Peer-To-Peer Lending Better Than Saving Account ISA’s?


Today, the ubiquitous accessibility of the Internet is revolutionising the arcane industries once considered territory solely accessible to the institutions of finance. The lending process once controlled by bankers has become more accessible and can yield higher returns than ever before thanks to peer-to-peer lending. Peer-to-peer lending is an inexpensive means of streamlining the lending process that is handled completely online for a better return on investments and a lower interest rate on loans than anywhere else. Compared to physical, financial institutions, this process virtually eliminates the costs and fees associated with staffing for and the processing of loans to keep surcharges low.

Additionally, well-established brands such as Zopa offer reliable service you can trust. The risk of investing in collapsing peer-to-peer lending company in an economy filled with failed upstarts can be overcome by choosing from the tried and true options. Zopa, Funding Circle and Ratesetter have each proven themselves to provide consistent quality financial monitoring to connect lenders to trustworthy borrowers. But, even in the case of small companies failing, the loans themselves are made directly between lenders and the various recipients assuring the protection of investments due to any potential externalities.

Is Peer-To-Peer Lending Safe?

This works in tandem with the spread of qualifying loan recipients to minimise damage from any individual defaulting on loan repayments. The system of peer-to-peer lending functions to ensure maximum safety for the lender while simultaneously maximising return without putting undue strain on the loan recipient. The premise of peer-to-peer lending is the efficient, sustainable exchange of services. This affordability and reliability make peer-to-peer lending the best option for mediating private loans today and guarantees that this web-based service will continue to lead the market for years to come.

Similar to a mutual fund, this process allows lenders to efficiently and affordably lend to approved lenders for upwards to a seven percent return consistently. Through peer-to-peer lending, you can minimise risk while simultaneously tapping into one of the largest and most diverse markets available by directly investing in the people of the United Kingdom. Peer-to-peer lending is a cutting edge, innovative online service that paves the way for a new kind of investment.

Are Banks Losing Grip Of Competitive Interest Rates?

Cash flow will no longer be mired in bureaucracy; and this direct exchange of funds between provider and borrower makes lending simultaneously inexpensive, efficient and profitable. This process revolutionises lending by maximising the percent return on your investment in a way that no physical financial institution can match. The internet, once a cheap disguise for getting rich quick schemes and all forms of fraud, is now in the hands of a new generation with a deeper understanding of the tricks behind and the true potential of the internet who are utilising this resource for practical, sound investments. Peer-to-peer lending is setting a precedent for secure investments in the future by tapping into the Internets true potential.

As interest rates in the UK plummet to an all-time low, savvy people have found other ways of garnering savings through the three most popular lending websites. The government has also set out a Personal Savings Allowance which is £1000 tax-free on the interest you have made.

What Are The Risks Of Peer-To-Peer Lending?

Before we get into the best Peer-To-Peer lending websites online, we must warn you that there is an element of risk connected to offering other users and businesses money. As we are currently in an element of uncertainty with Brexit, there is a possibility that this may affect peer lending in the future. Unfortunately, we cannot say how much this will affect lending but have in mind, is the risk worth the long term investment?

Your investment could be at risk. Please be aware that there is a possibility that borrowers may default on their loans. P2P companies like Ratesetter have implemented certain safeguards to protect lenders but be careful!

Once you have decided that you want to invest your money in a Peer lending website, you will be provided with information that will give you a good insight into potential borrowers. Lending websites like FundingCircle will grade the risk of different businesses and users so that you can make the decision on how much risk you are willing to take. Peer Lending websites will also chase up borrowers for money each month so you won’t have to worry.

What we see nowadays is peer to peer lending websites now implementing a spread across a number of borrowers to further protect the lender. This time a couple of years ago your risk was much higher. The reason was you were given much more scope on what borrowers you give too. Because of the stability and uncertainty of the UK in Brexit. The future forecast is a shakey road and therefore protection of investment has been on the back of everyones mind.

We have looked through all Peer-to-Peer lending facilities online and consider the websites below to be the best options with the safest measures. We have provided the pros and cons of each provider and our personal favourite below.


LendersFeesMinimum Investment Highest InterestRank
RateSetter1.5% £105.9%1st Place
Zopa1.0%£10005.2% 2nd Place
Funding Circle1.0%£10006.5%3rd Place

Funding Circle

FundingCircle provides customers with loans and lending options on a peer-to-peer system. FundingCircle launched in 2010, with the main focus of helping out small businesses to get their feet off the ground. Lenders can receive great interest rates, going as high as 15% if they are happy to take the risk. Businesses with a lower credit score will be considered a higher risk therefore required to pay a higher amount of interest.

CurrencyFair Graph

FundingCircle’s lending term is between 6 months – 5 years with a minimum investment of £10 per loan. In the event that you want to withdraw your funds earlier than agreed, you may sell your loan parts to someone else who wants to carry on the loan. If you choose to sell, FundingCircle will ask for a fee of 0.25%.

FundingCircle used to provide lenders with important information that assists them in making judgements on whether to lend their own cash to small businesses. But FundingCircle has changed the way it works to further protect the lender from getting hit with bad debts. They have implemented a new system that spreads your investment across a number of different businesses. Similar to stock market techniques, the spread of your investment to a number of different businesses, reduces the risk significantly of losing large amounts of your investment.

FundingCircle has two options that you can choose, both offering different risk. The first one is ‘Balanced’ which will send your money to the businesses in all risk types that are graded by FundingCircle. The second is called ‘Conservative’ which will focus on the lower risk grades but will give you a lower return.


Launched in 2010, Ratesetter established itself as one of the most popular person-to-person lenders in the world. Ratesetter’s system is considered to be the easiest platform to work with compared to its competitors. Ratesetter has both individuals and businesses that you will be loaning your money too. Ratesetter is lower in terms of interest rates but implements safeguards that protect your investment if there is a failure of payment.

One of the reasons why we chose Ratesetter as our favourite, is because of the confidence they give lenders knowing that their funds are protected if borrowers default on payments. Ratesetter calls it The Provision Fund, a safety net for lenders. Resetter has paid nearly £40 million to The Provision Fund, they also brag that over a period of 8 years they have kept a track record of 100% in investment. According to Ratesetter, no one has lost a penny in a total of £850 million of investments. There is no way to actually test or disprove this but we again warn you that there is still an element of risk! If you’re still not sold by Ratesettors high-quality service, take a look at Trustpilot score of 9.8/10.

Ratesetter offers a 5-year interest of 5.9% which would be estimated around 4.5% after accumulating bad debt. In a 1 year market, the interest rate is around 3.9% and in the rolling market interest rate is estimated at 3.1%. If you do plan to withdraw early you will be hit by a small fee depending on what plan you are on. The fees are shown below on the graph:

ratesetter graph

Ratesetter is a good option to test the waters as a minimum investment of £10 can be much more affordable then going straight into deep water with other peer-to-peer lending websites.


Zopa has been in business for over 11 years, longer than FundingCircle and Ratesetter. They provides lenders with two lending options, Core and Plus. Both offering similar features but will have differing levels of risk that you are willing to take:

Zopa Graph

Zopa grades the risk of the market from A* – E, this is based on the level of risk you will take on. Zopa offers early access withdrawals on both features at a cost of 1%. You can withdraw available funds or you can leave it in your account to accumulate. Zopa boasts excellent returns performed against the expectation at the start of the investment. Again, there is no way of proving or disproving this, we will just stress that there is a possibility of losing money. If a borrower fails to pay whats owed then Zopa will go through the recovery process to retrieve owed money.

Zopa, like other peer to peer lenders, use a technique called diversifying. As discussed previously, this is to reduce the risk of having all your eggs in one basket. Your investment will be spread across a number of different borrowers, so if one defaults on payment you will not lose out on a large amount of your investment.

Every month you will receive repayments from borrowers and you can choose to lend this money out again or sent into your holding account. Any outstanding loans that you want to get back can be sold at a 1% fee.

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This is very interesting I’ll have to look into this a bit more. This might be the only investment that earns you more