Just here for the Mintos promo code? Well, there it is. When you use the Mintos referral code to sign up, you’ll earn 1% extra on all investments made within the first 90 days after signing-up. Plus, you’re helping me fund this blog. Thanks!
Listen, the Mintos Marketplace is the fastest-growing peer-to-peer lending site in Europe, where you can invest in high-yielding loans online. Excellent. So, in this Mintos Marketplace review, I will show you how to earn a 12%+ net annualized return on the site in a few simple steps.
Moreover, I have included a Mintos referral code in the review for you to get a head start. It gives you a 1% sign-up bonus on all new investments. Sounds good, right?
Mintos pros and cons
There are plenty of peer-to-peer lending sites out there, but Mintos by far my favorite. It has more 100.000 active investors and has already paid them more than €33,500,000 in interest.
- Buyback guarantee to repurchase defaulted loans
- Auto invest saves you a lot of time
- Largest platform in Europe
- Long track record
- Massive amount of available loans
- 9-14% interest rate
- Diversification options
- No fees
- Multiple currencies
- Promotion code available
- Slow customer support
- Lower interest rates than competitors, e.g. Envestio (15%+), Kuetzal (17%+)
- Business is profitable, but only marginally
About the review
I will show you how to set up an account to generate impressive from results from peer-to-peer lending after just a few months. I will do so solely based on my own experience.
In other words, I will walk you through
- How to properly set up an account. This is not as simple as you may think. A lot of people do it wrong.
- The different options for transferring funds to the marketplace from your bank account.
- Setting up an auto invest portfolio with buy back-guaranteed p2p loans – and what this even means.
- How to increase your earnings by utilizing the secondary market dynamics for buying and selling peer-to-peer loans.
And before you even ask: Yes, peer-to-peer loans is an excellent investment.
In case you are wondering: Is it difficult? Certainly not. It is incredibly easy to get started, and the auto-investment function automates the whole process. Once you have set it up you will have a new passive income.
The average return on Mintos ranges from 9-14%, depending on loan type and risk tolerance. For example, if you invest €10,000 at 12% you will have earned €1,200 after one year before taxes.
Are you as excited as I am? Ready for the Mintos review? Well, let’s go!
What is Mintos?
Mintos is an online peer-to-peer marketplace for alternative financial investments. The platform offers individuals and businesses an opportunity to invest in many kinds of loans issued by lending companies around the world. These include business loans, car loans, personal loans, and many other types, all with a calculated interest rate of 9-15%.
The purpose of the lending platform is to facilitate the contact between investors and loan providers. You should, therefore, think of it as a semi-automated broker for p2p loans. And acting as an intermediary, they supply the necessary pool of investors for the loan originators to issue debt to millions of consumers.
The company headquarters are situated in Riga, Latvia, where the platform launched in 2015. As of today, it employs more has more than 60 people across Europe and is constantly hiring more. Positive signs of growth that suggest an evolving business.
Why invest with the Mintos Marketplace?
To begin the review, let us look at some basic stats about the platform: Less than three years after launching, the company turned a net profit of €196 thousand in 2017. Most noteworthy, it also increased the revenue fourfold to €2.137 million from €521 thousand in 2016.
It is very impressive for any technology company to be in the black so fast, as most tech firms run with red numbers for years.
For this and other reasons, several external organizations have not failed to recognize the company’s success. Among them the leading news site for alternative investment AltFi.
Three years in a row, AltFi has rewarded Mintos the prestigious “People’s Choice Award” for best alternative investment option. An important testimony to the lending network’s widespread popularity.
Not only that, it means that the users love the site’s user-friendly design and hassle-free way of putting their money to work.
There is no doubt that you should only put your hard-earned funds into businesses with a proven track record. And for this reason, it is well worthwhile to look at the site’s market share. How are they stacking up against the competitors?
According to the financial analytics firm Brismo, Mintos held a whopping 31,8% of the continental European market share in September 2018, with most opponents staggering far behind. This makes it the dominant peer-to-peer lending platform in Europe.
Mintos returns – Is it a good passive income?
Now, you at this point you are probably wondering: Well, the figures are nice. But how much can I actually make from p2p lending on the marketplace?
In general, you will gross 11.70% yearly. This number is based on the site’s historical average.
My own personal net annual return is calculated to 12.09%, which is slightly higher. It is most certainly better than the disappointing European stock market results from 2018.
Mintos was the first peer-to-peer lending site I invested with. I began in June 2017 with an initial deposit of around €500 to test things out. Because the returns turned out nicely, I decided to scaled things up to €4264.
At the present time, I plan to keep my stakes at this level to instead diversify my p2p portfolio across multiple platforms.
My personal gross return so far amounts to €687.95, which includes bonuses from various programs. Before taxes, I make €45 every month on the platform; an undeniably nice supplement to my day-time job’s monthly paycheck. No wonder why most people have good experience with the marketplace.
But how is the annual return (as shown in the screenshot above) calculated? Let me try to explain, and correct me if I am wrong. Mintos utilizes a methodology called “extended internal rate of return”.
This methodology excludes the continuously compounded interest and renders the annual return as a nominal “bare” interest rate.
As might be expected, a normal compound formula is not going to reflect your potential earnings 100% accurately.
Given that you are going to earn interest daily and pay taxes annually, you obviously need to take the following example with a pinch of salt. What a basic compound calculation will give you is a rough estimate of the potential gross income.
Let’s say, for instance, that you commit €10,000 at a 12% interest rate over 10 years. Before taxes, your balance after 10 years will be €31,000 and you will have earned €21,000 in interests.
How to invest in Mintos – Setting up your Account
Let’s go ahead and set up an account. To get started, make your way over to Mintos.com. If you choose to use my link you’ll get 1% extra on all investments you make within the first 90 days. The promo code is added automatically.
Click “Create an account” in the top right corner.
Proceed by entering your email address, then click “Continue”.
Go ahead and fill out the registration form. I’ll wait right here. No stress.
In case you are wondering how large the bonus is, confer the table below. For example, if you invest 500€, the bonus amounts to 10€ or 2%.
Mintos identity verification
When everything goes as planned, you now need to verify your identity.
Get your passport or ID-card out and follow the instructions shown on the screen.
Whether or not you are a Russian oligarch, the identity verification is a mandatory for everyone by European law. The regulation is instated to combat money laundering, which unfortunately happens way to often in the Baltics.
The easiest way to verify your identity is by using a web camera. It speeds up the process, as, I believe, AI is used to compare the ID photo with the one captured by web camera.
But what happens if your identity verification is rejected? No panic. Mine was. I do not know whether it was rejected due to bad lighting in my office or whether the two photos did not look much alike. However, I simply contacted the support team who were quick to resolve the issue.
How to deposit money to Mintos – Add funds to your crowdlending account
Did your application come through? Congratulations! You can now make a first deposit to your crowdlending account.
It is important not to play around with Auto Invest function just yet, as it may unintentionally begin buying up loans, once the money arrives.
Click on “Deposit/Withdraw/FX” in the top menu.
In the drop-down menu on the left, select “EUR” or whatever currency you wish to deposit.
In general, I strongly recommend beginners not to buy in peer-to-peer loans issued in currencies other than Euros.
The Euro is among the most stable currencies in the world, and buying loans issued in it greatly lowers your risk of losing money due to fluctuation.
It is true that crowdfunding loans Rubles, Georgian Lari and others come with interest rates of up to 14-19%. But a very important point often overlooked by beginners is their instability.
On the flip side, if you are in the market of currency speculation, there is obviously money to be made from buying, selling and holding different currencies. Some people do actually make a profit from fluctuations, but that is a topic for another time I cannot cover in this review.
Equally import is the fact that most loans are issued in Euros. What this means is that you will experience no or only minor cash drag compared with other currencies.
With this in mind, do feel free to make your own research.
As of today, there are three ways to deposit money to your account: Direct transfer, bank transfer and by an E-money provider.
The cheapest option to transfer funds will depend on your local currency, exchange fees, various bank fees. For the most part, you will have to compare the expenses yourself.
The “Direct transfer” option means that your money is transferred through an external payment service provider called Trustly. By using Trustly, your funds will be added to your investor account relatively fast, from within minutes to 1-2 working days.
There is a 1% – and maximally €10 – service fee on the transferred amount. I do not personally use Trustly, mainly because of their poor reputation on sites like Trustpilot.
The second way is to add funds is by direct bank transfer. To transfer money from your bank account, you need to know the recipient’s IBAN (International Bank Account Number) and SWIFT/BIC code.
On the Mintos deposit site click on “Bank transfer” on the left side menu. Here you can find all the required payment details.
Open a new tab in your browser. Log into your bank account and find the option to make an international transaction in Euros. Fill out all required fields with the information listed in the yellow field on the Mintos page.
It is very important to include your investor ID number during the transaction, as Mintos needs to forward the deposited amount to your personal account.
I have circled the area where you can find this number in the screenshot above. There is usually a field called “payment details”, “message” or similar in your banking system where you can write it.
Do not panic if you forgot to include the number. Your money isn’t lost. Contact the support team and document your proof of payment.
I personally make my deposits by bank transfers to keep third parties out of the transaction. This way either my bank or Mintos can be held accountable if something goes wrong (except if I typed a wrong number, for example).
If your local currency is different from the one you deposit, your bank will most likely charge a conversion fee. Mine charges around €3 but it has an excellent exchange rate which I am very happy with.
It usually takes 1-3 business days for the deposit to reach your investor account.
The third option is to use an E-money service provider such as Transferwise.
You have probably seen a lot of people recommend Transferwise, as they receive a bonus for each referral they make to the service. But it is not all bogus.
If your bank has less favorable rates than mine does, Transferwise may actually be a cheaper alternative to convert your money.
The service is a bit different from a traditional international bank transfer.
Instead of making one direct international conversion, Transferwise matches your local currency-to-currency conversion with other users who want to transfer money in the opposite direction.
To make a deposit to your investor account via Transferwise, visit the Transferwise website.
Sign up for an account and follow the necessary steps. Then proceed logging into your account. Click on “Activity” and choose “Send money”. Enter the amount you wish to transfer to your lending account. Select “Low-cost transfer” in the drop-down menu, then click on “Continue”. Select “Business or Charity” as the recipient.
Fill in the form with the banking details found on the Mintos site and click “Confirm”. Your deposit should arrive within 2-3 working days.
As a side note, several people have recommended that I switch to the banking app Revolut. I have not yet had time to check out the platform. But it seems that Revolut it is rapidly gaining momentum among international investors.
This upcoming champion promises to transfer money abroad without any exchange fees, so I will definitely have to try their services out at some point.
Mintos Auto Invest Strategy – Automating Investments in Loans
So far so good. You survived the first half of my review of Mintos.
Once the money has arrived at your account, you are ready to set up an autoinvest profile to buy loans automatically.
The purpose of automating your investment portfolio is basically to save time, thereby gaining higher returns in the long run. When a loan period ends, you will not have to worry about logging in and buying new ones manually. It is all done in the background for you.
Click on “Auto Invest” in the top menu. You will now arrive at the Auto Invest site.
Our final portfolio should look something like this:
Our plan is to create a five-tiered Auto Invest strategy for optimal performance (ignore the sixth row shown on the picture which consists of high-interest car loans I bought during a previous campaign).
Each tier will be set to purchase loans lasting 1-3 months and to invest at a 1% lower interest rate than the previous level. So, if there are no loans available at a 14% interest rate it automatically continues to look for those with 13% and so on.
Click the blue button “Create new Auto Invest strategy”. On the next page, choose “Custom Strategy” for personal customization.
The next page may look quite confusing at first sight. But do not worry, it is quite simple. We just need to make a few choices here.
First, in the grey top row, deselect “no” from the rightmost column called “Buyback guarantee”. That way you will only invest in loans eligible to be repurchased by the loan originator if the borrower is late on payments by more than 60 days.
If more than 60 days late, the defaulted loan is automatically bought back, and you will receive the outstanding principal (the initial amount invested) together with the accumulated interest, i.e. what you have earned but not received.
Click on “Rating” in the menu and deselect anything below B or B-.
These levels represent Mintos’s assessment of the loan originator’s business, their financial standing, performance, but also whether disruptive regulation may be enforced upon them in a foreseeable future.
All in all, the rating system is a measure of quality. And you want to hit that sweet spot between low risk and high returns.
If you wish to remove any individual country or loan type from your portfolio you can also do so here.
Scroll down to the first graph called “interest rate”. Drag the left slider to 14% to select loans with a 14% or higher interest rate.
In the second graph below, pull the right slider left to 3 months to select loans with a remaining term of 3 or fewer months.
Name your strategy something memorable like “1-3mo. 14% interest”.
In “portfolio size”, write the maximum amount of your total portfolio you wish to potentially invest using this configuration. For 14%, I would go all in and write 10,000 or higher.
Define the minimum and maximum you want to invest in a single loan. Again, for 14% I would go for €10-50 but only €10-10 for lowers interest loans.
For “Do you want to reinvest?” select “yes”. Select “no” for “Loans already invested in”. Also, select “no” for “Diversify across loan originators”.
All other things being equal, you should diversify. However, for the time being, I consider the diversification setting is partly broken. Checking it forces you to completely spread out your investment equally across every loan originator, and if one company does not meet your criteria, your portfolio will be stuck at one loan per loan originator.
With the risk of falling asleep, read the Assignment Agreements for each loan originator. If you have better things to do, just check the box to accept.
Click “Save and Activate”. And voilà! You have created your very first auto invest strategy.
Simply repeat the steps above for 13%, 12%, 11% and 10%.
Congratulations! You are now ready to receive interest and watch your savings grow!
Buyback guarantee – What is it?
I briefly mentioned the so-called buyback guarantee above. But what does a buyback guarantee mean? The buyback guarantee simply means that the loan originator will buy back the loan from you if the borrower fails to make payments on the loan by the due date.
On Mintos, the buyback guarantee generally kicks in when the borrower is more than 60 days delinquent. You will then automatically receive both the principal (what you invested) and the originally anticipated interest.
The buyback principle was a game changer in the p2p investment world. By and large it removed a great deal of risk from the side of the investor to the loan provider.
But the buyback guarantee does not make your investments entirely safe. In the event the loan provider goes bankrupt, you may not get your money back.
Just like any other form of investment, the success of peer-to-peer lending is at the mercy of both internal and external factors such as new regulation.
Although Mintos has arrangements in place with all loan providers for you to continue receiving payments in case of insolvency, such legal proceedings can drag on for many years.
Despite this short reality check, do not be scared. All firms are properly vetted by Mintos before they appear on the platform.
But how does the buy back guarantee affect you on a daily basis? For one thing, most of the daily interest you receive will come from loans being bought back.
Last week, for example, I made €11.21 out of which 8.12€ (72%) came from repurchases.
And if you invest primarily in short term loans (1-3 mo.), expect 50-70% of your monthly interest to come from rebuys.
With more than 50% of all borrowers failing to make due repayments, you unequivocally need the buyback guarantee to prevent severe losses.
But you may be wondering how the loan providers can afford the high default rates.
On the face of it, these numbers do not seem sustainable in the long term. It nonetheless seems to me that the incredibly high interest rates charged on loans are enough for many lending companies to sustain a profitable business.
What happens if the loan originator goes out of business?
Although the lending industry is booming, every single company must operate in an increasingly competitive market; some will evidently win, while others will lose. Like regular companies competing for the same clients, it is not unlikely that a loan originator some time or other loses territory and goes bust.
But what happens to your investment if case of bankruptcy?
As of 2019, only one loan originator has caused Mintos trouble: Eurocent from Poland. Eurocent were suspended from the platform in June 2017; but two years later Mintos is still awaiting the District Court of Krakow to settle the dispute and reach a favorable outcome.
You should always bear in mind that company defaults do happen. Always diversify or prepare to say money bye-bye.
Mintos Direct vs. Indirect Loan Structure
How does Mintos deal with insolvent companies?
With every loan originator they have an agreement in place which considers the claims of private investors like you and me.
Be aware that two different agreement structures exist: the direct vs. the indirect loan structure. They involve you, the lender, and the borrower, and they differ with regards to retrieval of your money.
First thing to remember is that lending people money means that you sell them debt with the prospect of future repayment. You buy a claim against the borrowing part with a demand of ownership over the money lent – at least in theory.
The same principle applies to peer-to-peer investments; an investment on most social lending sites involves the purchase of loan claims against anonymized borrowers.
For each investment you make, Mintos automatically signs a contract on your behalf with the borrower directly or indirectly through a lending company.
The structure depends on what the lending company has agreed with Mintos. Let me explain.
When investing in a loan with the direct structure you own a direct claim against the borrower. If the loan originator goes bankrupt your rights remain in place. The money is legally still be yours.
But how are you going to reclaim multiple loans from different borrowers in a faraway country? According to Mintos, they will take over the process of dealing with borrowers from the insolvent loan originator to benefit of the investor. They will function as your representative and maintain the repayment process on your behalf.
The indirect structure, on the other hand, means that your claim is against the loan originator and not the borrower. In the case that the originator goes bankrupt, Mintos will make its investors the first to receive payment from whatever assets can be obtained from the bankrupt estate.
On the negative side, however, leftover assets from bankruptcies are often equal to zero. In my humble opinion it is therefore safer to buy loans sold with a direct claim against the borrower.
In praxis your portfolio will probably not remain untouched by any type of bankruptcy. Although the contract between you and the borrower remains in place, there is no knowing how and when Mintos will reclaim the money on your behalf. A legal process in, especially outside the European Union, may take years to resolve.
Secondary Market – Strategy and Autoinvest
The secondary market is a place where investors can sell and purchase loans to and from each other. Loans can be resold or bought at the original purchase price, at a premium or at a discount.
By understanding the secondary market dynamics investors may obtain higher profits.
Two principal strategies for making money on the secondary market exist.
The first is to buy high interest loans (13%+) sold with a markup. Stay away from defaulted loans, even if they are heavily discounted; instead, aim for those with a long duration.
The second, and more common, strategy to make money on the secondary market is to sell loans you bought during a cash-back campaign. You simply flip them at the secondary market at a discount smaller than the bonus you received from the campaign, thereby making a profit from the margin.
Although I personally do not spend much time buying or selling loans on the secondary market, I understand why others do so. With the right strategy, there is a huge potential for scaling up the selling of loans from cash-back campaigns.
Wrapping up the Mintos review
I am really happy with how my investment has turned out. I have not experienced any losses thanks to the buyback guarantee.
My biggest concern is that Mintos wants to expand too rapidly and lose track of things. And of course, the possibility of economic crisis is always looming large on the horizon, in which case a lot of lending companies could go under.
But again, I never invest more than I can afford to lose. I take the risk and reap the rewards – or sorrows.
Although platforms such as Envestio promises returns as high as 25%, I like the shear stability and historical performance Mintos has shown.
I spend very little time on the platform, perhaps less than 15 minutes a month. That’s a huge win for someone like me with limited time.
To sum up, Mintos should be an essential part of any peer-to-peer investor’s portfolio in 2019.