Features of the Peer to Peer Lending Platform

Neo Finance is a service operator Peer to Peer Lending based in Lithuania and manages the online platform of the same name for the widespread collection of capital on the Internet to be used in consumer credit.

Il social lending it is an investment that attracts small savers because it is within everyone’s reach, it is convenient and profitable. There is no shortage of risksso if you want to try your hand, do it by leaning on a reliable and professional portal, which allows you to diversify your investment and protects you against the risk of losing your capital.

Neo Finance has all the features in order and also has an average rate of return of approximately 12%. But will it really be convenient for you? There are 6,666 active investors on the portal and more than 6,000 borrowers have applied for a loan. If you want to know more about this platform, continue reading the article.

Who is NEO Finance

NEO Finance is a leading fintech company in Lithuania, it is qualified in several respects: it holds the license of unlimited electronic money institution which allows operations throughout the European Union.

It is supervised by the Bank of Lithuania, is part of the public list of authorized consumer credit providers and payment service providers (PISP), and is also the first Lithuanian operator in the list of platform operators.

They can count on more than 14,000 investors and nearly 20,000 loans issued.

How the platform works

The portal allows registered users to lend money by way of investment, to subjects who have applied for funding from the Platform.

NEO Finance personally carries out a creditworthiness assessment of each applicant and establishes a interest rate proportionate to the risk of insolvency. When the debtor repays the loan, the sum and interest are distributed proportionally among all the creditors based on the share invested by each.

Investing in NEO Finance is possible for all citizens of the European Union and does not include commissions.

There are usually some amount limits: you can invest from 20 euros per loan with an A,B,C and C- rating, while from 50 euros per loan with an A+ rating. The maximum investment in a mortgage for 12 months is instead equal to 500 euros.

What type of loans are financed?

The platform deals consumer credits (personal loans) with contracts with a maximum duration of up to 5 years. The interest rates offered vary from 6% to 12% based on the risk rating of the loan: it is the highest reliability rating, while E indicates the highest level of risk, NEO Finance tries to reduce the risk of insolvency as much as possible therefore it only admits loan requests up to C.

Everything is fine loan it has its own file where key information is marked: the amount requested by the borrower and how much is left to cover it, how many investors have already participated and with what amounts, the duration of the loan, the interest paid and the risk rating.

To view more information about the borrower you must be registered (for example: education, age, gender, job, etc.)

Path to becoming an investor

Registration, loading, investment and withdrawal, let’s see in detail all the steps to take if you want to invest in NEO Finance:

1. Obviously you must first register on the site as an investor. Fill out the form registration with your telephone number, providing your details with which you can later log in, fill out the account questionnaire and authenticate;
2. Follow the path of verify of your identity requested by the system;
3. Open an account E-money in your name on NEO Finance and deposit your first funds. Your account has a personal IBAN code so you don’t transfer money to Neo Finance, it’s an additional security for your capital and it’s free;
4. Select one of the two investment methods: manual or automatic, and start investing in the loans that interest you.

Manual or automatic investment?

The option manual it forces you to browse the list of loans and select, one by one, those available to evaluate their characteristics; you can use the filters to make a first screening but you save a lot of time if you rely on the automatic investment right away.

With the’automatic investment you just have to set your selection criteria – borrower rating, interest rate, loan maturity etc. –, after which the system automatically invests only in contracts that match those criteria. This way you don’t have to constantly follow and review all the questions that are presented in the system.

The tool allows you not to constantly follow the publication of new offers and to make the investment immediate and fast.

Secondary market

Il secondary market allows investors to buy and sell consumer credit investments, i.e. investments in which investors have already invested and previously financed. If the investment is sold at a lower price than the purchase price then the loan is considered to be sold at a discount; otherwise, the loan is considered to be sold at a premium.

Is the investment risky?

Investing in personal loans can be very risky, I am without guarantees because they are based only on the trust given to the debtor based on his credit profile. The investor assumes the risk that the borrower may be unable to pay or pay late.

The borrower may also decide to repay all or part of the credit early and, as a result, the lender receives less interest than stipulated in the agreement.

Per to limit the risks NEO Finance carries out in-depth checks on borrowers and prepares measures to protect the investor which we will see in detail shortly.

Another risk, less likely, is that the manager of the platform goes bankrupt, but since investors’ money is kept in a separate account from that of the company, there is nothing to worry about.

In any case, it is an investment and therefore it involves risks, so the advice is to face it with preparation and awareness.

Provision fund

Il Provision fund it is one of the measures envisaged to protect investors that I mentioned. When a borrower is late on a payment even for a single day, NEO Finance covers the payment by repaying investors.

To do this, NEO Finance draws on a separate account, the Provision Fund. The investor is free to choose, before each investment, whether to acquire the guarantee of the Fund.

This is not a free service, you pay a monthly commission which varies according to the creditworthiness of the borrower and the duration of the loan, it can range from 0.44% to 22.91% of the invested amount. The commissions collected are accumulated in the Fund and go to cover, in the event of delay, repayments to creditors.

Buyback Guarantee

If you do not choose to enable the provision, in the event of a loan default, the buyback guarantee. Starting from the 60th day of late payments, NEO Finance terminates the contract and offers to buy back the loan for 50-80% of its face value.

In this way the investor can immediately regain possession of a portion of the capital and interest. If you decline the offer, debt recovery takes place through the courts and can take a few years.

Commissions

There are no additional commissions when investing in the primary market, while in the secondary market there is a brokerage commission of 1% for both selling and buying.

Taxes

The earnings derived from the investment are subject to taxation. Personal income tax for interest paid to non-Lithuanian residents is deducted and paid into the budget of the Republic of Lithuania by NEO Finance.

The tax rate is 15%, therefore, before paying interest to investors, NEO Finance will deduct the percentage from the amount.

If Lithuania has signed a double tax avoidance agreement with a particular country and the investor submits the claim regarding the rate specified in the said agreement, NEO Finance will deduct the respective rate.

The VIP Investor

The investor receives the status of “VIP investor” in the event that his active investment portfolio contains certain values ​​which I am now going to list for you:

• VIP Bronze: the portfolio must contain more than 5,000 euros of active investments;
• VIP Silver: the portfolio must contain more than 15,000 euros of active investments;
• VIP Gold: the portfolio must contain more than €50,000 of active investments;
• VIP Platinum: the portfolio must contain more than €125,000 of active investments.

VIP Investor Status also gives VIP Investors the opportunity to sell defaulted loans at a 10% higher ratio than other loan providers, who do not have VIP Investor Status.

Why choose NEO Finance?

Each P2P lending marketplace has its own individual characteristics, more or less advantageous, which make it possible to offer a service that is somewhat different from the competition. These are the advantages of NEO Finance:

• Has good credentials and communicates transparently;
• The range of interests can satisfy all investors. Good return/risk ratio;
• There is the provision fund option, but you pay;
• There is a buyback guarantee, but it doesn’t allow you to save all your credit.
• There is the AutoInvest feature;
• The secondary market is present, but for a fee;
• Your money is kept separate by NEO Finance.

Why not choose it?

Some details are not very inviting:

• Starting with the commissions foreseen for this and for that service;
• The lack of variety in the type of loans;
• are not clarified refund method of credit and interest, is it in installments or at the end of the contract?
• The site is very basic, not particularly attractive.

My Business Opinions

We have come to the end of the review NEO Finance. You have seen that it is a reliable operator that offers a series of services to protect its customers without sacrificing the promises of income (medium-high and for all needs). So, I have no opinion against using the platform, the choice is up to you and if you are in doubt you can always read other platform reviews on Affari Miei in the section Crowdfunding.

In any case, before invest on this or that portal, I invite you to train and create a real investment strategy.

Conclusions

Before saying goodbye, I invite you to browse my blog where you can find lots of in-depth content, videos, podcasts, guides, reviews and articles on the world of investments, savings and growth.

You can start from the guides-path to invest studied for each profile:

Good continuation on Affari Miei!