Mintos is one of the best P2P lending platforms in Europe at the moment. Not only is it the largest. Mintos also has the most advanced functionality combined with great returns.
I made my first P2P lending investment in Mintos back in 2016 when it was a brand new platform. Since then many things have changed. Mostly for the good, but a few things have also become worse. In this Mintos review, I’ll show you both the good and bad things.
Today, Mintos is by far the biggest European P2P lending platform. It has more than 4 billion EUR in funded loans, which is four times more than the closest competitor.
I am investing in six different P2P lending platforms (Mintos, Grupeer, Fast Invest, Lenndy, and PeerBerry). I can honestly say that Mintos is the best option at the moment.
Mintos has the most advanced platform with most functionalities. However, recently, my returns have slowly started to decline.
Introduction to Mintos
Mintos is a P2P lending platform from Latvia founded in 2015. The platform accepts investors from more than 70 countries. It offers a range of loans; agriculture, business, car, invoice financing, mortgage, pawnbroking, personal and short-term loans.
Looking at the numbers for 2020, Mintos is huge:
- 245,000 investors
- 4,500 million EUR in funded loans
- 95 employees
- 248,000 loans available on the primary market
- 441,000 loans available on the secondary market
- 62 loan originators across 32 markets and 12 currencies
If you are not familiar with the size of these platforms, I have not seen any competing platforms get even close.
What about the returns then?
Lately, I have experienced a slight decrease in my annual returns with Mintos. This is my main concern with Mintos at the moment. The reported pre-tax returns have decreased by roughly 0.3% in the past year. It is my primary concern with Mintos, and I am watching the development closely.
In 2019, Mintos won the People’s Choice award by altfi for the fourth time in a row. Also, Mintos has consistently received good ratings on Trustpilot:
My investments on the Mintos primary marketplace
I have 1,066 current loan investments and 3,470 finished investments.
My average net annual return before tax has been 11.85% in the past three years. It has declined slightly since the beginning where it was above 12%.
I am really satisfied with this level of return. It outperforms my average returns on the stock market and it is my most stable investment. I do recognize, though, that high returns come with high risk.
My loans are well-diversified across different loan originators, loan terms and interest rates. I’m not too afraid about putting all my eggs in one loan originator basket:
My current loans have an average weighted interest rate of 11.79%. This shows that future returns will be slightly lower.
Choosing autoinvest strategies on Mintos
I’m not a fan of spending a lot of time on my investments. I prefer to set and forget my investments.
All my investments are automatically executed by Mintos. This feature is called “autoinvest”.
I only invest in platforms with autoinvest functionality. Autoinvest enables me to invest in loans according to specific criteria automatically.
Autoinvest on Mintos gives you the option to rank different autoinvest strategies. This means that the system will execute orders on your highest prioritized autoinvest strategy before moving on. I use this prioritization to invest in high-interest loans before low-interest loans.
My autoinvest strategies for the primary marketplace are set up the following way:
The highest priority strategies focus on loans with higher interest rates.
Lately, it has been difficult to get high-interest rate loans. Thus, I have increased the maximum investment amount per loan for all strategies.
Which autoinvest strategy settings do I use?
Wondering how to invest in Mintos? Below I have created a strategy to optimize returns.
In my autoinvest strategies, I have used the following autoinvest settings:
- Loan originator: All loan originators with above B- in rating (B- included).
- Rating: I deselect with rating C+, C, and D.
- Loan type: All loan types.
- Country: All countries.
- Buyback guarantee: Only loans with “Yes” to buyback guarantee – this is crucial for me.
- Interest rate: Intervals starting from 14% up to 20.5% and decreasing with 1% for each investment strategy.
- Remaining loan term: 1 month to 36 months, since I don’t like the very short-term loans that have to be reinvested frequently. I have an investment horizon of more than 3 years.
- Reinvesting: “Yes”, I reinvest all returns.
- Include loans already invested in: “No”, I like the diversification.
- Diversify across loan originators: “Yes”, I like the diversification. The distribution across loan originators is equal.
- Portfolio size: Large enough to make sure the investments don’t stop unexpectedly.
- Investment in one loan: 10-50 EUR in high-interest rate loans, and 10 EUR in lower interest rate loans.
For each loan originator, you have the option to set even more settings. Here’s what I have chosen for all loan originators:
- Remaining principal amount: N/A
- Loan status: “Current” only
- Pending payments: “No” only
- Investment structure: “Direct” and “Indirect”
- Amortization method: “Full”, “Partial”, “Interest-only” and “Bullet”
- Schedule extension: “Yes” and “No”
- Borrower APR: Max 50% – I don’t want borrowers to pay more in annual interest rate
Here’s how it looks in practice:
Once you have activated your autoinvest strategy it quickly fulfills the orders. Make sure to initially put a cap on the portfolio size of your strategies to check whether you have set them up correctly. Once an order is locked, there are no cancellations (except if you sell the loan on the secondary marketplace).
There’s one negative side of Mintos’ autoinvest feature. You cannot automatically include new loan originators or countries as they are added to the platform. I log on the platform once a month and tick off the new loan originators in my different autoinvest strategies to include as many as possible.
Is it a good idea to invest in the secondary marketplace?
I have invested in loans on the secondary marketplace and found it quite attractive.
The secondary marketplace has a lot of loans available and most often some quite lucrative ones. Many people try to sell their loans at a premium in the marketplace, so make sure you catch the good deals.
Last year, Mintos launched autoinvest on the secondary marketplace. I have autoinvested in loans with a yield to maturity (YTM) above 15%. This has turned out to be a good idea.
I invest in the secondary marketplace because interest rates on the primary marketplace have decreased over time. I plan to sustain higher average interest rates doing this.
I use nearly the same autoinvest settings as in the primary marketplace. The only difference is I choose a YTM of +15% for now because there are enough loans available in that range. I have also chosen a high YTM because the quoted YTM is based on a few assumptions described by Mintos:
“YTM (yield-to-maturity) is the expected rate of return of an investment, expressed as an annual rate, assuming that an investment in the loan is held till maturity. YTM calculations include the following assumptions: 1) investment in the loan is made at the quoted price, i.e. including a possible premium or discount; 2) all future payments will be done according to the schedule, i.e. the calculations do not include any default expectations; 3) no service fee is included, i.e. YTM is comparable to the nominal interest rate of loan; 4) late loan payments are expected to be received the next day.”
I know that the secondary marketplace is increasing in popularity. More than 15,000 loans are sold each day on the Mintos secondary marketplace. More than 24,000 investors buy loans in the secondary marketplace, so it is a popular choice.
Finally, you should be aware that you pay secondary market transaction costs straight away (e.g. premiums on loans). This means you then take over the loan to get the interest and principal payments over time.
How to withdraw money from Mintos
I didn’t want to write a review before I had tried withdrawing money from Mintos.
If you can’t get your money out of the platform, it is not worth anything.
Thus, I decided to make a little test and made a withdrawal.
It was simple and only required two clicks.
First, you navigate to the “Withdraw” page and enter the following form:
When you click the “Withdraw” button, you immediately get a confirmation:
Two working days later I had the money on my bank account.
How does the buyback guarantee work on Mintos?
Borrower default is one of the risks associated with investing in P2P lending. How does the buyback guarantee protect you from this?
Consider the following example:
You decide to invest 10 EUR in a loan on Mintos. The borrower cannot repay the 10 EUR. If you do not have a buyback guarantee you would have lost the investment. It’s like borrowing a friend money who doesn’t repay.
But, with a buyback guarantee, the loan originator issues a guarantee to repurchase the loan. This happens when the payment is delayed by more than 60 days. The loan is bought back from the investor with the value of the outstanding principal – including accrued interest income. This means you still get the expected return up until that date and can re-invest the money into a new loan.
I like this concept as it shifts risk from you to the loan originator. Yet, it doesn’t protect you against the other risks associated with investing in crowdlending.
Mintos Invest & Access: What is it?
Mintos Invest & Access is an automatic investment strategy set by Mintos. It will always invest in this product before investing in your autoinvest strategies.
Mintos claims it has the “best diversification Mnitos offers”. The strategy is set up to be fully diversified across the marketplace.
I see two benefits of investing in Invest & Access. First, you can always withdraw your money under normal market conditions. This means you don’t need to sell it in the secondary marketplace if you suddenly need the money. Secondly, it’s really easy to get started instead of having to set an autoinvest strategy.
I tested out the product for 1300 EUR, and my conclusion is clear. The returns are simply not as good as when I autoinvest myself.
The Invest & Access product yielded a return of 9% whereas my autoinvest strategies yield a return of 12%:
Because of this, I have decided to only use my own autoinvest strategies going forward.
How safe is Mintos? Risks to be aware of when investing
Wondering how safe Mintos is?
Investing in financial assets always comes at a risk. P2P lending is a high-risk investment, and I only have 5-10% of my net worth across different platforms.
First, you need to secure your account. Remember to activate two-factor authentication to keep other people from accessing your account.
There are in general six risks when you should aware of when investing in Mintos:
- Money drag means that your money is not fully invested. I don’t expect this to be a problem on Mintos as the loan availability, in general, is quite high (unless you have very aggressive strategies).
- Borrower default is when a borrower cannot repay his/her loans. This is covered on most loans on Mintos with the buyback guarantee. I only invest in loans with a buyback guarantee, so I am not directly exposed to this risk on Mintos.
- Loan originator bankruptcy is if the loan originator behind the loans goes bankrupt. In that case, you risk losing the investment made in loans from that loan originator. I have experienced this once on Mintos when Eurocent went bankrupt. If this happens, normal bankruptcy procedures are started and Mintos tries to get as much of your investment back as possible.
- Platform bankruptcy is if Mintos goes bankrupt. In that case, you risk losing all the money you have invested. The latest example of a platform bankruptcy/scam was Envestio. However, I’m not worried about Mintos. Right now, Mintos looks financially sound. They have a large organization, are profitable and have billions of EUR invested. However, as with all investments I recommend you to watch this if you decide to invest in Mintos.
- Financial crises are also a real risk. We haven’t seen what happens with P2P lending platforms in times of crisis.
I’m not trying to scare you. I would never put my money in P2P lending if I didn’t believe the rewards outweighed the risks. However, I believe it is important you are aware of the potential risks if you decide to invest.
In general, for all assets, you should not invest if you cannot afford to lose your investments.
On Mintos, I would always recommend diversifying your investments across many loan originators. You should also use Mintos Ratings to get a credit rating for each loan originator to lower your risk.
Mintos risk ratings
So, now that you know there are risks associated with investing in Mintos, you should know about Mintos risk ratings.
Mintos risk ratings are a great tool to get some transparency on the risks you are facing investing in different loan originators.
Mintos was the first P2P lending platform in Europe to introduce loan originator credit ratings. I like this feature because it gives me much more transparency about my investments. It also allows me to deselect certain loan originators that carry too much risk.
The Mintos risk ratings measure the risk of the loan originator from low risk (A+ to A-), moderate risk (B+ to B-), elevated risk (C+ to C-) and default (D).
I use the Mintos risk ratings to filter out the loan originators carrying the highest risk. I only invest in loan originators with a rating between A+ to B- (low to moderate risk rating).
Keep in mind that you need to update your autoinvest strategy if Mintos changes the rating of a loan originator.
For example, in October 2019, the following loan originators changed risk category:
- Aasa Poland’s rating was downgraded from A- to B+
- Rapido Finance’s rating was downgraded from B- to C
If you previously had an autoinvest strategy that allowed B- investments, but not C investments, you should remove Rapido Finance from your autoinvest strategy.
Is it ethical to invest in P2P lending?
There’s an ethical aspect to investing in P2P lending. You never know what your money is funding through the loans. It could be ultra-high interest loans to weak borrowers or unethical businesses. However, on Mintos, you have the opportunity to set a limit on the borrower APR. This means you do not invest in loans where borrowers pay higher interest than you dictate. I use this feature for my investments.
For other ethical aspects, I have chosen to put my faith in the EU authorities and regulations. I hope there’ll be more transparency on this in the future.
The advantages and disadvantages of investing with Mintos
Enough with all the details. Let’s zoom out and have a look at the pros and cons of Mintos.
Investing with Mintos has a few advantages, but there are also some negative aspects compared to other platforms. I feel both are important to mention in this review.
The advantages of investing with Mintos are:
- Great platform with the market’s most advanced functionality such as prioritized autoinvesting, secondary market, site-wide filtering, and currency exchange
- Buyback guarantee on most loans protecting the investor from borrower bankruptcy
- Great average annual returns compared to e.g. stock market returns
- Wide variety of available loans in different countries, currencies and from different loan originators
- Credit ratings of all loan originators with detailed information on the company and its consolidated financials
- Constantly growing with new functionality and more loan originators
- Fast and accurate customer service, deposit and withdrawal (I have tested all three)
The main disadvantages of investing with Mintos are:
- Lower returns than newer competitors in Europe and slowly declining average returns
- Not all loan originators seem sound and one loan originator has gone bankrupt in the past
- No way to automatically include new loan originators, countries or loan types in autoinvest strategies
- It can be hard to get rid of lower interest loans at decent terms on the secondary marketplace due to the big supply of attractive loans
All in all, the advantages outweigh the disadvantages for me. You should, of course, do your research to make sure Mintos is a good option for you.
Mintos review conclusion
As you might have sensed in this review, I have been very happy with my investments in Mintos so far. The platform is sound and returns have been great. Most importantly, I feel my investment is safe with multiple diversification opportunities.
Mintos is my top choice for new and experienced P2P investors alike. New investors will be able to get started while experienced investors will have the most advanced platform available.
The only concern I have is whether they can keep up the returns in the long term. It is not keeping me from investing in Mintos yet. I am testing out other platforms at the moment to see how much returns will differ in the months and years to come.
Mintos alternatives: Other P2P lending platforms
There’s plenty of good platforms out there, and some of them also offer higher returns than Mintos.
Before investing with Mintos, I urge you to do a bit of research on the other platforms to find out whether they suit you better. You could also consider real estate crowdfunding as an alternative.
If P2P lending is new to you, feel free to send me any questions you might have, and I’ll do my best to help you 🙂
I have tried creating a video review below (not me speaking though) to help people who would rather watch a video than read a long post. Hope you like it!