ISA season: Consumer loan IFISAs on the market
Consumer lending was where it all began for the peer-to-peer lending sector.
While the biggest brand names in P2P consumer lending – Zopa, Lending Works and RateSetter – have now left the retail P2P space, there are still plenty of consumer lenders operating in the market. And they all allow investors to shield their returns within an Innovative Finance ISA (IFISA).
There are seven P2P platforms offering IFISA-wrapped consumer loan investments in the current tax year. Minimum investments begin at just £1, and returns range from seven to 16 per cent.
Read more: IFISA returns on the rise
An IFISA is a tax-free wrapper that allows UK investors to lend money through Financial Conduct Authority-authorised P2P lending platforms. They can receive interest and capital gains tax free, up to the current annual ISA limit of £20,000.
Here are the IFISAs which allow investors to fund consumer loans:
Elfin Market
Elfin Market is unique among P2P lenders as it offers its loans via a credit card product, called the Elfin Wallet. Borrowers can access lower rates than traditional credit cards, while investors can earn IFISA-wrapped returns of up to 10 per cent, with a minimum investment of just £100.
Read more: Elfin Market facilitates loans of more than £17m in 2022
Fund Ourselves
Fund Ourselves allows borrowers to apply for short term loans of between £100 and £1,500, at affordable rates. Investors can help fund these loans via their IFISA accounts, with target returns of up to 15 per cent. The minimum investment threshold is £1,000.
HNW Lending
As the name suggests, HNW Lending caters primarily for high net worth borrowers who can offer collateral in the form of property, high value cars, aircraft, fine wine, jewellery, pensions, shares, yachts, and antiques.
Investors must add a minimum of £10,000 to their IFISA, meaning that the HNW Lending IFISA is most suited to sophisticated investors who understand the risks of P2P lending and can afford to make five-figure investments.
Leap Lending
Leap Lending’s IFISA was launched in 2020, and allows investors to borrow small amounts of money to cover expenses such as home improvements, weddings, and holidays. Investors can open a Leap Lending IFISA with just £50, and target returns are seven per cent.
Lendwise
As a student loan provider, Lendwise just about qualifies as a consumer lender. It allows post-graduate students to fund their course with the help of the platform’s investors. Lendwise has a minimum investment threshold of £1,000, with target returns of nine per cent. Investments made via Lendwise’s IFISA have helped to push the lender’s loanbook above £30m for the first time this year.
Share Credit
Share Credit targets the highest returns of all platforms on this list. It is currently advertising target rates of 16 per cent for investors, with an investment minimum of just £10.
Unbolted
Unbolted may be the only P2P lending platform which doesn’t have a minimum investment threshold. Investors can back consumer loans which have been secured against valuable assets, in the tradition of pawnbroking. Unbolted is targeting returns of eight per cent for the current tax year.
Read more: Seven IFISAs backing British business
