It is always important to understand basic principles of how P2P marketplace selects assets for listing as its quality is the key factor for consistent profitability for every investor.
Check these procedures at Mintos:
Selection of Loan Originators
Mintos has a set standard of requirements for each prospective loan originator which should be met before listing at the marketplace. As a result, Mintos conducts a thorough analysis of:
- Financial statements,
- Management quality,
- Underwriting policy,
- Credit scoring policy,
- Loan portfolio performance,
- Data accuracy,
- Continious monitoring of key data
As well as additional specific requirements for loans:
- For mortgage and car loans: borrowers provide collateral that can be used to recover the loan in the case of default,
- For business loans, other credit enhancements are obtained, such as a personal guarantee (a legal commitment from a business owner to repay the loan from personal means if the business fails to perform on loan repayment),
- Skin in the game of at least 10% (funds invested by a Loan Originator to ensure investability of an asset).
Some loan originators on the Mintos marketplace offer a buyback guarantee option (if the loan is delayed by more than 60 days, the loan originator will repurchase the investment for the nominal value of the principal and the accrued interest till the date of repurchase. This happens automatically and with no additional efforts required from the investors' side).
- The Key drawback of a buyback guarantee option: slightly less yield on investment
- The Key advantage of a buyback guarantee option: protection versus default
- Total default rate out of all originated loans since the start in 2015: 0.4% or EUR 356,502 (3 July 2017)
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