secondary market reached 2,000,000. The usual number before that was up to 500,000 loans.

Borrower default risks

You can invest in loans with or without a buyback guarantee. If you choose to invest in loans without a buyback guarantee, you should also realize that some of them might default and you might lose your invested funds. They might have higher interest rates, but they also have higher risks.

Performance risks

Your returns might be lower than you expected. The causes are multiple:

  • some loans defaulted and they didn’t have a buyback guarantee
  • the loans have a buyback guarantee, but they are constantly late with their payments and they don’t pay interest on their late period
  • even if they pay a fee on the late period, the loan originator has a “grace period” of 15-30 days when they’re not required to pay interest (you can check these details on the loan originators page)
  • you bought loans with high-interest rates on the secondary market, and you paid extra for them, and then the loan originator bought them back before you got a chance to get any payments
  • you invested in loans in an exotic currency because of the 18% interest rate advertised, and that currency dropped a lot
  • and many others

Conclusions on Mintos

I’m happy with my results after 2 years. Mintos offers me a good balance between risk and returns. I’m planning to keep and increase my investments here in the future and keep an eye on how the platform evolves.

Mintos is one of the safest p2p lending platforms I’m currently investing in. It has a few points that make it a good investment option for me:

  • good transparency on its operations
  • a huge number of loans to choose from (usually more than 500k)
  • a very active secondary market, due to its large number of investors
  • a diversified selection of loan originators and loan types
  • a buyback guarantee on most of its loans
  • an amazing auto-invest tool
  • a mobile app for fast-check on numbers when bored

Besides Mintos, I’m also invested in Estateguru, Investly and Neo Finance, 2 other great peer to peer lending platforms.

Disclaimer: I’m no financial advisor, and I have no formal financial education. While I believe my opinions are informed, you should rely on your own judgment before deciding to invest in any financial instrument. If you do decide to try out Mintos, you could use my referral link and get us both a 0.5% bonus on all investments made in the first 90 days after signup.