Lendermarket Review 2023: 16% Too Good To Be True?

Lendermarket is an Irish-based P2P platform, where investors can earn an above-average return of up to 16%. After serving primarily as a funding source for Creditstar Group lenders for the first three years, the platform evolved in 2022 to become a standalone and independent P2P marketplace, offering fundraising and liquidity to different non-bank lending institutions around the world.

Lendermarket thus wants to move away from the image of a Creditstar spin-off. How the P2P platform is currently set up, what risks to watch out for and where the advantages and disadvantages lie, that’s what investors can find out in this Lendermarket review.

All the information that are covered in this Lendermarket review are based on my own due diligence. Please make sure to do your own research before investing on the platform. More information can be found in the Disclaimer.

Further analyses of other platforms can be found on my P2P Platform Review page.

Last Update: May 2023

Lendermarket Overview

Before we get started, here is a quick summary with the most important information about Lendermarket.

About Lendermarket

Lendermarket is an Irish-based P2P platform founded by Creditstar Group in June 2016. Since the operational launch of the platform, in June 2019, investors have been able to invest in a variety of international consumer loans on Lendermarket, earning an average return of 14.4%.

What is particularly striking about Lendermarket is the high returns of up to 16%, which is thus significantly above the market average for unsecured consumer loans.

After the platform has served as a funding source for Creditstar Group lenders for three years, the first external lender was added to the marketplace in May 2022.

Creditstar Group

Until May 2022, Lendermarket exclusively offered loans from Creditstar Group, which still account for a large part of the assets on the marketplace. The lender is a company founded 2006 in Estonia, which has been active in the European lending business for 16+ years.

Anyone looking into Lendermarket should also review the situation and development of Creditstar. Here is a brief summary of some important information:

Here you can download the Creditstar Annual Report 2021.

In April 2019, Creditstar Group launched the Lendermarket platform to fund a portion of its loan portfolio through the platform.

“Lendermarket was initially founded by Creditstar Group’s management team in order to provide
additional liquidity to their growing lending business.”

In addition to other marketplaces such as Mintos, the loans are also financed with private bonds, bank loans, credit lines and equity.

Who owns Lendermarket?

The P2P platform “Lendermarket Limited” is fully owned by “SA Financial Investments OÜ“. This is an Estonian holding company to which a total of 18 companies belong.

Its owner and ultimate beneficiary is Aaro Sosaar, who is also the CEO and main shareholder of Creditstar Group.

He holds a university degree in banking and international finance. He describes himself as an entrepreneur and investor in financial services and technology.

Lendermarket Management

Endrik Eller has been CEO of the Lendermarket P2P platform since May 2021.

The Estonian businessman was previously employed as a product manager and consultant at EstateGuru (July 2019 to January 2021). His CV is marked by many experiences in the FinTech sector, a large number of them in senior positions.

Currently, there are approximately 15 employees directly employed by Lendermarket. According to the platform, it receives no operational support from Creditstar Group. Investors can get an insight into the platform’s team members on the “About Us” page.

Business Model & Finances

Throughout the process of due diligence, investors should also have a look at the business model of a P2P platform as well as the overall financial situation. How does the company earn money? Does the platform operate profitably? And how well is the company positioned financially? In the following paragraphs of this Lendermarket review, you can follow-up on those questions.

How does Lendermarket earn money?

Lendermarket generates its revenue through a variable brokerage fee, which is charged to lenders in exchange for financing through the marketplace. This amount is primarily dependent on the amount of the financed loan volume and can range from 2% to 5%. The exact percentage also depends on the borrower country and the type of loans the lender offers.

Is Lendermarket profitable?

Lendermarket is currently not yet profitable. The last published annual report for 2021, which was audited by Grant Thornton, showed a loss of approximately €600,000.

The platform says it has made a conscious decision to spend more money on marketing and product development in order to increase its user base and add new product features to the platform. The platform hopes to be in a stronger market position in 12 to 24 months.

Sign Up and Bonus

In order to invest on Lendermarket, investors must meet three requirements:

• A minimum age of 18 years,
• a residence in the European Economic Area
• and a European bank account in the specified name.

The subsequent registration with Lendermarket takes place in a few simple steps:

• Click on the “Register” button on the homepage.
• Register via email, assign a password and agree to the platform rules + privacy policy.
• Verify the email in your mailbox.
• Enter personal data (name, address, phone number, etc.).
• Verify the account / identity.

Bonus for New Investors

If you sign up for Lendermarket via this link, you will receive a 1% cashback on all investments made in the first 60 days after registration.

Investing on Lendermarket

How does Lendermarket work and what should investors know and consider when investing on the plaform? In the following sections of my Lendermarket review you will find all the necessary information that you need.

Loan Offering

There are four different lending groups on Lendermarket, which map the offer on the marketplace with their respective lenders. These include the Creditstar Group, Credory, QuickCheck and CrediFace.

The borrower countries represented include Poland, Estonia, Finland, Sweden, Denmark, Spain and the Czech Republic. Nigerian loans are also represented from Africa.

The types of loans are primarily short-term and unsecured consumer loans. The average loan term is 81 days, although in some cases it can be up to 36 months. The average loan amount financed, on the other hand, is €2,330.

The Estonian lender Credory also offers secured business loans for small and medium-sized enterprises (SME loans). Here, the average loan-to-value (LTV) is 65%.

Costs and Fees

There are currently no costs or hidden fees for investors at Lendermarket. Neither for deposits and withdrawals, nor for other functionalities or investing itself.

“Investing through Lendermarket is completely free of charge. Lendermarket does not charge any fees for opening an account, depositing or withdrawing funds.”

Expected Returns

Lendermarket offers above-average interest rates compared to similar platforms. According to Lendermarket, the average interest rate is 14.40%. In some cases, there have already been loans with an interest rate of up to 19%.

Auto Invest

At Lendermarket, investors have the opportunity to invest their money with the help of an Auto Invest. This means that certain criteria can be defined in advance, which are then taken into account by an algorithm when allocating new loans. This means that the investment can be passively controlled and managed on Lendermarket.

The criteria to be selected include the minimum and maximum amount per loan, the interest rate, the loan term or the lenders.

A secondary market, where loans can be sold before maturity, does not yet exist on Lendermarket.

Lendermarket Buyback Guarantee

Lendermarket also advertises the protection of loans in form of a buyback guarantee.

This applies when loans are 60+ days in delay. The lenders are then encouraged to repurchase the loan in full, including repayment and accrued interest.

However, there are some differences in the extension periods depending on the lender. With Creditstar for example, up to 6 extensions of 30 days each can occur. This means that a loan with an original term of 30 days can theoretically be repaid 240 days later (60 days to buyback guarantee + 180 days extension period). As there is no secondary market on Lendermarket, liquidity for investors can be very limited.

To date, the buyback guarantee has always been met.

Lendermarket Forum

If you have questions about Lendermarket, other platforms or different p2p-related topics, you can join the re:think P2P Community on Facebook and engage in discussions with more than 1,000 other private retail investors.

Lendermarket Taxes

Generally, interest income generated by loan financing is considered capital income and thus must be declared as such in the tax declaration. 

Unlike other platforms, Lendermarket does not withhold taxes through interest income such as in Latvia or Lithuania.

For the tax declaration, investors can select the “Account Statement” tab in the main menu, where a tax report for the respective year can be downloaded. This information can then be submitted to the relevant tax office as part of a tax return.

Lendermarket Risks

Investors should look very carefully at the potential risk factors when evaluating a P2P platform. What is it that investors need to be aware of when it comes to Lendermarket? Where are the underlying risks and how are they assessed?

Creditstar Repayments

So far, the buyback guarantee on Lendermarket has always been honoured. However, there is growing resentment on the part of many investors who have invested in assets of the Creditstar Group. The lender often makes use of the extension periods, which could be due to liquidity issues from Lendermarket’s largest lending partner.

Another argument for this would be the extremely high interest rates that Creditstar offers, especially for long-term loan terms. Investors should be aware of these risks and carefully consider their choice of lenders.

Is Lendermarket a Safe Platform?

Lendermarket has been on the market for about four years, which means that the platform is no longer a brand new provider. Moreover, €300+ M in financed loans indicate a certain market size.

However, there are also some weak points at Lendermarket, which negatively influence the supposed security:

• There is no form of deposit insurance with Lendermarket. A total default is therefore theoretically possible.
• The platform is not controlled and monitored by any governmental financial supervision or authority.
• Lendermarket is far from being profitable.
• There is no insight into the performance of the lenders loan portfolio.

Pros & Cons

In this section I have listed the most important advantages and disadvantages of Lendermarket.

Advantages

• Competitive Return: With an average interest rate of 14.4%, Lendermarket’s expected return is higher than at other competitors.
• High Liquidity: With Lendermarket it is possible to invest in very short-term assets. In addition, the planned secondary market will further increase liquidity.
• Strong Lenders: Through Creditstar Group, Lendermarket has access to some large and internationally experienced lenders, which provide a certain stability to the platform.
• Segregation of Funds: Lendermarket works with FIRE Financial Services, an e-money institution authorised by the FCA and regulated by the Central Bank of Ireland.

Disadvantages

• Transparency: The platform is very passive when it comes to publishing business reports. The same applies for the performance of its lenders’ loan portfolios.
• Profitability: Lendermarket’s turnover is still very manageable. The platform needs to grow further and attract more funds if it wants to be profitable.
• Regulation: Lendermarket went to Ireland in order to find a simpler tax and regulatory set-up. Regulation and control by a financial regulator could provide investors with more compliance and transparency.
• Extension Periods: In some cases, loans can be extended up to 240 days, which gives investors significantly less liquidity.

Lendermarket Alternatives

Lendermarket has been a “mono-lender” for a long time, offering only Creditstar loans for the first three years of operations. When it comes to Lendermarket alternatives, this model is most comparable to the Irish-based platform Esketit, which primarily finances Creamfinance loans.

With the ambition to become a global marketplace for P2P loans in the future, the platform’s approach is more similar to providers such as Income Marketplace, Mintos or PeerBerry.

You can find other Lendermarket alternatives on the P2P Platform Comparison page.

Lendermarket Community Feedback

The Lendermarket reviews within the P2P lending community are rated slightly above average. In the community voting 2023, a score of 3.22 was achieved with 41 votes. The year before (2022), the score was only 2.67.

The most popular platforms in 2023 included Esketit, Robocash, PeerBerry, LANDE and Income Marketplace.

Lendermarket Review Summary

Lendermarket is on the verge of change. After three years of exclusively financing Creditstar Group loans, the platform is now planning to provide fundraising and liquidity for external non-bank lenders. How should this step be assessed?

On one hand, it will increase diversification for investors and reduce dependency on Creditstar. In addition, scaling the loan offering could also boost the turnover. 

On the other hand, the marketplace model also entails other requirements. The acquisition, support and monitoring of a large number of lenders can prove to be very demanding. The developments at Mintos have made it impressively clear that this is not always as easy.

It remains to be seen how and whether Lendermarket can live up to its new claim. One should also observe the developments at Creditstar. Although the group is profitable, certain liquidity problems seem to be evident. Investors should take this into account before investing on the platform.

FAQ Lendermarket Review