How to Invest in Peer-to-Peer Lending: A Step-by-Step Guide to Opening a Loanpad Account

If you’re exploring how to invest in peer-to-peer lending, opening an account with Loanpad is one of the simplest ways to get started. Loanpad is one of the most established P2P lending platforms in the UK, and the premise is simple: open an account, add your funds and Loanpad will automatically spread your investment across a variety of property-backed loans, which will accrue interest daily.

Depending on the type of account you choose, you can either access your money instantly or by giving Loanpad 60 days notice. All accounts are eligible to be held within an Innovative Finance ISA (IFISA) which means that any returns are protected from taxation.

These are the benefits of opening a Loanpad account, but before you go any further it is important to be equally aware of the risks. P2P lending is not protected under the Financial Services Compensation Scheme (FSCS) so if you lose money you may not be able to recoup it. Capital loss is the key risk of any P2P lending platform – in the event of a borrower default, there is a chance that investor capital could remain unpaid.

Loanpad takes this risk very seriously and carries out strict due diligence on every borrower, as well as insisting upon collateral underpinning every loan. This means that if the borrower defaults on a loan, the collateral can be sold to pay investors. Loanpad also offers loans with very conservative loan-to-values, which further reduces the risk to investors. Due to these measures, not a single Loanpad investor has lost a penny of their capital to date. However, it is important to note that past performance is no guarantee of future success. We encourage all investors to do their own research before committing any funds.

How to Invest in Peer-to-Peer Lending With Loanpad: 5 Simple Steps

Once you have done your research and determined that you want to invest in peer-to-peer lending with Loanpad, the process is very simple.

1. Register as a new user

    

   This involves filing out a simple form here. To open an account you must be at least 18 years old, and hold a UK bank account. During the onboarding process you will be asked which account you want to choose. For retail investors, a personal account is the most appropriate option, unless you are using your Loanpad investments as part of a personal pension plan, in which case you may wish to choose our SSAS account. If you have any questions about which account is most suitable for you, contact us at support@loanpad.com.

    

2. Complete an appropriateness test

    

   By law, all new P2P investors have to complete an appropriateness test to prove that they understand the risks involved with this type of alternative investment. This test should only take a few minutes and you will receive an immediate pass or fail decision. At this stage, Loanpad will also carry out identity and anti-money laundering checks which could involve requests for photo ID or other supporting documents.

    

3. Add funds

    

   Once you have passed the appropriateness test, you can start adding funds to your account. At this stage it is important to decide whether you want to invest in our Classic Account, which offers daily liquidity, or our Premium Account, which offers slightly higher returns but requires 60 days notice before any withdrawals are made. If you are a UK taxpayer, you can also choose an IFISA version of either of these accounts, which will ensure that any returns will remain tax free.

    

4. Invest

    

   When you are ready to invest, Loanpad will spread all of your invested funds across any eligible live loans on the platform. Interest is paid daily into your Loanpad cash account, where it can be withdrawn or reinvested.

    

5. Monitor your portfolio

    

   Your online dashboard allows you to review your balance, interest and underlying loan portfolio. Pay attention to any changes in interest rates, loan performance, withdrawal conditions and risk disclosures, and make use of the Loanpad chatbot or contact support@loanpad.com if you are confused about anything or have any other questions.