Bondora Review

June 3rd, 2021
6 minutes read
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One of the oldest and largest peer-to-peer lending platforms in Europe

FAST FACTS

Launch Date2008
Total Investment Volume€432m+
Average annual interest8.4%
Minimum Investment€1
Investment Fees€1 withdrawal fee
Who’s eligible to investEEA or Norwegian residents
Investment TypePersonal Lending
Secondary MarketYes
Auto Invest FunctionYes
Investor ProtectionNone
CurrenciesEUR
Website LanguageEnglish + 23 other languages

PROS & CONS

Pros

  • Long track record
  • Comprehensive statistics and reports available
  • A diversified product portfolio

Cons

  • High default and overdue rates
  • No investment protection
  • Actual returns lower than expected

Pros Explained

  • The crowd’s trust and high investment amount always boost a platform’s credibility. Bondora is the oldest peer-to-peer lending platform for direct personal loans in continental Europe. Over 160,000 investors have chosen Bondora since it launched in 2008 and the total accumulated funding volume puts the platform among the 10 largest European P2P platforms.
  • Bondora is extremely transparent with regards to loan and company performance. It provides extraordinarily detailed (almost too detailed) statistics with general loan information and average performance indicators and datasets, which include granular data for every single loan and transaction on the platform. Bondora’s financial reports are easily available too (although one for 2020 is still lacking).
  • Bondora credits its both high volume and revenue growth in recent years to the introduction of easy-to-use investment products, especially a “one-click” option – Go & Grow. You can read more about the options on offer below.

Cons Explained

  • The default rate (including overdue loans and write-offs) stands at almost 13%. This is much higher than most platforms – for example, a gold standard for the best business lending platforms is 2-3%, many of which offer only slightly lower returns than Bondora.
  • With such a high default rate, you’d expect some sort of capital protection. Bondora offers none – the loans are not secured by collateral, and there’s no buyback guarantee, a provision fund or any other sort of safety pin. The recovery rate oscillates around 40-60%.
  • High default rates surely contribute to not-so-high average returns. You can find many posts online praising Bondora for extraordinarily high yields. Although earning above 10% or 15% is possible, you should probably lower your expectations. The average historical return stands at 8.4% (even though the average interest rate is over 30%!) and the return from the most popular Go & Grow option does not exceed 6.75%.

Who is behind Bondora?

It’s quite odd that Bondora doesn’t share any information on their management team. If you dig deep enough, you’ll find short bios of Supervisory Board members in Bondora’s FAQs, but a proper “about us” page is missing. Owler estimates the company has approximately 65 employees. We can also learn something about the founder and CEO Pärtel Tomberg from his LinkedIn profile. He seems to be one of the young and bold entrepreneurs as he says he launched Bondora from his dorm room in Oxford.

What does Bondora offer?

Investing on Bondora, you have several options to choose from:

  • Manual investing. You can pick the loans yourself and filter a large range of settings to find suitable deals, including country, interest and rating. The average loan amount is €2,500 and the loan duration – 50 months.
  • Portfolio Manager. A no-hassle option suitable for beginners – you can customize the level of risk in your portfolio by adjusting the risk-return slider from “ultra-conservative” to “opportunistic”. If you wish, you can also meddle with additional settings such as max loan bids, secondary market options, etc.
  • Portfolio Pro. This is another semi-automatic investment product, but with more advanced filtering options, including interest rate, country of origin, loan duration, etc.
  • Go & Grow. The most popular Bondora product offers a one-click option – you invest in the default portfolio with a return of up to 6.75% and instant withdrawals (as long as the platform has enough liquidity).
  • API. A new, highly advanced feature, which allows you to access different data points of borrowers to make your investment decisions. You can investigate borrowers’ income and obligations, employment, age, education among other criteria, and design a very individual investment strategy. Bondora signals, however, that to use the API, you will need advanced programming skills, and the feature is used by only approximately 1% of all investors.

How much can you earn?

Even more than with other platforms, returns on Bondora will highly depend on your investment strategy on one hand and overall market performance on the other. You can go for the relatively safe Go & Grow and make a likely stable though not sky-high return. Or you can play with one of the auto-invest options and seek higher yields. 

Almost half of Bondora investors (44%) earn between 5 and 10% p.a. and one in four earns between 0 and 5%. The remaining share is quite evenly split between those who make 10% or more and those who lose money. But the average ROI significantly varies year-to-year, too, from 0.1% in 2017 to 25.8% in 2009.

Who is Bondora best for?

Bondora offers a wide range of products for various groups of investors, from the extreme hands-off option, through different depths of auto-invest features to a highly advanced API. The Go & Grow product can easily find its place in your portfolio almost regardless of your preferences, as a relatively secure, stable, and most importantly, very liquid asset. 

How to invest on Bondora

Easy – just register, verify your identity and complete the KYC procedure. You can then add funds to your wallet and start investing using one or more of the available investment options.

Summary

With a very volatile performance and high default rates, it seems investors could benefit from a mechanism (a provision fund?) that would help to smooth out the returns. One option that does offer a level of stability, Go & Grow, has come under scrutiny during the Covid-19 crisis. Amidst the mass move away from P2P lending assets and high demand for withdrawals, partial pay-outs were enacted, which means you couldn’t actually access all your money from this supposedly highly liquid product. Nonetheless, Bondora is a very solid platform overall, with a long track record, great transparency, high investor trust, impressive growth rates and rising profitability.

Methodology

At P2PMarketData we are dedicated to providing unbiased reviews of peer-to-peer lending, real estate crowdfunding and crypto lending platforms. Among other, in our mission to bring more transparency to the market we closely monitor and track over 70 platforms funding volumes.

When reviewing an alternative investment platform, we consider a variety of factors such as:

  • Number of investors
  • Minimum investment requirement
  • Historical annual returns
  • Diversification opportunities
  • Reinvestment opportunities
  • Educational and informational offerings
  • Platform fees
  • Total capital invested
  • Features (such as secondary market and automatic investing)
  • General transparency (the difficulty of finding who the owners are, how they make money on the platform (fees), terms & conditions and more)
  • Management team

We also look into the company’s online reputation (for example customer reviews, news, complaints, average monthly searches and social media).