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RateSetter Review

by Evan Carlsen
Crowd Rating0 Votes
4.4
GREAT

The RateSetter P2P lending platform is very popular. But is it right for you? What kind of returns can you expect? Is it safe to invest with the RateSetter platform? Find out in our RateSetter review now.

What is RateSetter?

RateSetter is a P2P lending platform based in the UK, which was first founded in 2010, It is one of the older P2P lending platforms on the market. Currently, it exclusively serves UK investors. Those from outside of the United Kingdom cannot use it to invest.

Since it was founded in 2010, RateSetter has become a very popular P2P lending platform. It has attracted a total of more than 80,000 investors. In total, it has issued more than £3.38 billion in loans, making it one of the largest P2P lending platforms out there. This is partially due to its wide variety of loans, including personal, business and real estate loans.

Overall, it’s a very reputable platform, and it’s very trustworthy, safe, and reliable. With a low,  £10 minimum investment, it’s easy to get started with RateSetter, too.

Returns at RateSetter: Low, but consistent and safe

If there is one area where RateSetter disappoints, it’s the overall returns offered by this service. Despite the wide variety of loans available, its rates are usually quite low. The returns on each loan range from 2.9% to 5.2%. The average annual return is about 4.60%. Some other P2P lending platforms can offer rates of up to 12% or more.

Of course, higher-risk loans are usually correlated with a higher interest rate. So what this means is that, instead of focusing on risky loans that may not be repaid, RateSetter mostly provides high-quality loans. It lends to businesses and individuals who have a very low risk of defaulting.

This decreases your risk. However, it also decreased your expected returns. If you are looking for a safe, consistent return on your money, RateSetter is a good choice. But if you want to be a bit bolder and risky with your investments, it’s not the best option. You are likely going to be better off using a different P2P lending platform.

RateSetter loan diversification: Get a piece of many loans

This is one of the many areas where RateSetter shines. The RateSetter lending platform is one of the largest in the UK. It offers personal loans, business loans, property financing, and family finance loans for divorce.

Also, you do not pick and choose your investments. Instead, your money is invested into one of a few RateSetter “funds” which contain tens of thousands of loans. This means that, even in the case that a few buyers default, your funds will likely not be impacted.

This is important because it protects your money. Because you’re invested in so many loans, you are unlikely to experience a major downswing in your investment. RateSetter claims it has lost £0 from investors. For a company that’s nearly a decade old, that’s impressive.

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The best RateSetter features: Provision fund, secondary markets & more

One of the best features of RateSetter is its Provision Fund. When a borrower makes a payment on their loan, part of their interest goes to you. However, another part of it goes to the RateSetter Provision Fund, which is now worth millions of GBP.

In the case that a borrower defaults (fails to pay), the RateSetter Provision Funds kicks in. Payment is made for the borrower, and you don’t lose any of your investment. This fund is carefully managed to ensure that it always has enough to cover potential losses.

RateSetter also has a secondary market. Using this market, you can sell your RateSetter investments early and cash out if you need the money. You will pay a small fee for using this service, though, so you will lose out on a bit of interest. Still, this is a good thing if you ever need to access some emergency cash from your investments.

The minimum investment at RateSetter is only £10, so it’s easy to get started. You can deposit cash via debit card or bank transfer. You can also get a bonus of £100 when you invest £1,000.

RateSetter user experience: Quick, easy and intuitive

We have absolutely no complaints when it comes to using the RateSetter website. It’s quick and easy to navigate. It allows you to deposit cash, withdraw money, sell your positions and invest in loans quickly and easily.

We never had any issues with long loading times or poor performance. There are plenty of tools to help you monitor your investment, they are all very easy to use. If you’re a first-time investor on a P2P platform, RateSetter is a great choice for you, thanks to its intuitive interface.

Many other P2P lending platforms could learn from RateSetter. It’s simple to use but has plenty of complexity for power users. This makes it ideal for pretty much every P2P investor, but especially for new investors.

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RateSetter risks & recommendation: Should you use it?

RateSetter is a lot less risky than most other P2P lending platforms, thanks to its Provision Fund. It has operated for nearly a decade without any losses. Naturally, there is always the chance that the fund may be mismanaged and your investment may be lost. Or high default rates will overwhelm it. If this happens, your capital is at risk.

Still, RateSetter is quite safe compared to other P2P platforms. It’s easy to get started, and you can be reasonably sure of a decent return on your investment, so it’s ideal for new P2P investors.

RateSetter Review
RateSetter Review: Our Verdict
RateSetter is a good option for the cautious investor
If you don’t mind a lower return in exchange for (nearly) guaranteed returns, RateSetter is right for you. It’s also great if you don’t want to pick and choose your loans, and want plenty of diversity.However, it does not offer high returns compared to other platforms or let you pick your loans. If you want high returns and don’t mind the increased risk associated with high returns, you’ll be better off with a different P2P platform. But don’t take our word for it. Sign up now, and see if the RateSetter P2P lending platform is right for you.
Returns
Features
Diversification
User Experience
Crowd Rating0 Votes
Reasons to invest
Safer investment due to Provision Fund
Low minimum investment of £10
High diversification across many loans
Reasons to avoid
Relatively low returns
Not possible to pick and choose loans
High fees for selling on secondary market
4.4
GREAT
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