In this article, you will find out all about Bondora, one of the best-known peer-to-peer lending platforms. I have been investing in it since 2014. And you know what?
From 2014 to today I have never fully understood how the platform works.
When I signed up, I liked the idea of investing in loans to individuals.
I had a rough idea of how it worked because I was already active on Italian platforms.
I had read many reviews on blogs and foreign portals, but I could not grasp the details and the particularity of this marketplace.
I noted with interest that Bondora had very high yields and was very enticed.
But over time I have found that loan losses are also very high.
This made me skeptical and prevented me from better understanding how it works.
I was left with 100 Euros paid and a lot of stranded loans.
Several times some of you have asked me for some advice on how to start lending on Bondora.
I promised myself to investigate, but I never did because, seeing the losses, I didn’t trust the platform and I certainly didn’t want to talk to you about something I don’t believe in.
In recent times, as you know, I have increased my investments in P2P Lending and therefore I have also returned to reconsider Bondora.
I, therefore, invested some time to study this platform and what are the possible investment methods.
So today I’m talking about it from a critical but constructive point of view.
Peer to Peer Lending platforms are all exposed to strong risks and sooner or later some of them will jump.
This is why selection remains very important and it is essential to differentiate between the various platforms from a portfolio perspective.
I think that in this perspective and under certain conditions, Bondora can also be part of my panel of investment platforms.
Let’s see why?
In this article
- What is Bondora?
- The team
- How to register and start investing with Bondora?
- What are the different investment methods?
- Portfolio PRO
- Portfolio Manager
- Go & Grow
- Bondora API
- How Much Do Loans Return on Bondora?
- Is it risky to invest in Bondora?
- Do you pay taxes on Bondora yields?
What is Bondora?
Bondora is an Estonian Peer to Peer Lending platform active since 2009 on the European personal loan market.
It, therefore, provides loans to individuals and allows, through the marketplace, investors from 40 countries around the world (including Italy) to invest in these loans together with, or in place of, Bondora itself.
These are unsecured loans for amounts ranging from 500 to 10,000 euros and with terms of between 3 and 60 months.
It operates in three markets: Estonia, Finland, and Spain.
Bondora is a historic operator that has experienced quite marked growth over the years and today is at the top of the category.
It has more than 60,000 subscribers and deals with around 100 million new loans a year.
If you want to check the collection of all P2P Lending operators and also of Bondora, I suggest you visit P2PBanking.com, which publishes very detailed statistics on the main operators every month.
If you want to view Bondora’s balance sheet, you can do it on the site.
Consider that in the last balance sheet:
- The company has revenues of approximately 7 million euros;
- Revenues are growing strongly;
- Operating income and net income are positive.
Bondora is regulated as a Credit Provider by the Estonian Financial Supervisory Authority.
The shareholders include international financial operators including the American Fund Valinor Management LLC and the Global Founders Capital Fund.
It is therefore an emerging reality with excellent potential for the future and excellent partners behind it.
Bondora has a team of around 60 people located mainly in Tallinn.
It was founded by Partel Tomberg who continues to be its CEO and has led it from start-ups to fast-growing fintech companies.
He is certainly a brilliant person with excellent skills and the ability to innovate a traditional sector.
In the team, various figures complete the staff of the company including many developers and credit analysts.
How to register and start investing with Bondora?
To subscribe to Bondora you will have to go to the site and click on Subscribe Now.
After filling in your data and attaching your identity card or passport, you can pay your first money and start operating.
To do this, you must be over 18 and be a European, Swiss, or Norwegian citizen.
To deposit, you can go to add funds and:
- make a bank transfer;
- use your Visa or Mastercard credit or debit card with which you can also set up a recurring transfer (monthly or weekly) on a specific date of the month;
- take advantage of other transfer systems such as Klarna, Trustly, or Transferwise.
What are the different investment methods?
Once you have added the funds you are ready to invest and you can then choose between three different ways.
This mode is semi-automatic and allows you to choose between three Profiles classified based on risk:
You can also set:
- the country where you intend to lend,
- the desired duration of the loan
- the Rating of the lenders you intend to lend to e
- by clicking on Add Filters / add filters the size of your Portfolio, the minimum, and maximum interest, the liquidity you intend to keep in the portfolio, the amount invested in each loan.
Once you have set up your risk profile, the system will automatically invest your money in the various available loans.
Portfolio Manager is an automatic insurance investment mode that will allow you to choose how much you want to invest and your level of risk and will buy loans on the market.
Loans will be bought on both the primary and secondary markets, where the secondary market is used to divest when you want to liquidate your portfolio.
Go & Grow
The third mode is an (almost) guaranteed mode that allows you to obtain a yield of up to 6.75% per year.
If you choose this form you will have to go & Grow and activate the service. You will see your money and in real-time how much you earn in interest.
The big advantage of this formula is liquidity.
In fact, at any time you can totally or partially liquidate the amount accumulated in your Go & Grow account.
You will only have to pay a 1 Euro fee.
Attention, the system does not guarantee 6.75% but specifies that since the average return offered to investors by Bondora has always been greater than 9%, the same should also be achieved in the future.
Finally, there is a fourth modality.
This is the Bondora API that allows you to access more data and customize your investment strategies more.
It needs programming and is therefore only suitable for those who know how to do it. Alternatively, I found (but I have not verified) an online system called Beeplus and which allows you to use this interesting Bondora feature.
How Much Do Loans Return on Bondora?
Loans on Bondora have differentiated yields based on the rating.
The safest loans have lower yields, while the riskiest ones have very high yields of up to 35% per year.
My advice is not to focus on risky loans because the repayment possibilities are very low, if not nil.
The average return of the platform is around 10% per year, but obviously, this can vary a lot based on the defaults you will encounter.
I honestly no longer invest on this platform in the Portfolio Pro and Portfolio Manager modes, but only Go & Grow.
I advise you to do the same to guarantee (more or less) an annual return of 6.75%.
Is it risky to invest in Bondora?
The answer is yes.
Bondora is a small Estonian operator that is exposed to multiple risks.
It is not supervised as a marketplace (but only as a lender) and is located in a small but growing country.
There is therefore a risk linked to the operator and the individual risks associated with the loans for which in many cases there will be the default of the debtor.
My experience with Bondora is precisely this, that of high defaults that compromise overall profitability.
That is why I do not recommend at least that you are a very experienced investor to use this system.
I invest and I intend to increase my investments in the Go & Grow mode only.
Do you pay taxes on Bondora yields?
Many think that since it is a foreign operator, taxes can be avoided.
But pay attention to how much paid on Bondora must be declared to the tax authorities in the tax return (as well as what is held on any foreign account).
In addition, taxes on the returns received must be paid.
Here the legislation is not clear and some argue that the tax is equal to 26%.
This is the taxation to which the Italian platforms are subject.
Others believe that these incomes should be declared among other incomes and subject to everyone’s marginal rate.
Pending clarification from the Revenue Agency, I favor a discussion with the accountant and a prudent application of the legislation.
Bondora is a pan-European operator active in consumer lending.
It is growing rapidly and is raising a lot of capital from investors who want to invest in a market that is not simple but profitable like that of peer-to-peer lending.
It remains very risky because all investments in P2P are very risky and the platforms are all very young and poorly regulated. Although solid Bondora is not without risks at all.
Unlike Mintos or other operators, Bondora carries out the two activities (formally separate) that is, it lends money to debtors and then places the debts (or part of them) to investors on the marketplace.
Bondora offers users various ways of investing.
My favorite because it is less risky is the one called Go & Grow.
This offers a gross return of 6.75% and the ability to withdraw your money at any time.
I will set up an automatic investment of 50 euros per month, to check how it goes without risking too much and accumulating slowly and without realizing a capital that can guarantee me a certain income.