A new online peer-to-peer website, ThinCats.com, launches nationwide this week, seeking to match consumers looking for a bigger return on their savings with companies hoping to borrow.
The peer-to-peer website does not itself borrow or lend, but rather puts potential lenders and borrowers in touch with each other, providing a platform for bids and preparing the necessary legal documentation.
Key information about ThinCats.com
- The minimum investment in each loan is £1,000;
- The loan is designed to provide a steady return of capital, together with a market-beating interest rate;
- Returns for lenders are typically between 8 and 11%;
- There are no fees for lenders;
- Investments can be held in a SIPP;
- Secured loans of between £50,000 and £1m are made to vetted businesses;
- Lenders take part in an online auction to bid for loans.
Kevin Caley, Managing Director of ThinCats said: ‘As bank lending has contracted, more companies are looking for alternative ways to raise the funds they need to grow. At the same time, investors are frustrated by the very low interest rates available on their savings and the volatility of the stock market. ThinCats provides a solution to both these problems. By bringing lenders and borrowers together and cutting out the bank, both sides get a better deal.’
Peer-to-peer loans should be viewed as an investment, not savings
Which? credit expert Martyn Saville commented: ‘With savings rates still very low, many consumers will be tempted by peer-to-peer lending. In the past few years companies like Zopa, Funding Circle, Ratesetter and Quakle have become household names.
‘A major plus point for Thincats is that loans are secured, so the default rate on loans should be lower. However, depositors should be aware that the Financial Services Compensation Scheme (FSCS) does not cover peer-to-peer lenders, so your money is not 100% secure.
‘I’d urge anyone thinking about putting their money into a peer-to-peer loan to view it as an investment rather than a savings deposit. That way you’ll be able to compare the increased risk with the higher rewards. Only sophisticated investors who are aware of the risks to capital should put their money into peer-to-peer lending schemes without first taking independent financial advice.
‘If you’re happy with the risks, though, peer-to-peer lending sites like ThinCats can be a useful part of a well-diversified investment portfolio.’
For more details about peer-to-peer lenders, including ThinCats.com, Yes-Secure, Zopa and Funding Circle, read the Which? review of Peer-to-peer lending websites.
To find out how your savings and investments are protected, read our Are my savings safe? advice guide.
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