Peer to peer

Why must I wait for my money to match?

One of the most appealing elements of lending with Lending Works is the ease with which you can do so. <--break->It takes no more than a couple of minutes to create your account, and you can instantly transfer funds into your Lending Works Wallet (the holding area for money in your account), either by debit card or bank transfer.

Of course, there is one more step involved with the process before you can start benefiting from our great returns. Once the funds are in your Wallet, you need to make lending offers in order for us to match your money with creditworthy borrowers. Once you’ve made your lending offers, you’ll enter what’s known as the ‘lender queue’, and from there we use a matching algorithm to fairly allocate yours and other lenders’ funds to borrowers.

Why is there a queue?

In an ideal world, there would be no lender queue, and as soon as you transfer money into your Wallet and make lending offers, you would be instantly matched with borrowers so that you can start growing your money.

However, the practicalities of running a platform in such a manner are perilous, and, in the absence of such a queue, there exists the ongoing possibility that reserves of lending capital could run dry. This would result in the platform being unable to pay out any funds to borrowers whose loans have been approved, and if these customers are made to wait for their loans – or even turned away entirely – well, that would be a very poor customer experience indeed.

So how long should the queue be?

It can thus be inferred that the optimal period for the lending queue is not zero. It differs depending on the platform, but at Lending Works we aim for a matching time of between 7 and 14 days in each market to ensure that reserves of lending capital aren’t at risk of moving into the 'red zone'.

Incidentally, the sometimes-maligned presence of institutional capital in peer-to-peer lending plays an important role in maintaining a buffer in terms of lending reserves. In fact, the certainty they provide over the availability of lending capital can actually reduce the lender queue as a result.

Yet despite this, maintaining an optimal queue length is easier said than done. The influx of lending capital (whether it be from new or existing lenders) and the demand for loans from borrowers are both susceptible to ever-changing external market conditions. Macro-market changes, be that a recession, an economic boom, fluctuations in competitor rates, or even seasonality can affect lenders and borrowers differently, and thus have significant and unexpected impacts on the demand for - and supply of - loans.

For these reasons our queue length is always subject to change. One tool we have to balance the flow of lending capital with borrower demand is our base rate. Because the rate of return received by lenders is directly linked to the APR at which borrowers pay back their loan, we can increase or decrease our lender rates depending on whether there is a shortage or surplus of lender capital, with the aim of maintaining a consistent queue length as a result. 

Aren’t I losing out while waiting in the queue?

As alluded to above, money that is waiting to be matched earns no interest, and it is thus beneficial to a lender for this process to conclude as quickly as possible. Yet for those who are anxious to see their money matched quickly, we thought we’d provide some examples of what effect the time in the queue has on your resultant yield:

If, for example, you have made lending offers to the value of £10,000 over a three-year term at an annualised rate of 5%, your final balance after three years would be £11,576 if your money was matched instantly (before tax, and assuming all repayments from borrowers are re-lent i.e. compounded). However, if you incur a matching time of 15 days, your balance in three years’ time falls to £11,553. That represents a ‘loss’ of £23 over three years owing to the queue.

Alternatively, if you invested £10,000 over five years at an annualised rate of 6%, your balance at the end of the term would be £13,382 if your money was matched instantly. Yet similar to the above example, a queue time of 15 days would see this balance drop to £13,350; or a shortfall of £32.

If the queue is too long, am I better off taking a lower rate elsewhere more quickly?

You may look at alternative platforms who are offering a lower rate of return, but who can match your money more quickly. Money that is waiting to be matched can be easily taken back out – all you need to do is cancel your lending offer(s), and transfer out your funds once they are returned to your Wallet. You may deem it worth your while to do so, and take a hit on the rate if you can start earning returns with another provider sooner.

Yet to demonstrate why this should not be done in haste, we thought we’d give you an indication of the ‘tipping point’ in terms of number of queued days using the above examples. Taking the first example, if you can get 5% over three years on your £10,000 on Platform A, but need to queue for your funds to be matched, or 4.9% on Platform B (and have your funds matched instantly), the lender queue would have to be more than 21 days before the 4.9% deal becomes beneficial over three years i.e. a queue of 21 days or less and you’ll still end up with more money in your pocket three years from now using Platform A.

Looking at the second example where you are offered 6% over five years by Platform A, with a lending queue, or 5.9% by Platform B and be matched immediately, the corresponding tipping point in terms of waiting time would be about 30 days.

In the ‘Offers’ tab in your Lender Dashboard, you can view the estimated waiting time for your money to be matched. We calculate this using the volume of funds currently queued ahead of you and the volume of consumer loans we've paid out over that term in the last 30 days (on a rolling basis). You can view in real time how much money is queued ahead of you, thus giving an even clearer indication of when your lending offers will be matched. You should then be well placed to make informed decisions about what to do with your money while you wait.

How fair is the system?

The aforementioned matching algorithm we use to match funds in the fairest way is called the 'Fair Algorithm', and one important nuance to note is that reinvested repayments are always prioritised over new funds. This means you’ll only need to queue to lend when you transfer new money in, and once you’re a bona fide lender and begin to re-lend the repayments you receive, these funds will generate further returns for you typically within the same working day as the repayment is received. That means once your money is lent, it stays lent!

While it’s important to look at the broader picture, and even the worst-case scenario, we are constantly at work to ensure that we have the right balance of lenders and borrowers so that your lending offers are matched as soon as possible. However, two of our core beliefs are that when you lend money through a peer-to-peer platform, the process should both be transparent and give the lender complete control over his or her money. By providing you with real-time and in-depth information, you can rest assured that you will be in charge every step of the way.

If you have any further questions we’d be delighted to help. Call us on 020 7096 8512 or email us at

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Our website offers information about saving, investing, tax and other financial matters, but not personal advice. If you're not sure whether peer-to-peer lending is right for you, please seek independent financial advice, and if you decide to invest with Lending Works, please read our Key Lender Information PDF first.

As with all investments, your capital is at risk.