Mintos Review: 2 years since I started investing

Mintos is the biggest p2p lending platform in Europe, with 6+ billion € in funded loans. I’ve been investing in Mintos for the past 2 years with great results.

Published:  Tuesday, 29 December 2020
Author:  Daniel
Investors from:
Investments Funded:
5.8 billion €
Investment Types:
Consumer Loans, Business Loans
Investment Countries:
Global, no US/UK
Investment Terms:
30 days to 20 years
Interest rates:
8% - 20%
Minimum Investment:
Early Exit:
secondary market

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. In the past 2 years, this is what I learned about Mintos.

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.

How Mintos works

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.

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

mintos loans

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:

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 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 is 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:

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.

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 more than 350,000 investors registered and 6 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:

Loan originator risks

There are 50+ loan originators available on the platform. While Mintos gives them a risk score, it wouldn’t be the first time a rating drops from 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:

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:

Want to learn more?

Check out Mintos's website and learn more about their available investment opportunities.

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