Lande Is The 1st European P2P Lending Company To Earn A 4thWay PLUS Rating
Lande* is the first P2P lending company in either the eurozone or continental Europe to earn a 4thWay PLUS Rating, as well as being the first to earn the very top rating.
What does Lande do?
Lande's borrowers are Latvian businesses – mostly farmers – who borrow for 3-24 months, with the loans secured either on the farmer's land or home, on pre-priced grain with insurance against natural hazards, or on farming machinery. Most loans pay lenders interest every month, with the amount lent repaid at the end.
To lend, you must have a bank account in the EU, Iceland, Liechtenstein, Norway, the UK or Switzerland.
Lenders using Lande have lent €8 million since 2020.
About Lande's 4thWay PLUS Rating
Lande has earned the 3/3 Exceptional 4thWay PLUS Rating.
This means that our stricter versions of the Basel global banking stress tests show lenders can expect to make a profit, even if there's a terrible recession and property crash at the same time.
These tests are based on Lande's actual raw data and assume that lenders use sensible lending strategies.
Lande just scrapes having enough history for us to be able to conduct our ratings assessment, which means that our stress tests include heavy penalties for its immaturity. Despite those penalties, it still manages to earn the top rating, which is impressive.
The ratings assessment finds that, if you lend for two years from the start of a major recession and property crash, we still expect the average lender to typically make a return of circa 5% per year after bad debts.
If instead you just lend once across a batch of loans during a downturn, and don't re-lend for two years to keep earning more interest, we still strongly expect you'll be satisfied with your overall performance.
So the margin of safety looks highly satisfactory.
When forecasting business lending during disasters, the type of business you're lending to has a very specific impact on performance. For example, the most recent global recession hit recreational services particularly badly.
Most forecasting models of potential losses in a disaster period assume that you're lending to many different kinds of businesses. Lande is mostly lending to farmers, which adds some uncertainty to our forecasts, as a specific type of recession could impact farmers more.
That lack of diversification across different industries is something to watch and plan for, especially through your other lending accounts and investments.
Considerably offsetting that risk is the fact that Lande has the highest cover against losses of any peer-to-peer lending provider that we have assessed so far, in terms of the interest earned against forecast losses in a disaster year. Typically this is 11% per year.
About Lande's 4thWay Risk Score
Lande has one of the lowest (i.e. best) 4thWay Risk Scores we have ever awarded and the lowest for a lending account with such high lending interest rates.
It's 4thWay Risk Score is 4/10, which means we expect the average lender who has spread across lots of loans will lose less than 5% of their lent amount during a severe downturn.
Unlike the 4thWay PLUS Rating, any interest earned is not considered in the risk score, so annual interest rates offset those one-off losses.
Lande's actual results have seen full recovery of the few bad debts that have occurred so far, plus interest, when they've had enough time to take the necessary steps.
Lenders need to be lending across dozens of loans to lower their risks and hold onto their loans until they're repaid, rather than selling early, so that their good loans continue to pay them interest for as long as possible.
Picking loans yourself – and how easy it is to lend
We don't have the right sort of data from Lande to help us understand how easy lenders are finding it to diversify quickly across lots of loans. We see that it typically has perhaps 15-30 new loans per month to lend in.
It also appears to have a reasonable number of loans that you can choose to lend in as of now, if you buy second-hand.
This is perhaps made easier by a lending partner of Lande's. This partner holds some of the loans that goes live and then sells them more slowly on the secondary market, to give more lenders a chance to take part. This indicates that you possibly don't have a long wait to deploy some of your money across quite a lot of loans.
Unusually, we see that existing loans that have turned bad are also still listed for resale, even though they are sold on for the initial loan amount. So do read any comments related to each loan on the secondary market you want to buy to find any reports of late or bad debts.
Automated lending and how easy it is to lend
Continuing that theme, it seems likely, therefore, that automated lending also offers the opportunity to spread across enough loans within a few months.
Lande doesn't commit to automatically spreading your money across a specified, minimum number of loans. But you're accessing the same pool of loans that's available to lenders who choose their own loans.
There are no additional costs for using the auto-lend feature.
How much cash can you deploy?
While I have noted that you can probably spread across enough loans within a few months, wealthier lenders might be lending less than you hoped in each loan.
The average lender currently lends around €3,000 and the entire book of loans is for smaller values (no more than €70,000 so far) that sum to just €8 million. Still, small lenders will be dragging that average down somewhat. Plus, Lande has sped up approving loans in 2022, so let's hope the trend continues to make it easier to lend larger sums.
If we get more data on this, we'll let you know.
Minimum lending amount
You lend for as little as €50, or just €2 when buying from second-hand loan parts.
Early exit
We have no data to help us understand how easy it is to sell your loans at present. But, considering that lenders are taking up the new loans that become available, I expect that selling your good loan parts is not currently difficult.
It should remain easy to sell most of the time, so long as lenders continue to get decent lending results.
Don't expect to always be able to sell your loans and sometimes you might need to wait until borrowers repay you naturally. If that happens to you, remember this is normal in money lending and therefore not likely to be a problem with Lande itself. Plan for this by preparing to stop re-lending your money a year or two before you need the cash back.
You buy and sell for the initial loan price, regardless of the status of the loan.
There are no fees for selling your loans.
Currency risk
If your own currency isn't the euro, there's currency risk (or reward).
The euro can easily move, say, 10% to 15% against most other currencies in less than a year – either in your favour or against. In such cases, one year's movement could wipe out – or double – your lending returns.
There are ways to contain this risk – and cut costs at the same time. To minimise currency risk and get the cheapest exchange rates, see The 11 Key Peer-To-Peer Lending Risks.
Regulation and lending structure
Lande is regulated in Latvia, which is seen in a positive light, overall, by the OECD and the IMF.
Latvia has just recently developed specific regulations for P2P lending and had previously been using older structures.
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The 4thWay® PLUS Ratings are calculations developed by professional risk modellers (someone who models risks for the banks), experienced investors and a debt specialist from one of the major consultancy firms. They measure the interest you earn against the risk of suffering losses from borrowers being unable to repay their loans in scenarios up to a serious recession and a major property crash. The ratings assume you spread your money across hundreds or thousands of loans, and continue lending until all your loans are repaid. They assume you lend across 6-12 rated P2P lending accounts or IFISAs, and measure your overall performance across all of them, not against individual performances.
The 4thWay PLUS Ratings are calculated using objective criteria that can be measured and improved on over time, although no rating system is perfect. Read more about the 4thWay® PLUS Ratings.
4thWay® may sometimes charge rating fees to P2P lending companies to cover the costs of the extensive analysis that we conduct.
*Ratings fees and impartial research: our service is free to you. 4thWay receives compensation from the P2P lending providers listed on our European website, as direct fees to cover the costs of conducting quarterly ratings assessments, or as commision when you open accounts. We vigorously ensure that this doesn't affect our editorial independence.
