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Review: Mintos
11/02/2019
Review: Mintos
My thoughts and experience with the market leader of European loan financing

(Updated 23/02/2020)

(If you are not yet on Mintos, a bonus signup link awaits you at the bottom.)

Mintos: The Dry Facts

  • Platform type: Loan refinancing marketplace
  • Established: January 2015
  • Headquarters: Latvia
  • Loan regions: 31 countries in 5 continents
  • Loan originators: 66 (not all actively listing loans)
  • Currencies: EUR, GBP, PLN, CZK, GEL, DKK, RUB, KZT, RON, SEK MXN, USD
  • Loan types: Personal, car, short-term, business, mortgage, invoice financing, agricultural, pawnbroking
  • Registered users: 268,357
  • Cumulative funded sum: € 4.9 billion
  • Outstanding portfolio: € 726m
  • Average interest rate since launch: 11.89%

Background

Mintos was co-founded by Martins Sulte and Martins Valters, both coming from the world of accounting and investment banking. In its 5 years of existence, the company has raised 2 funding rounds, grown into a team of about 200 people, won several awards, and become the largest loan financing platform in continental Europe.

The Attractive Bits

  • Unparalleled diversification among loan types and loan originators from all parts of the world.
  • Endless supply of loans, most of which have a buyback guarantee in case of default.
  • The large number of originators means that Mintos isn’t too dependent on any one partner, making the platform itself extremely resilient.
  • Good returns compared to other well-established platforms.
  • Secondary market allows investors to sell loans at zero fees, increasing liquidity.
  • Extremely high standards of transparency about the platform itself, loan originators, individual loans, and overall loan-book stats.
  • Excellent interface allows easy access even to sophisticated functions, like setting up intricate manual auto-invest portfolios.

Concerns

While Mintos itself is a great platform and seems highly unlikely to fail, the loan originators they work with are a different story. Almost all of them issue loans at the highest legal interest rates, to the weakest borrowers, which means that the ratio of late loans is high. Managing your Mintos portfolio requires a lot of homework, and invokes constant self-doubt.

The best originators offer lower returns to investors, which encourages investors to focus on the riskiest ones. These walk a fine line between profit and loss. If an originator goes out of business, or its license is revoked, the buyback guarantee will likely become useless. There were several such cases already, where investors are still waiting for any recoveries.

In theory, Mintos Ratings help distinguish the stable originators from the risky ones. In practice, these ratings don’t always represent the risk. Doing your own due diligence is difficult considering the number of originators, many of whom show outdated financial statements. I recommend using ExploreP2P ratings to support you assessments.

As a side-note, several loan originators are owned or supported by the same person who owns part of Mintos. So in a way, the opportunities on the marketplace are more centralised than it first appears. But in practice, these related companies are not bound to help each other out in case of trouble, so they can be viewed as separate entities.

My Personal Experience

Since joining Mintos in January 2018, my experience has been largely positive: With excellent returns, a great interface, and a huge diversity of loan offerings, it’s clear why they’re the market leader. Mintos now holds the largest share of my crowdfunding portfolio, and has earned me over €21,700 so far. I’ve managed to dodge most bullets by avoiding the worst originators, except Monego (whose license was revoked), where I still have €1300 at risk. For now, the debt is gradually being repaid.

Another thing that bothers me is market volatility, present on Mintos more than on any other platform. It works in investors’ favour when loan originators are in need of cash, and compete over our money by offering high interest rates. But there are also periods when demand is satisfied, interest rates drop sharply, and originators actually buy back their financed loans to relist them with lower interest rates. Remember, lower returns for the same risk level mean that returns are less likely to cover losses.

Even in normal times, loans are often extended, repaid early, or bought back before they reach maturity, because loan originators use Mintos as a cash-flow balancing mechanism. All this commotion forces investors to always be on guard, reassess the opportunities on the marketplace, and often redistribute their money, which is a hassle.

Bottom Line

My ambivalence towards Mintos is likely to last for many years. Despite its downsides and complexities, it’s still the most stable and diversified platform in Europe, the cornerstone of every European P2P portfolio.

If you decide to join Mintos, this sign-up link will give you 1% bonus for your invested amount in the first 90 days. I will also be rewarded.

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*Mintos has also applied for a license to run lending operations in the UK. This application was denied due to failure to comply with UK regulations. Interestingly, one regulation dictates that a business like Mintos should take responsibility for the operations of its contractors, the loan originators. Perhaps it’s a sign that Mintos should stop celebrating its success as a startup, and start taking itself more seriously as a business managing the wealth of over a hundred thousand people.


Legal notice: This post is not meant as investment counselling! I’m just a fellow investor sharing his personal experience and thoughts.

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