Based in Estonia, Bondora offers unsecured customer lending. It was founded in 2008 and has grown to become one of Europe’s largest lending platforms. Bondora has offered successful loans to customers in Finland, Slovakia, Spain and Estonia.
The average borrower is someone in the middle class looking into consumer- or payday loans. Average borrowing amount is 500 euros payable over 60 months with a gross interest of 31%. Anyone over the age of 18 or having a business registered with the European Union can invest with Bondora.
At Bondora, a borrower provides their basic information and documents before data collection and verification begins. The data collected is passed through identification and fraud detection. The data is then taken through risk scoring, where a customer’s scorecard provides payment plans and probability of default. Loan pricing and issuance processes follow with the signing of credit information forms.
Traceability and policy
Identification of borrowers is done through their ID documents, email addresses, mobile numbers and bank accounts verification. Traceability enables identification of potential fraudsters and debtors. Policy rules allow loans to persons over 18 years, earning at least 300 euros per month. Loans are paid in installments.
The collection process focuses on time, efficiency and customer satisfaction. Borrowers are reminded of payments early through email and SMS. Defaulters are directed to courts and debt collection agencies.
Bondora offers two types of automatic (re-)investmen features.
- Portfolio Manager allows you to simply set the desired risk/return level, then the Bondora algorithm dos the rest. It has a portfolio manager that lets you select your desired amount, risk-return and agree to terms and conditions. The portfolio manager does the rest for you.
- Portfolio Pro lets you specify your rules for auto-investing. Among other options, you can choose countries, credit rating and interest range. Based on Bondora’s large amounts of data from previous loans, the Portfolio summary then calculates expected return for you to review.
High yielding P2P opportunities
At Bondora you can choose less risky loans, or you can select high risk loans. By choosing those loans, you can theoretically make very, very high returns. Although you should expect several of these loans to default.
No fees are levied against lenders from buying or holding loan shares, nor from trading at the secondary market. Although recovery expenses is deductible from the cash flow of delinquent loans.
Fast liquidity for P2P loans
A large secondary market allows for buying and selling of existing investments by investors. A liquidation feature is set in place for those wishing to quickly and easily sell their investments at market price.
Bondora has opened and laid out default control processes for borrowers who fail to live up to their repayment obligations. A financial partner keeps clients in the loop to avoid risks without taking advantage of them.
You can also pull out a comprehensive list of data regarding your loan shares. For those of us who are into data analysis, this allows us to perform in-debt analysis and to optimize our investment strategy.
A couple of years ago Bondora was hit with a lot of negative reviews. This was due to a couple of issues that were handled badly. Bondora had implemented some feature changes in the platform, which were not to investor’s advantage – often without informing users in advance. Returns also dropped significantly when Bondora expanded into the Spanish marked. Many Spanish loans defaulted, and many investors saw their returns dwindle.
On top of that, Bondora didn’t handle these issues with grace. They failed to follow the P2P tradition of transparency and seemed to rather try to hide or minimize these issues. This further hurt their credibility.
Although these issues still haunt Bondora in the form of bad online reviews, they have since improved significantly and become much more transparent since those days. There haven’t been more undesirable feature changes, and they are now publishing updated statistics on recovery rates.
The user interface of their website is not very well outlined. The landing page is difficult to maneuver and many investors complain that it’s a relatively steep learning curve.
What distinguishes Bondora from other platforms?
Bondora is an large, “old” and established platform. Investors can select their desired risk/return level and will generally gain a few percentage points more than at most other platforms.