Wellesley Sees First Late Payment

For most peer-to-peer lending companies, a late payment is not newsworthy. But it's different for Wellesley & Co. (4thWay^® Risk Rating 12/50, putting it just slightly above savings accounts on the risk scale.)

This peer-to-peer lending company has been around since late 2013. Wellesley & Co. has never had a loan go bad, meaning the borrower is unable to repay.

And 4thWay^® has never even logged a late payment at Wellesley, which is defined as being 45 days overdue.

Now, Wellesley reports that 0.09% of loans issued in 2014 are showing as being late. This probably boils down to one loan, or part of one loan, out of 138 property loans made.

What's happening with that loan?

4thWay can't get any details about the loan from Wellesley, which has chosen not to discuss the situation at individual borrowers.

This isn't unusual. Wellesley's closest competitors don't either. At the safer end of P2P lending, where Wellesley is, and where your money is protected by bad-debt funds, you don't choose your borrowers. Your money is also easily spread across many loans.

These P2P lending companies take the view that you don't really need the information about the status of your loans, because you're trusting them to do all the work for you.

That's the trade-off. You have to be comfortable with what their doing and their expertise to lend your money.

This trust is not be misplaced. In the four-and-a-half years since the first of several low-risk P2P lending companies arrived – RateSetter (4thWay^® Risk Rating 10/50) – none of them have lost a single lender a single penny.

That's why these few P2P lending companies already now have well in excess of 70,000 lenders.

If you want more control

It's worth contrasting with Funding Secure, Saving Stream and Assetz Capital, which keep you up-to-date. This is more important here, since you will have chosen to lend to specific borrowers and probably far fewer borrowers, so your money is more concentrated.

Even here, however, bear in mind that it is more important to have confidence in the initial selection capabilities of the P2P lending company than it is for you to pick the right borrowers from those presented to you.

I hear many lenders say they want more control over who they lend to and that's why they go for these other websites.

I think there are lots of good reasons to go for them, including some great individual deals at outstanding interest rates, but control is not necessarily the best one.

I expect to upset several 4thWay^® readers here, but my current view is that control through selecting your own borrowers can be imaginary. It's clear from other investments that humans have a very strong tendency to see patterns in random data, especially when they expect to see patterns.

Those patterns cause them to do dangerous things with their money.

You need a large amount of repeated data before a pattern is reliable enough to consider using.

I'll keep you updated about the Wellesley late payment, but I won't be losing sleep over it.

*Commission, fees and impartial research: our service is free to you. 4thWay shows dozens of P2P lending accounts in our accurate comparison tables and we add new ones as they make it through our listing process. We receive compensation from Wellesley & Co. and RatteSetter, and other P2P lending companies not mentioned above either when you click through from our website and open accounts with them, or to cover the costs of conducting our calculated stress tests and ratings assessments. We vigorously ensure that this doesn't affect our editorial independence. Read How we earn money fairly with your help.