All about return, risk and scores
This is how you put together your personal loan portfolio.
Attractive interest rates and low loss rates have made crowdlending an increasingly popular asset class for years. With LEND, you can finance Switzerland together. To help you decide which loan projects you would like to invest in, we provide you with all the important information about scores, collateral, structure and product.
Score
We have developed the LEND Score to help our investors put together a portfolio that is optimised for them. We subject each borrower to a comprehensive risk assessment and categorise their creditworthiness in our own risk model.
We obtain borrower data from recognised credit rating agencies (e.g. ZEK & Crif) and incorporate this into our scoring. The scores of our loan projects range from A+ for a very low probability of default to D1 for a slightly higher expected probability of default.
The LEND Score helps our investors to determine the individually desired balance between expected returns and risk appetite.
The A+ scores show the best LEND score values for credit projects with exceptionally low risk.
The A scores show very good LEND score values for credit projects with an extremely low default rate.
The B scores show good LEND score values for credit projects with a low default rate.
The C scores show average LEND score values for credit projects with a moderate default rate.
The D1 scores show the best LEND score values within the D segment.
NR stands for ‘Non Rated’. The score is used for individual loan projects that are not subject to scoring.
The LEND Score is a success
A well-functioning risk model is essential. It is based on well-thought-out and comprehensive scoring, which we constantly scrutinise, expand and check for accuracy. With the score, we are committed to both our borrowers and our investors. It plays a major role in determining the loan interest rate and returns.
We are happy to show that we are right with our credit rating system based on our independently audited loss rates. On our statistics page we show detailed data on return, volume and risk. These are externally verified by LoanClear, the market leader for independent and standardised evaluation of lending performance data.
LEND is the first platform in Switzerland to undertake this external audit and thus an independent and standardised comparison. In addition to LEND, LoanClear also verifies international marketplace lending platforms, including LendingClub, Funding Circle and October.
As can be seen from the historical data of the asset classes, our risk assessment and therefore the ratings work very well. A better rating goes hand in hand with low loss rates. Poorer ratings have a slightly higher average loss rate, but this is compensated by higher interest rates.
And if a borrower does not pay their instalment on time, the money invested is not lost. We start the debt collection process immediately and ensure that payments are resumed.
Security
To minimise the risk of loss on a loan project, borrowers can provide collateral. This includes:
Real estate
Mortgages on real estate play a central role in the collateralisation of loans. By depositing mortgage notes as collateral, borrowers can obtain more favourable conditions and reduce the risks for lenders.
Joint security
For SME loans, a private joint security from the owner can be deposited as security.
The joint security is notarised and has the advantage over a simple surety that the guarantor can be prosecuted for a simple arrear of payment.
Payment protection insurance
Payment protection insurance protects individual borrowers against possible insolvency due to unforeseeable events such as loss of job (through no fault of their own), incapacity to work or death. In these cases, the insurance (PPI) takes over the monthly instalment payments.
Product
At LEND you can currently invest in three products:
Personal loan ("Personal")
Business loan ("SME")
Mortgage (first and second rank)
The projects are assigned to a category that describes the purpose of the loan. The most common category for personal loans is "refinancing", which often involves the repayment of an expensive bank loan. For business loans, the purpose is often "liquidity".
Further information on loan projects
Each loan project is presented in more detail for logged-in users. In addition to a detailed description, there are further key figures:
Debt sustainability
Information on the borrower or company
Various financial KPIs (often important when evaluating business loans)
We also show detailed statistics on return, volume and risk, externally audited by LoanClear.
LoanClear is the market leader for independent and standardised evaluation of lending performance data.
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