To earn the top 4thWay PLUS Rating of 3/3 “Exceptional”, P2P lending companies need to supply 4thWay with detailed data of every loan and access to their key people. They need to pass our specialists’ Basel stress tests. These are the same tests that global banks have to do to see how your loans might perform in a downturn. But we go further: we assume a major recession and severe property crash happening. Only those passing these stress tests can get the top rating.
2/3 is highly impressive and these can earn the moniker “Rising Star” or “Hidden Gem”. The industry is still young, so quite a few P2P lending providers still don’t have the depth and history to conduct full Basel stress tests. But 4thWay’s specialists know what to look for in budding P2P businesses and how to quantify it. If they give us full data and access, and pass our other measures, they deservedly earn this 4thWay PLUS Rating.
1/3 “Discover” is where you can find surprising and interesting lending opportunities. It’s these ones that often pay the most attractive interest rates for the risks involved, as they are still being especially generous to attract lenders’ attention. These are the ones that are generally so young they don’t have the capacity to provide 4thWay with the data and access we require, or they’re not yet ready for that step. Even so, data from other sources or that is publicly available shows us that these, when viewed as a group, are likely to produce excellent results in the coming years.
Now it’s your turn. Because the ratings only work if you use them right:
The 4thWay PLUS Ratings in the P2P lending comparison table assume you spread your money across 100s or 1,000s of loans in 6+ lending accounts, and hold your loans until they’re fully repaid by the borrowers. Focus on your overall returns across all loans and P2P lending sites, not individual performances.
Ratings aren’t guarantees. Understand all the risks before you lend, because the risk of bad debts, as reflected in the ratings, is just one of the risks.