Ablrate Review – Peer To Peer Lending
** Ablrate review updated December 4th, 2019 **
Read my comprehensive unbiased Ablrate review highlighting my experiences as a lender.
On June 2015, I made my first Ablrate deposit. The platform was of interest because of the secured aircraft loans. Honestly, what person doesn’t dream of investing in planes? Albrate is one of the few survivors in the high-risk loan sector so I’m keeping my investment amount low as my faith in these types of loans has diminished due to the failures and closures of Lendy, Funding Secure and Moneything.
Click here to listen / watch my podcast with David Bradley Ward, Ablrate CEO and founder.
My November 2019 Investment: Unchanged
My annual rate of return: 10.95% (Net return after bad debt and fees but before tax)
|Est. Annual Returns:||Up to 15%
|Recent Return Rate Trend:||← →|
|My Risk Rating *:|
|Loan Types:||Aviation, property, business, grouped assets|
|Loan Security:||Property, airplanes, equipment, debentures|
|Min Investment:||£1 - £100 depending on loan|
|Time to Become Invested:||Fast|
|Time Needed Managing:||Low|
|FCA Regulation:||Full permissions|
|Cashback Offer:||No current offers|
|Sign Up:||Sign Up For A Free Account|
* This opinion risk rating factors in types of loans offered, interest rates, platform history, default numbers and my own investing experience. My risk rating explained.
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
- ISA available
- High risk
- Small loan book
- Limited default recovery experience
- Smaller amount of new loan offerings
- Types of loans make risk assessment difficult for all but very advanced investors
- Complicated secondary market
Ablrate Review: My experiences so far….
I have been investing small amounts through 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 my main investment platforms. But Ablrate never became one of my go-to platforms because of its lack of new loan offerings, limiting my ability to properly diversify. I have also become less inclined to invest in high-risk high return loans due to other company closures and loan defaults.
Also, I found it time-consuming doing the due diligence on each loan. While Ablrate’s 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 Ablrate loans defaulted and seems stuck in legal purgatory with no recovery after over two years. Other than that my experiences have been positive. Ablrate is consistent and transparent with their loan updates, even when the news isn’t good.
What Is 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 violate 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 can be made via debit card and funds are normally available immediately. You can also make deposits via bank transfer where funds 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?
Yes Ablrate offers an IFISA
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 reasonable. If the borrower defaults, Ablrate or its loan partners can try to sell the assets 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.
What Is Default Handling Like?
My single defaulted loan is working its way through the legal system but seems troubled. There are rumors that the security wasn’t properly handled and recovery is questionable. Only time will tell if this proves true. The recovery process has taken many months but Ablrate’s communication has been consistently good throughout. Hopefully, the assets can be legally acquired and Ablrate can 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 £6.2m. 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 risk assess. It’s relatively easy for an average person to approximate the value of a house or a car, but not an airplane or a business. 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.
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.
THUMBS UP FOR ABLRATE:
Lenders Returns of 10-15%
Ablrate offers high 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 much 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:
Ablrate’s average lender interest is 12.5%. Borrowers are paying much higher interest for their loans but Ablrate doesn’t publish how much interest borrowers are paying so it’s hard to assess just how risky a borrower is.
Unfortunately, other high interest-paying peer to peer lending companies haven’t been able to survive so my faith in this type of investing are low.
Difficult Risk Assessment
Due to the nature of Ablrate’s loans, risk assessment will be very difficult for all but the most advanced investors. Investors will have to rely heavily on the due diligence of Ablrate to underwrite quality loans, a skill some other companies have performed poorly. Not to say Ablrate can’t accomplish this, just that my faith in underwriting quality of higher-risk lending is low to where I’m not willing to take the risks anymore.
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 make this allocation difficult to follow so I’m forced to allocate larger single loan amounts than I normally would. If a new investor didn’t have time to research loans individually and were to deposit £1000 into Ablrate, they would ideally invest in 20 loans minimum using the 5% allocation rule.
Ablrate’s loan originations for 2019 were lower than its other years in business. This suggests that Ablrate has experienced difficulties originating new loans.
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 premium options.
Since my Ablrate investment has always been small due to the high risk, I’ve invested small amounts into various loans. I have successfully bought and sold small amounts on the secondary market. Out of the few loans I’ve held, one defaulted in September 2016 and still hasn’t come to a recovery conclusion. Remember defaults are a part of peer to peer lending and should be expected, especially in high-risk lending.
I’ve no desire to increase my investment exposure through Ablrate at this time.
The Ablrate Review Conclusion
After more than 3 years months of lending, my Ablrate investment amount continues to remain small as I await the recovery results on a defaulted loan I’m invested in. If you do invest through Ablrate, Ablrate advertises gross returns up to 15% with the average being in the mid 12% range depending on which loans you invest in.
Risk assessment of Ablrate’s loans will very difficult for all but the very advanced investor.
If you are good at assessing business and have time to research, you might find Ablrate’s loans attractive. The secondary market to buy and sell loan part isn’t easy to use but it works, once you understand how to use it. I look forward to Ablrate’s continued growth but my desire for high risk investing has diminished so my balance will remain minimal.
I hope this Ablrate review helps make your investment decision easier.
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** This Ablrate review is for information purposes only. This information is not financial advice and has been prepared without taking your objectives, financial situation or needs into account. You should consider its appropriateness for your circumstances. All investing carries risks. Opinions expressed in this review are opinions based on my own personal experiences. The FSCS does not cover peer to peer lending and your capital is at risk. Please don’t invest more than you can afford to lose. **