Rates & fees
What is an 'annualised return'?back to top
The interest rates you'll see advertised on our website are an 'annualised' rate of return. An annualised return illustrates what the interest rate would be if paid and compounded each year. Interest on Lending Works' loans is calculated daily and paid monthly, so the annualised return includes the effect of compound interest i.e. it assumes your interest earns interest too.
The annualised rate assumes that all repayments (both capital and interest) are re-lent, in much the same way that the return on your savings account (Annual Equivalent Rate or 'AER') assumes you keep your money, and any interest earned, in the account. The only difference is that with peer-to-peer lending your funds need to be kept 'on loan'; funds left in your Lending Works Wallet do not earn interest.
Remember, there are no fees for lending (unless you wish to access your money early using Quick Withdraw), and the cost of the Lending Works Shield is paid for using the fees charged to borrowers.
How our rates workback to top
Any lending offer you make will be placed at the latest interest rates available on our website, which are updated weekly. However, the rates on your loan contracts are not fixed until your funds are matched with creditworthy borrowers, so if the rates change while your funds are waiting to be allocated they will be matched at the latest rates. The rates for the current week and the next week are shown on your lender dashboard.
You can read more about how our lender rates work here.
Weekly rate changesback to top
Lending Works interest rates are set each week based on the supply of new lending funds versus the demand from sensible borrowers. For example, lending rates will be higher where demand for loans is increasing (to attract more lenders) and lower where demand is falling (to attract more borrowers). Rates are fixed from 00:00 on Monday to 23:59 on Sunday.
We'll make the new interest rates for the upcoming week available on our website from the Friday morning so you've got plenty of time to decide what to do with any unmatched funds before the new rates kick in on the Monday. We'll also notify our lenders of the rates for the upcoming week in our weekly lender email, which is sent out every Friday.
Lender feesback to top
Lending Works does not charge lenders a servicing fee for lending. Instead, we make money from the arrangement fees paid by borrowers in relation to each loan and a small spread between the borrower and lender rates.
This means you'll benefit from great returns with no hidden fees or charges to calculate. You will also continue to benefit from the market-leading lender protection of the Lending Works Shield at no extra cost (the cost of operating the Shield is built into the risk-weighted fees charged to our borrowers).
Quick Withdraw feesback to top
If you need early access to any money which is still on loan i.e. before it's been fully repaid by borrowers, you'll incur a small fee for doing so. We understand that personal circumstances can change and that you may need access to your money sooner than you'd expected. In order to give lenders full flexibility, we allow you to sell some or all of your loan chunks to other lenders, provided we can find other lenders to replace you. We'll do all of the hard work for you once we receive your request and, provided there are sufficient funds in the lending queue waiting to be matched, this will all happen instantly. We charge a fee for this facility of 0.6% of the amount being withdrawn.
For more information on the Quick Withdraw facility, please click here.
How does Lending Works make money?back to top
Like any business, we need to make money to cover our overheads and be sustainable - otherwise we wouldn't be around for very long! We charge an arrangement fee to the borrower in relation to each loan matched, in addition to a small spread between the borrower and lender rates.
Rate Lockback to top
Rate Lock ensures you get the rates you want.
We’ve introduced Rate Lock until May 5th 2019 to ensure our rates are not affected by the volatile ISA season. Historically, ISA season has driven rates down due to demand, giving you a weaker return on investment. Rate Lock enables all investments matched during this period to meet the advertised rate.
When you invest using P2P platforms your funds will initially go into a queue ready to be matched with creditworthy borrowers. If rates lower during the queue process, your investment will be matched at the lower rate. We don't want that to happen.
In line with our normal rate matching practice, any lending offer made during the Rate Lock period will receive the live rate at the time the loan is matched i.e. Rate Lock rates will not apply to any investment still queued at the time Rate Lock ends (May 5th 2019). To ensure your investment is matched at Rate Lock rates, we would advise making your investment at least a week in advance of Rate Lock closing, as queue times may be longer than usual during this busy period.