Ablrate Review – Peer To Peer Lending
** Ablrate review updated March 31st 2017 **
Read my comprehensive unbiased Ablrate review highlighting my experiences as a lender.
On June 2015, I made my first Ablrate deposit. Their platform was of interest because of the secured aircraft loans. Honestly, what man doesn’t dream of owning a plane? I’m one of those daydreamers, despite never being able to land a plane on Microsoft Flight Simulator. Ablrate’s lender returns are very competitive and while their loan offerings are sporadic, they are always interesting and pay great returns.
My March 2017 Allocation: Unchanged
My annual rate of return: 11% (Net return after bad debt and fees but before tax)
* This opinion risk factors in loan types, interest returns, platform history, default numbers and my own investing experience.
The Ablrate Review: What You Need To Know
- Up to 15% interest returns for lenders
- Interesting selection of secured loans
- Secondary market with zero fees for buying and selling loan parts
- Great staff communication
- Smaller amount of new loan offerings
- Overly complicated secondary market
- Lack of loans makes diversification difficult
- Short company operating history with smaller loan book
Ablrate Review: My experiences so far….
I have been investing in Ablrate since June 2015 and have always had high hopes for the platform. In fact when I made my first deposit, I thought Ablrate would become one of main investment platforms. But Ablrate never became one of my go to platforms because of its lack of new loan offerings, limiting the ability to properly diversify. While thier recent loan offerings have been increased, I also wondered how the platform could survive financially if their pipeline of new loans was so inconsistent. One of my loans has defaulted but apart from that, my experiences have been positive. Ablrate is consistent and transparent with their loan updates, even when the news isn’t good.
What Is An Ablrate?
Ablrate is a peer to peer lending platform where investors can lend money to loans secured by interesting items such as aircraft, property and shipping containers.
How Can I Contact Ablrate ?
UK Tel: 01491 410 400
When Did Ablrate Launch?
Are they regulated?
Yes, by the UK Government’s Financial Conduct Authority under full permissions. FCA regulation is nothing like the FSCS (Financial Services Compensation Scheme). FSCS covers consumers when they deposit money in banks, the FCA does not.
The FCA does have the ability to pursue criminal action against companies that violates its standards. The FCA is not a government entity and it’s funded by the very companies it regulates.
How Do I Sign Up / Any Offers?
Click here to sign up. Currently there are no cashback offers.
Who Can Open An Account?
Anyone over the age of 18 who can pass the usual verification identity checks. Overseas residents can invest however USA residents aren’t eligible.
What’s The Signup Process Like?
Easy. They run the usual i.d. check, no additional identification needed.
How Are Deposits Made And How Quick Are They Credited?
Deposits are made via bank transfer and usually show up within an hour or two during business hours.
What’s The Minimum Deposit / Investment?
Loans: Between £0 to £100 depending on the loan
Does Ablrate Offer An Innovative Finance ISA?
Currently there isn’t an Ablrate IFISA. If you want to invest through an IFISA, you can use a company such as Sippclub.
How Much Annual Interest Does Collateral Pay Lenders / Investors?
6.5% – 15.5%
Does Interest Accrue Immediately On Loan Purchase Or When the Loan Begins?
This varies depending on the loan. Some loans pay instant returns while others pay once the loan has been drawn down.
When Is Interest Paid?
Interest payments are staggered throughout the month. Your account dashboard shows when your next payment is due:
Am I Lending To The Ablrate Platform Or To Borrowers?
Loan agreements are directly between lenders and borrowers.
What Are The Fees?
Lenders pay no fees. Secondary market transactions are also free.
What Are The Length Of The Loans?
Most loans are one to five years. Loans can renew at the end of term or be paid off early.
What Security Does Ablrate Loan Against?
Loans are usually secured by items such as aircraft, property, or business assets and debentures. Loan To Values are very reasonable. If the borrower defaults, Ablrate or its loan partners can sell the assets to try to recover lenders money. If a borrower defaults, it can take months or even years for recovery. That is one of the risks of peer to peer lending.
What Are The Loan Default Rates?
Ablrate doesn’t provide default statistics but I believe their default rate is very low. So far I have only experienced one default but my sample size is small since I haven’t invested in many loans.
What Is Default Handling Like?
My single defaulted loan is working its way through the legal system. The process has taken a few months but Ablrate’s communication has been consistently good throughout. Once the assets are legally acquired, Ablrate will attempt to sell the assets to recover lenders capital and interest.
Is There a Secondary Market?
Yes but the market is the one feature of the platform I don’t care for. See below in my Thumbs Down section for a full explanation. On a positive note, lenders can buy and sell loan pieces anytime for free.
What Are The Main Risks?
Platform failure: As with every peer to peer company, platform failure presents the greatest risk to lenders. Ablrate is a smaller platform with a limited loan book of just over £11m. If Ablrate were to cease trading, there are many unknowns as to whether lenders capital and interest would be recovered.
Economic downturns: Since Ablrate pays lenders high return rates, this means borrowers are paying even higher interest rates. When economies fail, high interest loan default rates increase and asset values can fall, making recovery challenging.
Valuations: Ablrate’s loans money against assets that can be difficult for lenders to value. It’s relatively easy for an average person to approximate the value of a house or a car, but not an airplane. Lenders place their trust in Ablrate’s ability to value the assets, which I believe they do well. But if assets are incorrectly valued and a default forces a sale, recovered monies could be less than the original loan amount, resulting in lenders experiencing possible losses. Ablrate does offer insights on how to read aircraft valuations here.
Is There A Provision Fund?
What Happens if Ablrate Goes Bust?
Ablrate has set up a living will through Kingston Smith LLP, a UK accountancy firm. In the event Ablrate ceases to operate, Kingston Smith would “administer the company in an orderly wind down process and collect interest and capital to be redistributed to loan holders.”
It appears Ablrate have taken this process seriously but in reality, no one knows how effective a platform wind down would be.
WHAT I LIKE ABOUT ABLRATE:
Lenders Returns of 10-15%
Ablrate offers industry leading return rates. Rates vary depending on the loan offering and interest has always been paid on time. I’ve never had an issue received my capital once loan terms have ended. High lender returns are always tempting but remember, with higher reward comes higher risk.
Interesting Selection Of Secured Loans
Ablrate’s loans were originally focused on aircraft but they have since expanded into other alternative and interesting offerings. Whether you lend money secured by a car, a gold ring or a Boeing 747, the type of loan asset only matters if the loan defaults and the asset needs to be sold. Having said that, when an aircraft loan is offered, it does makes lending more interesting.
Zero Secondary Market Fees
Ablrate offers a fee-free secondary market for loans. Market liquidity varies based on demand and supply but if you need to buy or sell, it’s possible to do so, especially if you’re willing to sell at a discount and buy at a premium.
If you need help, the Ablrate team is always very helpful and quick to respond. They send regular emails containing information about loan updates. Good customer service always inspires platform confidence.
WHAT I DISLIKE ABOUT ABLRATE:
Sporadic New Loan Offerings
I have a rule where I try not to invest more than 2% to 5% of my platform allocation into any individual loan. Ablrate’s inconsistent new loan offerings makes this allocation difficult to follow so I’m forced to allocate larger single loan amounts than I normally would. If a new investor were to deposit £1000 on the platform, they would ideally invest in 20 loans minimum using the 5% allocation rule.
In the past Ablrate hasn’t offered enough loans for ideal diversification so my investment amount has remained relatively small. Recently Ablrate has increased their new loan offerings and hopefully this will continue into 2017.
The Secondary Market
While Ablrate’s secondary market makes sense to some, other lenders I’ve spoken to find it difficult to understand and use. The market works on Bids and Offers using percentages:
Bids are what lenders are willing to pay when they buy and Offers are what lenders are willing to sell loan parts for. The popular loans are usually priced at a small premium.
When you click on a loan you want to buy or sell, you will see the various Bids and Offers:
The percentage price is the amount someone is willing to pay or sell their remaining loan capital for. In the above example, the buyer is willing to pay 100% (yielding 12.683%) meaning £100 for every £100 of remaining capital. This buyer isn’t asking for a discount or willing to pay a premium. the seller on the other hand is offering a price of 101% (yielding 11.351%), representing a 1% premium.
When you click on the Amount to Sell or Buy boxes, the calculation button presents the specifics of the transaction:
You can also set your own Bid and Offer prices:
When you click on this option, you set the amount you wish to buy and a yield percentage you want to receive:
Unfortunately this screen doesn’t show you transaction specifics or how much loan yield you would receive if your bid were accepted by a seller.
It’s definitely the most complicated secondary market system I’ve ever used. Personally I like markets that are really simple and have no buyers premiums or difficult to understand calculation methods. The most liquid peer to peer secondary markets offer no premiums or discounts.
Short Company History Track Record
Ablrate launched in 2014 so its track record is short. Having said that, the staff and Directors appear to be highly experienced, especially in aviation leasing.
No Information on Default Rates
The website doesn’t show any statistic information regarding late payments or default rates but the company estimates its default rates will be approximately 1% of all loans.
Since my Ablrate investment has always been relatively small, I’ve mainly invested in aircraft and shipping container loans. There was a time where I increased my investment slightly but became uneasy about the lack of new loans so I scaled back. I would like to increase my investment amount again and might do so when more loans appear on the platform. I have successfully bought and sold small amounts on the secondary market. Out of the few loans I’ve held, one has defaulted and is being appropriately handled. Remember defaults are a part of peer to peer lending and should be expected.
The Ablrate Review Conclusion
After 18 months of lending, my Ablrate investment amount continues to remain small due to the limited loan offerings. Lenders can expect returns up to 15% gross annually (not included expected defaults) and most loans are secured by assets. Their current loans are creative and the due diligence is high. If you are good at assessing business and don’t mind the limited diversification options, you will find Ablrate’s loans attractive. The secondary market isn’t easy to use but it works, once you understand how to use it. I look forward to Ablrate’s continued growth and I have high hopes they’ll continue to expand, offering quality loans giving better diversity options to lenders. I hope this Ablrate review helps make your investing decision easier.
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** This unbiased Ablrate review is for information purposes only and should not be considered as investment advice. Opinions expressed in this Ablrate review are based upon my investing experiences. All information was deemed to be correct at the time of writing. Peer to peer lending contains risks so never invest more than you can afford to lose. **