Lendermarket Review

Lendermarket In Numbers

Before investing in any P2P lending platform, you should look at the platform's statistics. 

Lendermarket was founded in 2019. Since then, the platform has not been able to provide performance-oriented statistical data. 

Lendermarket is listing most of the loans from the Creditstar Group. 

The portfolio performance of Creditstar's portfolio isn't being shared publicly. We can estimate that Creditstar's exposure to Lendermarket is around €40 million.

On Lendermarket's website, you can review outdated statistical information published as blog posts.

Be aware that Lendermarket isn't publicly sharing its loan book's performance with investors, nor does the platform provide live insights into its statistics.

The reason for this could be the poor performance of Creditstar's loans, which resulted in many loan extensions, essentially limiting investor funds' liquidity.

Risk & Return

Lendermarket follows a similar business model to P2P lending sites such as Bondster, IUVO, or Mintos. 

The goal is to raise funds to fund the loan portfolio of Lendermarket's parent company Creditstar. 

Like other P2P lending platforms, Lendermarket offers a buyback guarantee and a group guarantee for loans issued by its lenders. 

Be aware that based on the feedback from investors and the changes in the platform's terms, we evaluate Lendermarket's buyback guarantee as unreliable.

Buyback Guarantee

If the borrower delays payment for more than 60 days, the loan originator will buy back your investment for the principal loan amount.

The truth is, however, that lenders on Lendermarket may extend the loans up to six times. Additionally, millions of investors' funds are likely in "pending payments" making Lendermarket's buyback guarantee essentially worthless.

Lendermarket's buyback guarantee does not come with significant benefits compared to other P2P lending platforms.

Diversification

The diversification of your portfolio provides better protection than any buyback guarantee. This isn't, however, the case for investors with exposure to Lendermarket.

On Lendermarket, you can invest in the Estonian loan provider Creditstar Group, CREDORY, an Estonian lender issuing real-estate-backed business loans, and QuickCheck, a lending company from Nigeria.

If you wish to learn more about the listed lending partners, we suggest reviewing the documentation on Lendermarket's website under "Loan Originators."

Is Lendermarket Safe?

We looked at the team and read the terms and conditions of Lendermarket, and here is what we found.

Who leads the team?

Conor Gibney was announced as the new CEO in March 2023. His portrait picture is not available in the "About us" section of the platform's website.

Lendermarket announced in September 2023 that Carles Frederico Arnabat is now running the team behind Lendermarket.

The management team of Lendermarket is changing frequently, which is not a good sign for investors. Any important decision is made my Credistar, the main entity that controls Lendermarket.

Who owns the platform?

It's incredibly tough to find any information about the owners or shareholders of Lendermarket.

We had to read the entire document about platform rules to find out that Tauri Jaanson signed in as the director and Veiko Väli as a secretary.

Neither person shares information about their roles at Lendermarket on their LinkedIn profiles.

We requested further information from Lendermarket, and here is what we found out:

Who is the legal owner of Lendermarket?

SA Financial Investments OÜ owns Lendermarket Limited OÜ – an Estonian holding company that is, in turn, wholly owned by  Mr. Aaro Sosaar - the CEO of Creditstar Group. He is the ultimate beneficial owner of Lendermarket Limited."

In short, Creditstar is making the decisions for Lendermarket. If you are unhappy with Creditstar's performance, then Lendermarket is not your platform.

A recorded interview with Mr Sosaar to address the platforms issues has not been accepted by Credistar.

Where can investors visit the offices of Lendermarket?

"Lendermarket's office is in Estonia, where the core team is located."

Again, we had to follow up to find the exact location.

"Lendermarket is sharing the office space with Creditstar on Lõõtsa 5, 11415 Tallinn."

What is the connection between Heimondo Limited and Lendermarket?

"Heimondo was the project name that the founding team of Lendermarket chose when the brand name was not decided. This team registered a company in Ireland called Heimondo Limited, which eventually was renamed Lendermarket Limited. In other words, Heimondo Limited was the legal entity's first name, and Lendermarket the new name it adopted."

Are there any suspicious terms and conditions?

We have read the platform rules, the privacy policy, as the loan agreement, and this is what we found:

Clause 8.10

According to clause 8.10, investors should do their due diligence about loan originators on Lendermarket. Also, investors accept that the Lendermarket does not question any information received from the loan originator.

This means the platform does not do much due diligence on the loan originators but accepts all data on an "as is" basis.

We reached out to Lendermarket and asked for a comment:

"As in every agreement, all parties have rights and obligations. The Rules of the Platform are no exception. All parties must conduct due diligence before entering the contract and throughout its duration. Lendermarket is committed to protecting investors' interests and carrying out due diligence in its operation; however, this is not incompatible with investors conducting the corresponding assessment of our financial service."

Clause 18.3

Like any other P2P lending site, the platform distances itself from any liability for loss in connection to investors' activities on the platform.

In case the platform presents inaccurate data, they aren't liable for it. As an investor, you invest based on information no one is responsible for.

Clause 18.3.2 is quite confusing. Here is Lendermarket's explanation:

"Clause 18.3.2 states that Lendermarket is not liable for the use the investors make with the content displayed on the website. Lendermarket is liable for the content on their website; however, it's not liable for the use users will do of it."

Clause 12.1

In 12.1, the platform explains that lenders might lose their money if the borrower does not repay the loan. This looks like it contradicts the buyback guarantee.

Do investors have access to individual loan agreements?

Verified investors do have access to loan agreements. You can view the PDF file when setting up your Auto Invest. We have reviewed the document, and here is what we found out.

Clause 3.3.4 - 3.3.5 Loan Agreement

Are you getting a headache when reading this? You are not alone. We asked Lendermarket to explain this to us.

Different clause, same response. The legal team could not find an answer to this.

Clause 6 - Loan Agreement

There is one positive aspect worth mentioning. Every investor can cancel their auto investments within 14 days of setting up their Auto Invest.

Note that you need to follow a specific process. This is one of the few aspects many P2P lending sites do not add to their loan agreements.

Other than this clause, the contract is very standardized.

Since this short clip was published, the quality of Lendermarket has further deteriorated.

Usability

You can set up an Auto Invest or invest manually.

Auto Invest

The Auto Invest allows you to set up the total amount of your automated portfolio and the maximum amount you are willing to invest into one loan. The minimum investment is €10.

You can also activate the option to reinvest your earned interest and invest multiple times in already invested loans.

Investing in already invested loans is not recommended, as this harms your diversification.

Furthermore, you can set up the loan interest and the loan term. Don't forget to include the countries and activate the buyback guarantee.

Read the loan and buyback agreements before submitting your settings to know what you are signing up for.

Investors can download income statements and tax reports directly from their profile pages.

At this point, you probably noticed that Creditstar is listing loans on Mintos and Lendermarket, so we asked Lendermarket:

How is it different from investing on your platform in loans from Creditstar as compared to investing in Creditstar loans on Mintos?

"One of the advantages of investing in Creditstar's loans in Lendermarket is having less risk and exposure than Mintos. Currently, Lendermarket focuses only on loans from Creditstar's operating entities, while Mintos has many originators. We want to think we can provide better Investor Support and communications via Lendermarket by focusing more on a single partner. The loans have a shorter term, are highly appreciated by investors, and have higher interest."

Investors should know that there are always two sides to a coin. While Lendermarket's reasoning makes sense to a certain extent, the added diversification investors have on Mintos easily outweighs the logic.

Recently, Lendermarket introduced a new lending partner, meaning investors will have more diversification options outside the Creditstar group. As a multi-lender platform, the argument of "better Support" might not be valid anymore.

Liquidity

Lendermarket doesn't offer a secondary market, and some investors on Lendermarket reported that a significant part of their portfolios is often delayed.

While it is common to have delayed payments when investing in payday loans, it's not common to have 50% of the portfolio (or more) delayed consistently.

While Lendermarket isn't publicly sharing information about the performance of their portfolio, the platform informed us that the amount of delayed loans usually stands at around 20%. 

In 2023, many investors report delayed loans of up to 90% from their outstanding portfolio on Lendermarket.

The liquidity on Lendermarket is terrible as it's likely you won't be able to plan your exit.