The 2019 ISA season is now in full swing, and it's as good a time as any to focus on financial planning - and, within that, looking ahead to your retirement years to ensure financial security.
Quick guide to lendingPopular
About peer-to-peer lending
Peer-to-peer lending involves the direct matching of shrewd lenders with creditworthy borrowers via the Lending Works platform, so both get a much better deal. By cutting out the large financial institution in the middle, lenders benefit from great returns and borrowers receive extremely competitive, flexible personal loans.
Becoming a lender
The first step to becoming a lender with Lending Works is to sign up and create an account, which is quick and simple. Once you have an account, just decide how much you would like to lend and transfer money into your lending account. Once you have transferred money, you will see that you have funds in your Lending Works Wallet – you’re now ready to start lending!
Money sitting in your Lending Works Wallet is available to lend immediately (see ‘Making loan offers’ below). Money that is sat in your Wallet has not and will not be lent until a loan offer is made. You can withdraw money from your Wallet without charge if you need to access it. However, once your loan offers are matched and your money has been lent you must use Quick Withdraw to access your funds. Fees will be charged for withdrawing funds still on loan (see 'Fees' section below).
Making loan offers
Making a loan offer is simple. Once you have transferred money into your Wallet you just need to decide how much you want to lend, and over how long. So, if you want to lend for up to 3 years, for example, just make an offer for the amount you wish to lend over the 3 year term. Then, once we find creditworthy borrowers who are looking for either a 1, 2 or 3 year loan, we will arrange the loan agreement. Your money is typically lent to many different borrowers, rather than one-to-one (for peace of mind, you will remain completely anonymous as will the borrowers to whom your money is lent). Please note: in order to receive the maximum returns your money must be kept on loan i.e. your monthly repayments are reinvested. Money that is left in your Wallet or waiting to be matched does not generate a return.
Changing a loan offer
If you have made a loan offer but wish to change it, go to ‘Offers’ in your Lender dashboard. Click on ‘Cancel loans or loan offers’, then select the amount and term of the offer you wish to change. In the table of information there are two rows that are important here. One shows money that has already been lent (a fee will be charged to withdraw this money), and one shows money that has not yet been lent (no fee will be charged to withdraw this money). When changing a loan offer you should only withdraw the amount that is available to withdraw without fees. Once you have withdrawn this offer, please make a new offer using the process detailed above.
Each month, borrowers make repayments on their loans and these are immediately transferred to you as the lender. Repayments are made on either the 1st, 10th or 20th of the month, and therefore lenders receive regular repayments up to three times per month. In addition, borrowers may make overpayments or settle their loans early, so you may receive other payments. Repayments will be transferred to your Lending Works Wallet and will be available either to withdraw or to re-lend to new borrowers. You can automatically re-lend any repayments received by using the Auto Lend facility, which is explained further below. We recommend using Auto Lend for two main reasons:
Manually re-lending your repayments is time consuming - we want to make lending money as simple as possible
In order to achieve the best returns possible you should keep your money lent out and not left in your Wallet.
However, Lending Works now offers a third option regarding receiving repayments with Auto Income. This new tool allows you to receive a pre-selected portion of these borrower repayments as an income direct to your bank account, should this be your preference. It is automated too, thus saving you the hassle of having to manually transfer the funds from your Wallet.
There are no fees for lending money through the Lending Works platform, so our lenders enjoy maximum returns. The only fees charged to lenders are for using Quick Withdraw if you wish to withdraw funds before they have been repaid by borrowers - see Quick Withdraw section below.
What happens if a borrower can't make a repayment?
We value the trust of our customers extremely highly. That’s why we’ve gone to the greatest possible lengths to protect your money. Remember: we only approve the most creditworthy borrowers – people who have a very good credit history and can demonstrate to us that they can afford to repay their loans. However, we know that people’s circumstances can change and that every so often borrowers can struggle to meet their repayments.
Missed and late repayments
If a borrower misses a repayment, we use our reserve fund (which is constantly topped up using part of the fee paid by each of our borrowers) to ensure that our lenders receive their expected repayments as planned. Once the borrower makes their scheduled repayment we will transfer that money back into the reserve fund. The reserve fund is maintained at a level sufficient to comfortably cover our expected short term missed payments.
If a borrower misses multiple repayments or defaults on their loan, we use our innovative insurance to ensure that our lenders receive their expected repayments as planned. Our insurance protects lenders against borrower defaults, fraud and cybercrime. No other peer-to-peer lender offers this.
How do I get my money back?
Money in your Wallet
Money in your Wallet is available to withdraw immediately, without fees, and will be paid back into your nominated bank account once you’ve requested to withdraw it. Remember, all repayments received from borrowers will be transferred into your Wallet unless you have turned on Auto Lend or Auto Income. To maximise your return, you should turn on Auto Lend.
Money on loan offers
If you have money on loan offers i.e. you’ve made an offer but it has not yet been matched, you can cancel these offers and the cash will be immediately transferred back to your Wallet, without fees, where it is available for withdrawal as above. We work extremely hard to ensure your loan offers are matched as soon as possible so everyone can fully enjoy the benefits of peer-to-peer lending with Lending Works. We have developed sophisticated algorithms which ensure that loans are matched fairly for all of our lenders.
If you have money lent out to borrowers, you can get your money back as long as we can find a new lender to replace you, but you will have to pay a small fee to do so. We call this Quick Withdraw. The fee payable is 0.6% of the loan amounts you wish to cancel or £20, whichever is higher. This fee is to cover the extra work required by us to find a new lender to replace you. Also, if the interest rates have changed since your loan was matched, you may be required to make up the difference. This amount will be clearly displayed before you confirm you wish to Quick Withdraw.
Once we have replaced you with a new lender, your money is transferred back to your Wallet where it is available for withdrawal as above.
Using Auto Lend
What is Auto Lend?
When you receive repayments from borrowers on loans you have made, they are paid into your Wallet and available for you to withdraw. However, in order to maximise your returns we encourage our lenders to re-lend these repayments to new borrowers, rather than leaving them in your Wallet where they won’t be earning our great returns. The Auto Lend facility allows you to automatically re-lend your money to new borrowers as it is repaid back to you by existing ones.
We do the hard work, so you don’t have to.
How do I use Auto Lend?
When using Auto Lend, all you need to do is decide the period of time to re-lend your money for just as you would with your normal loan offers. To do this, please:
Go to your Lender Dashboard and select ‘Lending Settings’
Click on 'Lent out' under 'I'd like my bank transfers in to be automatically', and then select the relevant loan term(s)
Ensure that 'Re-lent' is the option selected for the dropdown for 'I'd like my repayments to be automatically'
Once completed, click 'Save' to confirm
That’s it. You can now sit back and watch your money grow.
Remember, the period of time you select starts from when the repayment received is re-lent, so if you need your money back earlier you should select a shorter term for the money that you are Auto Lending.
Using Quick Withdraw
What is Quick Withdraw?
When you make loan offers you are committing to lending money for a set period of time. However, we know that your personal circumstances can change and Quick Withdraw enables you to cancel your existing loan agreements should you need to get your money back more quickly than you had previously planned, as long as we can find a new lender to replace you.
How do I use Quick Withdraw?
To activate Quick Withdraw, go to ‘Withdraw money’ in your Lender Dashboard. Click on ‘Cancel active loans’, then select the amount you wish to Quick Withdraw from each term and confirm by clicking ‘Yes, cancel these loans’. Remember: you will be charged a small fee to use Quick Withdraw. The fee payable is 0.6% of the loan amounts you wish to cancel or £20, whichever is higher. This fee is to cover the extra work required by us to find a new lender to replace you. Also, if the interest rates have changed since your loan was matched, you may be required to make up the difference. This amount will be clearly displayed before you confirm you wish to Quick Withdraw.
Once we have replaced you with a new lender, your money is transferred back to your Wallet where it is available for withdrawal.
Using Auto Income
What is Auto Income?
You can now take the loan repayments you receive from borrowers as a monthly income. You can either choose to draw down these loan repayments in full, or simply take the interest while your capital keeps working hard for you. The beauty of Auto Income is that it's completely automated, and, what's more, we charge no fees for using this function.
How do I use Auto Income?
When using Auto Income, all you need to decide is the proportion of the borrower repayments you wish to receive as an income.
Go to your Lender dashboard and select 'Lending settings'
- Select 'Withdrawn' for the dropdown for 'I'd like my repayments to be automatically' Auto Lend
Choose between 'Withdraw capital and interest' and 'Withdraw interest'
- Choose between 'Receive payments every Friday' and 'Receive payments on the 28th of each month'
Enter the details of your nominated bank account for these Auto Income withdrawals
Once completed, click 'Save' to confirm
It really is that simple. You can also change these settings at any time. But, in the meantime, you've just converted peer-to-peer lending with us into an income device - one which transfers money to your bank account on the 28th of each month, or the next working day.
Innovative Finance ISAs
With the Lending Works ISA - also known as an Innovative Finance ISA (IFISA) - now live, your lender dashboard subdivides into two sections: an ISA section and a Classic account section, with the former allowing you to earn tax-free interest on your returns up to the individual ISA allowance for each financial year. You can learn a whole lot more about IFISAs by clicking here.
You can find out more about opening your ISA with us here. However, as with the usual lender dashboard, the ISA section of your account comprises a cash element (Wallet) and an element for funds on loan. You are then be able to make use of functions such as Auto Lend and Auto Income within your ISA once you have made lending offers.
The Lifetime ISA (LISA), announced in 2016, would prove to be one of George Osborne’s last flagship gestures to UK savers and investors as Chancellor, eventually launching against a backdrop of anti-climax a year later in April 2017.
There is barely a week to go until the conclusion of the 2017/18 financial year, which means that, as ISA season begins to hot up, time is running out to take advantage of your ISA allowance.
Over the last decade, there can be little dispute that the reputation of mainstream banks – and particularly the so-called ‘Big Four’ (HSBC, Barclays, Lloyds and RBS) – is at its lowest ebb.
The peer-to-peer (P2P) lending industry is now regulated by the Financial Conduct Authority (FCA). The regulatory framework has been designed to protect customers and promote effective competition.
Loan underwriting is the process that we undertake to analyse all of the information provided by each loan applicant and their credit file to assess whether or not that applicant meets our minimum loan criteria. As part of that process all data is verified, analysed and summarised to paint a picture of each applicant.
When you earn interest from a regular bank savings account, for example, the bank automatically deducts basic rate tax (currently 20%) before paying your interest. With interest earned from peer-to-peer lending, tax is not deducted automatically so lenders will need to declare their income to HMRC.
As 2018 draws to a close, with our bellies full of Christmas turkey, it's only natural to look back on the past 12 months and reflect. No doubt, it's been a turbulent one economically and politically, and not everyone has had it all their own way.