To get the best lending results, compare all P2P lending and IFISA providers that have gone through 4thWay’s rigorous assessments.
Kuflink: Why New Lending Rates?
There are some items that we pay close attention to at 4thWay.
For example, we have often described some of the signs we look for that a P2P lending provider is kicking the can of bad debt down the road to hide its actual performance.
But there are many other things we watch for as well, depending on the specific potential risks at each different provider.
One of those potential risks applies in Kuflink's situation. It has auto-lend accounts that have fixed lending periods for lenders that are not aligned with the fixed repayment periods for borrowers.
You may not be surprised to learn that such imbalanced structures have caused problems at a couple of other providers in the past.
That's why we watch whenever Kuflink's lending rates change, as that can be one of the potential signs of stresses occurring underneath the surface.
Kuflink's rates have just changed, in one case quite substantially:
| Lending account | Old lending rate | New lending rate |
| 1 Year | 10.25% | 8.00% (-2.25%) |
| 2 Year | 8.50% | 8.75% (+0.25%) |
| 3 Year | 7.00% | 7.00% (unchanged) |
In the olden days (i.e. at the start of 2024) the lending rates used to rise the longer you were committing your money. In spring this year, Kuflink mixed it up so that you earned more the shorter the duration of your commitment. The reason it gave was that borrower rates, like the Bank of England base rate, were currently high, but the expectation was they would come down soon. They wanted longer-term accounts to reflect that longer-term trend.
Now, Kuflink has mixed it up again.
The shortest-term rate has been reduced from 10.25% to 8%, Kuflink says, due to the Bank of England also beginning to lower rates. Since you're locked into that rate for the duration of the agreed term, Kuflink is arguing that you are going to benefit from higher rates even if the Bank of England continues to lower rates further over the coming months.
8% is more in line with lending rates prior to high inflation and rapid base rate rises. The rate remains higher than its longest-term account, its three-year account, which pays 7%. This is unchanged. Presumably, this takes into account Kuflink's assessment that the base rate and borrower rates will continue to sink for some years to come.
Somewhat bizarrely, the highest rate is now being paid by the middle account. The two-year auto-lend account pays 8.75%. While that's slightly odd, the difference is small, and therefore not of concern. It's probably explained by its technical decisions to reflect its current balance of loans and economic forecasts. We have received no data or information from any source that contradicts this assessment, so it seems satisfactory to me.
While rates are no longer as attractive as they were, they are still tremendous for the risks involved. Assuming inflation remains lower, they are attractive in real terms (i.e. after taking into account rising prices).
All of that said, lenders absolutely need to reckon with the possibility of being tied in for longer than they expected when accounts have this sort of fixed-period structure that doesn't precisely match the loan terms.
Kuflink has safety valves that prevent major issues, but nothing changes the fact that you sometimes get tied in for longer when you make money by lending your money. Even with the best providers. The much more stable returns you get in money lending are the reward for that (with the stock market being the opposite: a lot more volatile but with low chance of being tied in).
In short, don't think of the one-year account as a guaranteed fixed one year of lending! That's not what Kuflink is promising you.
The biggest disappointment for me is Kuflink's continued insistence on using a bizarre calculation to make the lending rates seem higher than they are. For example, it sells its two-year rate as 9.13%, but 8.5% is a more standardised calculation that you see everywhere else in the investing/lending world. 4thWay always standardises.
| Lending account | Today's lending rates as shown on Kuflink | Today's lending rates when standardised |
| 1 Year | 8.00% | 8.00% |
| 2 Year | 9.13% | 8.75% |
| 3 Year | 7.50% | 7.00% |
So keep an eye on the rates as shown by 4thWay. Not quite as good, but still excellent for the risks involved.
Visit Kuflink* | Read the 4thWay Kuflink Review for our highly detailed assessment of the risk-reward balance.
Independent opinion: 4thWay will help you to identify your options and narrow down your choices. We suggest what you could do, but we won't tell you what to do or where to lend; the decision is yours. We are responsible for the accuracy and quality of the information we provide, but not for any decision you make based on it. The material is for general information and education purposes only.
We are not financial, legal or tax advisors, which means that we don't offer advice or recommendations based on your circumstances and goals.
The opinions expressed are those of the author(s) and not held by 4thWay. 4thWay is not regulated by ESMA or the FCA. All the specialists and researchers who conduct research and write articles for 4thWay are subject to 4thWay's Editorial Code of Practice. For more, please see 4thWay's terms and conditions.
*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 Kuflink, 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.
