Lending Works Review – My Experiences After 4+ Years Investing

Lending Works review

Lending Works Review

** Lending Works review updated September 29th, 2019 **

I made my first deposit in Lending Works on July 16th, 2015 so I’ve just passed my fourth year anniversary. July 2019 brought some positive changes to Lending Works investment products and I’m still happy lending through Lending Works.

Lending Works offers peer to peer investment options via products that are protected by insurance to cover missed loan repayments due to borrower job loss, accidents, sickness,  or death. Lending Works is extremely simple to use. Deposit your money, select a three or five-year term, decide between reinvestment or two different withdrawal options, and set-and-forget.

Read more below for my unbiased exclusive Lending Works review.

My August 2019 Investment: Reduced
My rate of return: 5.9% (Net return before tax)
Est. Annual Returns:Up to 6.5%
Recent Return Rate Trend:
My Risk Rating *:
Launched:January 2014
Early Exit:
Provision Fund:
ISA Available:
Loan Types:Consumer loans
Loan Security:Loans are unsecured
Lender Fees:Exit fee is 0.6% or £20 (whichever greater)
Min Investment:Regular account & ISA: £100, ISA: £100
Avg. Lender Portfolio Size:£13,000
Time to Become Invested:Varies based upon demand but can be about 10 days.
Time Needed Managing:
Lending Agreements With:Borrowers
FCA Regulation:Full
Cashback Offer:
New lenders: £50 bonus when you invest £1,000+ investment in regular or ISA account
Sign UpSign Up Now

* 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.

How Do I Sign Up?

Receive £50 cashback when you invest £1,000. Please read the terms and conditions on the sign-up page. (Lending Works pays me a small referral fee when you open an account through one of my links. This fee comes at no expense to you and when you sign up for an account through my website, it allows me to continue to operate this website).

Lending Works Review: What You Need To Know

  • Very easy to use and hands-off
  • Two lending products, updated July 23rd 2019
  • Competitive lender return rates
  • Auto reinvest
  • Safety measures include provision fund and insurance
  • High-quality borrower screening and underwriting
  • Offers ISA
  • Low default and bad debt rates
  • New exit options with lower or zero exit fees (exit based on availability)
  • Lender return rates can fluctuate
  • Loan matching times can fluctuate
  • Early loan repayments can lead to cash drag due to matching times
  • £10 min needed to reinvest interest payments
  • Borrower APR % has been rising. Does this mean increasing risk?
  • 0.6% early exit fee for legacy products (new investments will see fee drop to 0.5% for 5-year product with zero fee for 3-year product)
  • Reinvestment funds prioritized over new investments
  • Some information tricky to find

Lending Works offers lenders peer to peer loans to creditworthy borrowers and is very picky who it lends to. Lending Works is unique in that not only does it have a provision fund which is paid for by loan borrowers, it also carries insurance to protect against defaults due to borrower job loss, accidents, sickness, death, fraud, and cybercrime.

Equivalent Competitors

Ratesetter, Zopa, Growth Street

Lending Works Review: My experiences so far….

I made my first deposit in Lending Works in July 2015 and have been happily investing through them for over four years. Account setup was very simple after passing the identification verification checks. I opted for the five-year term with automatic interest reinvestment. It’s such an easy set-and-forget website.

The biggest downside of Lending Works is it can take some time before your investment is deployed depending on how much lending money is ahead of yours in the queue. This queue is always based upon lending and borrowing demand and supply. I’ve found queued money takes about five to seven days to be invested but I’ve seen times as low as 1 day and as high as 14 days.

The queue time is always transparently displayed under the Offers Tab on your investor dashboard.

Reinvestment money is always placed in priority over new deposits. New investment time frames have ranged from 2 to 20 days but reinvestments are prioritized over new investments so they can be a little quicker.

I’ve been very happy with Lending Works because it requires so little effort and the product does what it says on the tin. Interest rates are competitive so this makes Lending Works more attractive.

When Did Lending Works Launch?

Lending Works was founded in 2012 and started offering peer to peer lending in January 2014.

What is Lending Works?

Lending Works is a UK based peer to peer lending company where investors lend money to personal unsecured loans to individuals. Investors are then paid interest returns based on two products, a three-year and five-year product.

What makes Lending Works different from other peer to peer lending companies is their approach to risk management. Lending Works attempts to reduce risk using their Shield which uses a reserve fund and loss insurance to protect against some forms of borrower default such as loss of employment, accident and sickness and death.

What Investing Products Does Lending Works Offer?

Lending Works offers two simple investing products. New customers saw the new products take effect on July 23rd, 2019 while existing customers saw the changes on August 6th, 2019.

Existing money within the three-year product will remain as is while all five-year product investments will be moved to the updated Growth product.

Growth (five year product)

  • Ideal for longer-term investors
  • Money is invested across personal consumer loans from 2 to 60 months in length
  • 0.5% fee for early exit (exit never guaranteed)
  • All existing five-year investments will be moved to the updated product

The Growth product is the same as the current five-year product except the selling fee is being reduced from 0.6% to 0.5%. It’s important to understand exit is based on demand and supply and not guaranteed.


  • Ideal for shorter-term investors
  • Money is invested across personal consumer loans from 2 to 60 months in length
  • Zero fees for early exit (exit never guaranteed)
  • All existing three-year investments will NOT be moved to the updated product but all new investments and repayments will be updated to new product

The Flexible product is similar to the existing three-year product but the biggest welcome change is the removal of exit fees should you want to access your money early. Lending Works is predicting investors will be able to exit in 48 hours providing there is demand for the loans. The exit time will always depend on demand and supply and is not guaranteed.

Important to note that existing investment in the three-year product prior to July 23rd will stay as is and the exit fee of 0.6% will remain. Any new investments or reinvestments will fall under the updated product.

Investors can set their account to automatically withdraw repayments to their bank accounts for income or automatically reinvest repayments and interest.

Both updated products are available in ISA and regular variants.

Is Lending Works Regulated? 

Yes, by the Financial Conduct Authority #722801 under full permissions granted December 10th, 2016. Investments made through Lending Works are not covered under the FSCS (Financial Services Compensation Scheme).

FCA regulation is nothing like the FSCS, which covers consumers when they deposit money in banks. The FCA reports to the UK government and has the ability to pursue criminal action against companies which violate its standards and codes of conduct.

Lending Works’s Company Financial Health

Lending Works operated at a loss for 2017. You can view their company accounts here.

Who Can Open An Account?

Any UK resident or nonresident with a UK bank account.

What’s The Signup Process Like?

New account applicants will need to pass the usual identification verification checks. I found the account opening process to be painless.

How Are Deposits Made?

Via debit card or bank transfer

What’s The Minimum Investment?

£100 on regular or ISA accounts (Increased from £10 min in April, 2019)

Does Lending Works Offer An Innovative Finance ISA?

Yes. The ISA was launched in January 2017 and includes the same two products as the standard accounts.

How Much Interest Does Lending Works Pay Lenders?

Rates vary week to week but the norm has been in the mid 6% range (five-year term) and 5% for the three-year term. Remember that idle money waiting to be invested does affect your returns negatively, (I estimate up to 0.25% per year), so your returns may be less than advertised.

When Is Interest Paid?

Interest payments are made to you when the borrower makes payments so therefore payments are staggered throughout the month.

What Are the Lending Works’s Bad Debt Rates? 

This number is shown as the actual lifetime bad debt (defaults minus recoveries), as a proportion of the total amount lent in the year of loan origination.

2016: 5.7%
2017: 6.1%
2018: 3.3%
2019: 0.2%
Total bad debt since 2014: 3.6%

As long as Lending Works keeps its lending standards high, the bad debt rates should remain reasonable.

You can view all the loan statistics here.

What Are The Fees? 

Flexible Product: Existing investments will be subject to the 0.6% exit fee while new investments will be able to take advantage of the free withdrawals.

Growth Product (5 year): 0.5% exit fee

Any differences in interest rates between buyers and sellers will be covered by Lending Works.

How Long Are The Investment Terms?

Short term, or up to 5 years

How Are Loans Paid Back?

Principal and interest are paid monthly.

What Security Does Lending Works Use?

Currently, all loans are unsecured.

Is There A Secondary Market?

Yes, and Lending Works will try to sell your loan pieces to other investors. The Flexible product has a fee-free exit and the Growth product has a 0.5% exit fee of the amount you are selling.

Exiting is never guaranteed and can only occur if there is demand from other lenders wanting to buy loans.

What Are The Main Risks?

Borrower default: Since all loans are unsecured, defaults are a concern. Lending Works attempts to lower the risk by strict borrowing requirements and default insurance.

Company failure: If Lending Works were to fail, they have a 3rd party in place to facilitate continued borrower to lender loan payments.

Economic downturn: Any downturn in the UK’s economy could affect people who borrow money.

Borrower Quality: If Lending Works lowers its requirement and lends to lower-quality borrowers, default rates could rise.

Is There A Provision Fund?

Yes. Borrowers pay a risk-assessed fee that is added to the fund and is designed to cover their payments should they fall behind or default.

Am I Lending To Lending Works The Platform Or To Borrowers?

All loan agreements are directly between lenders and borrowers.

What Really Happens If Lending Works Goes Out Of Business?

Lending Works states it has a 3rd party in place to facilitate continued borrower to lender loan payments if their business were to fail. In reality, as with every peer to peer lending company, no one can predict recovery amounts as there are many unknowns here, so only invest what you can afford to lose.


Ease of Use / Hands Off

Unlike some other peer to peer lending companies, Lending Works is very hands-off which means less time glued to a computer screen.

New Free Exit On Flexible Product

For investors looking for a short-term investment, the Flexible product offers a free exit for new money invested. Exit is never guaranteed as it’s based on demand and supply.

Interest Rates

Rates adjust weekly but have been holding steady for several months paying up to 6.5% on the Growth product and 5% on the Flexible product.

Auto Reinvest

Lending Works is a dream come true for those who want to be hands-off investors. Just choose from two simple reinvestment options and set and forget.

Lower Risk

I consider Lending Works to be one of the lower risk peer to peer lending options. Lending Works stated that their quality of underwriting is higher and that their borrowers are well-screened and lower risk. They also provide a provision fund which is funded by borrowers and well-funded, and insurance is in place to cover loan payments in the event of borrower job loss, accidents, sickness, death, fraud, and cybercrime.

Remember there is risk in all forms of investing. However as long as Lending Works maintains its advertised high borrower screening, the company should remain as one of the lower risk peer to peer lending companies.

High Quality Borrower Screening And Experienced Underwriting Team

It’s in Lending Works’s best interest to keep its defaults to a minimum and its experienced underwriting team accomplishes this by implementing high-quality borrower screening.

Fully FCA Authorised / Offers ISA

Lending Works passed its compliance checks and was one of the first peer to peer companies to offer lenders an ISA.

Low Default And Bad Default Rates

Since Lending Works screens their borrowers effectively and chooses lower-risk customers, default and bad debt rates have been low which is good news for lenders.

Possible Easy Exit On Five Year Growth Product

Providing there are funds from other investors to purchase your loans, Lending Works will facilitate a sale for a fee of 0.5%. Remember, there may be additional exit fees if your investments are at lower rates than current rates.

Withdrawals & Payments

Capital and interest payments are credited promptly. Withdrawals are prompt, usually showing in your bank account in a day or two.

The Website

It’s very easy to use and understand. Here is the Portfolio dashboard:

Lending Works review

Click Lender Settings on the right side and you will be taken to the page where you select your reinvestment options:

Lending Works review

Loan matching estimates are now shown on the dashboard page which is a really nice addition:

Lending Works review

Sometimes A Delay In Deploying Money

Depending on changes in demand and supply, it can take some time for your new investments to be invested in loans. I’ve seen investment times range from two days to one month.

For example in December of 2018, investments were taking as long 30 days to deploy and in August 2019 times ranged from 1-7 days for the Flexible product and 7-14 for the Growth product. In my experience, five days has been my usual investment time. This delay in investing is known as “cash drag” meaning anytime your money isn’t earning you interest, it’s a drag on your returns.

Remember that queued reinvestments always take priority over new investments.

Early Loan Repayments Can Lead To Cash Drag Due To Matching Times

Lending Works doesn’t offer lenders a way to limit how much money is placed into any single loan. So, for example, if you wanted to invest £5,000, that amount could be theoretically invested into two different £2,500 loans.

If a loan is repaid early, you could have a large portion of funds returned to the matching queue taking days to be reinvested. It is theoretically better to have 100 x £50 loans than two x £2,500 loans because the chances of your two loans being repaid early are much higher than the chances of 100 loans being repaid early.

The problem is in order to receive 100 x £50 loans, you would have to manually drip-feed £50 per day into your account which is a pain. Hopefully in future Lending Works will allow lenders to set how much maximum they would like to go into any single loan.

Lending Works does use their Protection Shield to diversify and equally cover lenders but it would be nice if, like Funding Circle, they offered lenders the ability to set their maximum allocation amounts to any single loan.

£10 min Needed To Reinvest Interest Payments (Began April, 2019)

Lending Works changed their minimum investment requirement from £10 to £100 and their minimum reinvestment from £1 to £10.

What this means to you is if you have invested £1,000 in the five-year product paying 6.5% per year, you’ll receive £0.18 per day. This means it will take 56 days for you to earn £10 in interest. This further means that your money won’t be reinvested into the queue for 56 days and your returns could be reduced depending on the queue times.

The solution here is to invest at least £1872 at 6.5% per year. to receive £10 in interest each month. The more you invest, the quicker you’ll receive £10 in interest and reduce this issue.

Borrower APR %’s Are On The Rise

When Lending Works first launched in 2014, their average weighted APR (annual percentage rate) to borrowers was 7.7%. In 2019 this number has risen to 14.3%. This leads to the question of whether the borrowers are being perceived as riskier or whether this is a business operational decision to become profitable?

Exit Fees

Lending Works has a 0.5% exit fee on their Growth product plus you may also face additional fees if interest rates are higher than your current investments. For example, if the loans you wanted to sell were at 6.5% but the new rates were paying 7.5%, the 1% shortfall would be charged to the seller as a fee. Lending Works doesn’t state whether this shortfall fee is charged to the new Flexible product so call to check before you exit.

This 0.5% selling fee is for the five-year Growth product and for existing investments in the older three-year product.

Reinvestment Funds In Queue Prioritised Over New Investments

This thumbs down is for those depositing new funds or switching their received capital and interest from withdrawing to reinvest. Reinvestment money is always at the front of the lending queue. Not a big negative but if you move funds to your wallet to withdraw and later decide you want to reinvest, the funds will be moved to the back of the lending queue.

Some Information Is Tricky To Find

One feature that really bugs me about Lending Works is the transaction history is difficult to find. No matter how many times I log in, I always forget where this information is located so I thought I would share to save you the headache.

Log into your lender dashboard and look at the bottom of the page:

Lending Works Review

Once you click the more button, you can scroll down the next page to the transaction details.

My Strategy

I began by investing a small amount in the five-year term and invested more as I became comfortable with the company. I now use the Growth product along with the set and forget auto reinvestment.

Interest return rates are still attractive so I continue investing through Lending Works. I may start using the three-year since the exit fees are being removed. I am always keeping an eye on bad debt rates and how much APR% borrowers are being charged.

The Lending Works Review Conclusion

After 4+ years of investing, I continue to have good experiences through Lending Works as their lending return rates remain competitive. Their advertised high-quality borrowers, quality underwriting, low default rates, well-funded Provision Fund, and default insurances convinced me to invest with Lending Works.

Lending times were unusually long for the end of 2018 but this demand and supply issue has been addressed and lending times have been reduced in 2019 but can still fluctuate.

The minimum reinvestment amount of £10 will reduce returns for those with smaller investment balances because it takes a while to accumulate £10 of interest. Investing a minimum of £1872 paying 6.5% returns will accumulate £10 of monthly interest.

I love the fact that Lending Works has zero exit fees on the Flexible on the three-year product and I think the 0.5% exit fee on the five-year Growth product is very reasonable.

If you are looking for a true set and forget investment that requires only a watchful eye and is relatively safe, Lending Works might be for you. Once you start investing in peer to peer lending, you will see how time-consuming it can be so Lending Works is a breath of fresh air.

Receive £50 cashback when you invest £1,000. Please read the terms and conditions on the sign-up page. (Lending Works pays me a small referral fee when you open an account through one of my links. This fee comes at no expense to you and when you sign up for an account through my website, it allows me to continue to operate this website).

I update this review as changes occur. If you notice any errors or omissions, I invite you to contact me and let me know.

If you enjoyed my Lending Works review and want to learn more about peer to peer lending, click here and receive my complimentary Top 5 Peer to Peer Lending Sites Report.

Disclaimers: I’m not paid to write this Lending Works review nor am I employed by any of the companies I write about. In most cases, I have invested or continue to invest my own money in these companies. The sign-up links on this website are referral links. When you sign up for an account through my website, I receive a referral fee directly from the companies, at no cost to you. Your support enables me to continue to operate the Financial Thing website. You can read more about my referral links here.

This unbiased Lending Works review is for information purposes only and should not be considered investment advice. Opinions expressed in this Lending Works 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.


Overall Rating:
74 %
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I'm the author of Financial Thing and a regular peer to peer lender who was begrudgingly forced to figure out his financial life. Now I have a passion for helping others figure out what took me years to learn.


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