Bondora Review and Key facts:
- Loan duration from 3 months to 5 years
- Unsecured consumer loans from Estonia, Finland and Spain
- High diversification possible
- Interest rates from around 8% to 160%
- Primary and secondary loan market
- Investments through API (application programming interface) possible
updated March 13 2019
My experience with Bondora
What is Bondora?
Bondora is a Tallinn, Estonia based company and actually one of the oldest p2p investment platforms (founded in 2009). It is also one of the few platforms that offer direct peer to peer lending, meaning that the investor is directly funding a loan to specific borrower. Bondora is just offering the service of managing these cash transfers. Of course, Bondora needs to finance itself and will take a certain share out of the interest which is paid back by the borrower.
The track record of Bondora is very good as it’s been around for 10 years now which is quite a long time in the fintech world. It became a profitable business in 2017.
How to invest with Bondora?
Making investments on Bondora is quite straightforward: after opening your investor’s account you can easily transfer funds to your account by credit card, bank transfer or through other money transfer providers. Withdrawing money is just as easy. All investments are made in Euros and there’s no minimum deposit required. The investments you make can be as small as one Euro which gives you the opportunity to diversify your portfolio over many loans even if you don’t invest large sums.
Bondora is by now offering two types of investment. The first option is like the one I described above and lets you invest directly into loans from Estonia, Spain, Finland and Slovakia. The average profit for investors across Bondora’s entire credit portfolio is around 11% (you can see the up-to-date value on the Bondora website in the Statistics section). Investing and spreading your funds over many credits is easy by using one of Bondora’s Portfolio Managers where you can set rules for automatic investment and re-investment of your funds. Your individual profit might be above or below the Bondora average but more on that in the Tips&Tricks section .
The second option is quite new and was added by Bondora in 2018: the Go&Grow account. This is advertised by Bondora as a kind of instant access savings account to which you simply transfer your funds and from which you can expect a yearly return of 6.75%. So, no need to concern yourself with any investment strategies; it’s basically the carefree investment option. Interest is paid daily and you can withdraw your funds at any time. It’s important to note that Bondora does not guarantee the 6.75% revenue since this is also subject to the profit that Bondora can generate with its overall loan portfolio. However, as mentioned before, this average profit is around 11% so I think the 6.75% interest rate of Go&Grow is a pretty safe bet.
Risk management on Bondora
Directly investing into loans on Bondora means that you’ll see loans fail as there is no third party between you and the borrower that absorbs that risk (like the loan originators on Mintos). This can’t be avoided because there will always be some borrowers who cannot pay back their loans. In case of a defaulted loan, Bondora will start a process to retrieve as much of your investment from the borrower as possible through courts and bailiffs. The key to reduce your losses is to invest in many loan shares (my portfolio is diversified over about 2000 loans) and to pre-select the loans as much as possible. Check the Tips&Tricks section for more information about how I invest on Bondora.
On the other hand, the interest rates on Bondora are very high and you can easily build a portfolio with an average of 30% interest. These high interest rates help to compensate for the defaulted loans and so far I could get an effective return on investment of around 18% , depending on my investment strategy.
If you’d like to give Bondora a try you can open an account through this link and you’ll receive 5 Euro starting capital which is credited immediately to your account.