Bondora Reviewed | A P2P Lending Relic in a Dynamic World
Founded in 2008, Estonia, Bondora is one of the oldest marketplaces for Peer to Peer lending available online. Bondora is a loan originator itself unlike Mintos or PeerBerry who are loan originator aggregators. Bondora may have fallen off the track for a few years but recently have been making their way back to the spotlight.
There are over +119,000 investors on Bondoras platform. Only investors from EU or EEA compliant countries may invest and use Bondora services.
Types of Loans on Bondora
Personal loans
Mortgages
Business loans
Car loans
Payday loans
Invoice finance
Development loans
Bridge loans
Renovation loans
Student loans
Debt consolidation
Wedding loans
REIT loans
Small Business loans
Cash advances
Bondora Loan Characteristics
Loan duration1 Day - 60 Months
CurrencyEUR
Buybacks No
CollateralYes
Available inEU
Returns rate6 - 20%
Default Rate10%
Recovery Rate71%
FeesNone
BonusesNone
Bondora Features
Auto-invest
Manual selection
Secondary market
Pooled investments
Regulated
API Integration
High liquidity
Quick withdrawals
Secured Loans
Loan originators
Equity based
Credit based
Diversified marketplace
Award winning
Who is Bondora?
Bondora is both the P2P lending platform and the loan originator. The lending platform services the lenders on their platform and the loan originator gathers the borrowers. Bondora is based in Estonia and are one of the biggest and longest living P2P lending platforms. They have endured hardships as a platform and still persevered but the market has introduced new players like Mintos and EstateGuru who make it more difficult for Bondora to take the dominant position it once took.
Lender/Borrower Ecosystem
Bondora specializes in consumer and business loans, most of the borrowers on Bondora either need a loan to purchase a new car, renovate a part of their house or thousands of dollars to open or expand their business. Bondora offers both secured and unsecured loans. Bondora is the sole loan originator on their platform that acts as the intermediary between lenders and borrowers. As opposed to companies like Mintos or PeerBerry, who allow several loan originators on their platform. This means that Bondora has a lot more control as to what kind of loaners and borrowers may enter their platform. In turn, having centralized control over the ecosystem has its benefits and it also has its downsides. If Bondora, as a loan originator, were to go bankrupt than all of their loans would also be in trouble.
Mintos and PeerBerry serve as a platform that brings together loan originators and borrowers and in the transaction, they allow lenders to fund loan originators and reap a share of the profits. The upside to this is that if a loan originator becomes insolvent, for whatever reason, there are many reasons for such an event to occur, then the lending site can mitigate the damage and keep on going.
If Bondora goes insolvent, thousands of investors will lose hundreds of millions of dollars. Bondora also finds itself with a relatively high default rate, which we will discuss below, and a track record that leaves little room for desire. While we do recognize Bondoras strengths, we are critical of some of their downsides, and at this time, we can not recommend Bondora as a P2P lending site.
General Data
| General | Data |
| Origin | Estonia |
| Founded | 2007 |
| Offices | Estonia |
| Loan Type | Consumer Lending |
| Sign Up Bonus | €5 |
| Fees | 4 - 6% |
| Interest Rates | 6 - 20% |
| Min Deposit | €1 |
| Investment Duration | 1 - 12 Months |
| Secured Lending | No |
| Currency | EUR |
How to Borrow:
Bondora offers consumer loans on their platform for a total of 10,000 EUR. In order to receive a loan from Prosper borrowers must submit an array of information, including but not limited to, credit Score, identification such as driving license or passport, bank account statement as well as any criminal history.
Registration and Withdrawal
Registering on Bondora is very easy and straightforward. After filling out name, number, address and email, users will have a Bondora account. Standard KYC procedures to ensure the user is authentic and can be verified. The minimum investment is only one EUR. It can generally take 1 - 3 business days for funds to show up in the account. As per standard for European P2P companies the local currency of the website is EUR and it is recommended to deposit in EUR to avoid currency exchange fees.
For free EUR deposits we recommend the following online banks:
Marketplace
On their marketplace, Bondora provides lenders access to Finnish, Spanish and Estonian markets. Bondora uses a variety of features to bolster the P2P lending experience on their website. These features provide users the ability to diversify their investments based on their financial capacity and knowledge. In other words, Bondora strives to give investor's from all levels of income and experience a way to invest and see a reasonable return.
Primary Market
The primary market is where lenders decide which borrowers they would like to fund. Bondora provides in-depth information regarding the borrowers on their platform.
Data on Borrowers includes
- Age, Country, Employment, Education and Home ownership
- Income, Expenses, Mortgage, liabilities and other liabilities and liabilities after refinancing
- Collection Strategy
- Loan schedule, expected dates of payment, principal, interest and late fees
Secondary Market
Like many other platforms, Bondora has a secondary market which serves as a tool for users to sell off loans they no longer which to participate in.
An aspect of Bondora that is incredibly attractive is that Bondora does not charge fees on any of their markets. There is just a one euro fee on any withdrawals on the platform as a whole. For some investors who may not like the idea of fees, this is one of the most fee-forgiving models in the P2P space.
Go and Grow (GG)
This feature is one of the most valuable traits of Bondora. It's purpose is to provide no hassle investing. Go and Grow is Bondora's solution to a market need of simplified investing. The idea, is that users can deposit money into an account and watch it grow. Easy to deposit and just as easy to withdraw. With this feature, users can expect to see a return of 6.75% p. a.
Go and Grow is the ideal investing strategy. It provides a considerably low return but at no work. Because of its indirect investment structure, Go and Grow, gives users the option to lend money to Bondora and Bondora then organizes pay outs to those who lent the money.
Whether you're an investor that's looking to retire or a newbie starting to invest, Go and Grow could be exactly what you're looking for.
Portfolio Manager (PM)
Portfolio Manager is a slightly less intuitive feature than Go and Grow. It is more suitable for lenders who want a semi-automatic approach to lending. Go and Grow is, simply, putting your money in an account and watching it grow. PM requires the user to choose from 5 investment strategies ranging from Ultra Conservative to Opportunistic. The option in the middle of this range is "balanced" and "recommended".
Ultra-Conservative implies, automatic investing in low risk reward investments that are accompanied with low risk.
Opportunistic implies, automatic investing in high reward investments that are accompanied with high risk.
The balanced strategy exists in the middle of these two approaches. Either as medium risk loans, or a diversified portfolio that includes high and low risk loans to balance each other out.
Users can determine their strategies and adjust their preferences as their investments progress.
Portfolio Pro (PP)
PP provides users ultimate control over their investments. Rather than automatic investing this features provides users full transparency and control over their investments. PP is for individuals who are fully committed to peer to peer lending who trust their own decisions and due diligence to acquire preferred rates of return.
API
Bondora's application programming interface or API gives users the ability to design their automatic investing strategy. This feature gives users access to a greater depth of detail on their borrowers in order for users to be able, to program and automate personal and unique strategies. Users need to have their own knowledge of coding to be successful with Bondora's API.
New P2P lenders on Bondora should most likely try out their Go and Grow feature to see if the website is for them. All other strategies are there for more experienced P2P lenders.
Risks Involved
Bondora's marketplace has an average default rate of about 11%, which is really quite high. By the third quarter of 2020, Bondora's recovery rate had increased to 52.8%. These numbers are quite discouraging. Bondora has been around for a long time after all, and it is worth mentioning that Bondora is one of the few P2P lending platforms that is regulated.
Being an old P2P lender in such a rapidly changing environment also has its disadvantages. Whilst they are experienced and that experience will equip them with the proper tools to embrace economic disasters. They are also weakened by outdated, less efficient strategies and technologies. The current P2P landscape implies that in order for Bondora to assume its position of one of the great P2P platforms it will have to adapt to the new times. Perhaps a buy back guarantee is in order, or a diversification of loan originators on their platform.
Customer Service
Bondora has been around since 2008, and they've mastered the art of customer satisfaction. They offer email support, phone support and live chat on their website from 9am - 5pm. They respond rather quickly on live-chat and take about 1 business day to respond to emails.
Transparency & Security
Bondora does not offer a buy back guarantee. That being said, the company still undergoes fund recovery strategies to ensure the lenders on their platform that there is somebody looking out for them.
An 11% default rate is a lot higher than its competitors but there are few P2P lending sites that can offer such high returns. As usual, returns are correlated with risks.
Furthermore, it is unsettling that while there is no buy back guarantee for investors there is also no collateral on the side of the borrowers. It is difficult to trust in a system that does not find it necessary to protect capital.
Crisis Management
Bondora was born from the 2008 housing crisis and continue to persevere through recessions in Estonia, Finland and Spain. They are proud to say that when it comes to risk management during financial crises they are veterans.
That being said, their statistics would imply that Bondora was heavily hit by the crisis. Just prior to the international recognition of COVID-19, Bondora, was soaring in terms of investor's, amounts and returns received. Since then, they suffered quite a big decline in aforementioned criteria. Bondora quickly stabilized their marketplace and shortly after, Bondora saw exponential growth in fund recovery.
Our Readers Have Asked:
Is it safe to invest with Bondora?
No investment is ever "safe". There is an inverse relationship between risk and reward, the more risk you take the higher your reward as well as the chances of losing your investment.
How much money will I make with Bondora?
Bondora projects that investors in their marketplace will make anywhere from 6 - 20 percent in yearly returns. Bondora determines this projection on what kind of returns you will receive based on the strategy you optimize for.
What are the risks?
Bondora's default rate ranges between 10 - 12 percent, historically speaking, investors can at the very least expect a 10th or a little bit more of their loans to be very late or default completely.
Why do I need to submit ID verification?
Know-Your-Customer or KYC protocols are a standard and necessity to protect your investment account from bad actors and hackers.
Is P2P Lending a ponzi scheme?
Some Peer-to-Peer lending platforms are not too be trusted. The industry is still in nascent stage and while there are definitely some dishonest companies, there also many honest, hard working and profitable ones. Bondora is certainly one of those companies that is honest, hard working and profitable.
Where is Bondora located?
A. H. Tammsaare tee 47, 11314 Tallinn, Estonia
Watch & (L)earn
Discover more about Bondora in this short but informative video.
Pros, Cons and the Verdict
Pros
- Auto - Investing Tools
- Established Platform
- Regulated and Audited
- Secondary Market
- 11 Year Track Record
- Low Minimum Entry
- Very Transparent
- Low Fees
Cons
- Low IRR
- High Default Rate
- One Loan Originator
- No Buyback Guarantee
One should always remember those who paved the way so others could follow in their footsteps. Bondora has very much showed everyone else the "rights and the wrongs" when it comes to P2P lending. While they boast so many features that other platforms are a far cry away from, there are so many inherent problems with Bondora's business model.
The lack of strategy to secure investor's funds is something that requires improvement and attention. P2P lending, in all of it's unconventionality needs to be able to ensure lenders that their capital is protected. Especially when it's moving to individuals who would otherwise have a non-existent or terrible credit score. Despite their comments, their dealings with Covid-19 has not been as impressive as they may say so. And, if they are in fact experts in the field of finance, credit and risk management, then their performance should have reflected that.
Their level of transparency is incredible, users can see everything about Bondora, easily. Their support is fast, ready and here to help. Their website is intuitive and Bondora makes investing fun.
Perhaps, when Bondora is able to give something more concrete returns so their investor's can feel less at risk on their platform, then Bondora will reclaim a top position. Until then, Bondora needs to go back to its roots and redefine what it is they are trying to accomplish.