- This is not financial advice, this is the opinion of investitin.com Staff.
- Investitin.com staff are not financial advisors.
- This is not a buy, sell or hold recommendation.
- Do your research before you investing in any peer 2 peer lending platform.
- Please consult your local financial advisor to verify if these investments are compatible with your local laws.
Ablrate started as an aviation peer to peer financing/lending company, but it has now expanded its loan range to many other things including Capital equipment, Property and financing SMEs. This is a much welcome change since the more diversified the loans, the more diversified the risks.
Ablrate continues to grow stronger year over year. Between 2015 and 2017 the loan book grew by a whopping 850% which is around 1 million loans per month are being listed on the platform.
Strengths and Opportunities of Ablrate
- Loans are asset-backed.
- Attractive LTV ratios, which tend to be below 69%.
- Lender returns are between 10% and 14%.
- Loan maturity varies between 6 months to 2 years.
- Open to international investors, but not those from the USA.
- No fees for lenders.
- Secondary market available and lenders do not need to pay any extra fees to use it.
- Ablrate offers a variety of asset types backing the loans such as planes, containers, property and many other asset types. The advantage here is that these assets are exposed to different risks, and the investor loan portfolio if well diversified is not exposed only to the property market or the aeroplane market but a bit of everything.
- Most loans are amortised, i.e. both capital and interest are paid back each month. This reduces risk as capital and interest on a loan is being returned and provides the investor with the opportunity to reinvest the capital in other loans.
- Ablrate has received full FCA authorization.
- Borrowers have the opportunity to place an auction loan whereby the lenders can bid by submitting their preferred interest rate.
- For the loans to be asset-backed Ablrate acquires the legal title of the assets being used as a guarantee. If the borrower defaults, the creditors will not compete with other creditors to acquire the assets.
- Detailed loan information is available for each loan on the platform.
- Ablrate cash flow model is based on periodical fees rather than initial fees. This makes it more attractive for the borrowers as they can pay the fees along with the loan rather than all upfront.
- Ablrate does not invest alongside investors with skin in the game model. Such a model is quite common on the Mintos platform. [LINK] However Ablrate still has skin in the game as the borrower fees are paid throughout the loan rather than all upfront. This aligns the interests of the landers and the platform; i.e. they both want the loan paid in full and on time.
- Recently there has been less than 8% of defaults on Ablrate
- There are different types of loans possible. Those with instant returns where the interest is paid upfront or those which amortise a part of the capital and interest is paid in instalments until loan maturity.
- Investors can use their debit cards to transfer funds to their Ablrate accounts.
- Loans are open for a few days before they are fully funded, this gives you the time to look and invest. On other platforms, loan investment availability vaporizes in minutes.
- In the unlikely case Ablrate defaults, a solicitor firm Kingston Smith LLP would administer the business.
Ablrate Weaknesses and Threats
- Capital is at risk. High-interest rates are a sign of high risk, even though the loans are asset-backed the guarantee of getting the return of capital is not as solid as strong as a Government-backed depositor investor scheme.
- Deal flow has been slow in the past years, but this is expected for new platforms, and both deal flow and deal size are improving each month. These improvements allow investors to tap into the power of compound interest faster.
- The Secondary Market can be complex for standard users but has been praised by power users.
- No provision fund exists, but loans are asset-backed.
- There could be multiple loans provided to the same borrower, risk-aware investors should check for this as the more lenders lend to one borrower the more risk is concentrated.
- Valuations of complex assets such as aeroplanes is a complex process, and luckily Ablrate has the necessary expertise to do this. Such process is well established given the maturity of the airline industry, however, consider that such assets are more at risk than real estate.
- A loan can be restructured if the borrower is at risk of default.
Ablrate is a platform which has both pros and cons; an investor needs to balance both and make his or her decision to decide on whether to invest or not. In my opinion, a platform is not better because it has a bigger loan book. Indeed a bigger loan book means that resources are spread across many borrowers. Ablrate is not as big as the bigger p2p players, and this is probably to the advantage of the investor. Also investing in only one or two p2p lenders creates focused platform risk and multiple peers to peer investment platforms allow investors to spread risk!