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How should I determine the rate I set?

If you are lending quickly and easily using Autobid, when setting the rate of return you want you should consider your lending speed. Borrowers only accept the lowest interest rate offers, so if you set your return too high it will take longer for your money to be lent out and start earning interest.

If you are using advanced settings in Autobid, you are able to set your offer rates, view the current average rates for each risk band and see your estimated net return. You can also see the effect of these changes on your lending speed and see the estimated bad debt rates in each risk band.

Using data from Experian including the historical amounts of bad debts experienced in similar businesses and their professional expertise, our underwriters have made their best estimates of the likely levels of bad debt that will be experienced in each risk band. You may receive a higher or lower level of bad debt depending on the performance of the specific businesses you lend to. You should continue to monitor your lending speed when setting these offer rates.

If you’re using advanced settings in Autobid, you should consider the minimum bid rates for each risk band when setting your offer rates. Setting your offer rates close to or below the minimum bid rate ensures your bids are more likely to be accepted, meaning your money gets lent out and starts earning interest quicker. You can still choose rates that are below the minimum bid rate as your Autobid will buy loan parts from other people at or above your desired interest rate. If your offer rates are below the minimum bid rate, you will only place bids for new loans at the minimum bid rate for each risk band.

If you are lending by choosing the individual loan requests you want to bid on, you should consider the expected return you want to achieve and the bids of other investors when determining the offer rates you set.

You can offer rates typically between 6% and 20% which will depend on the risk band a business is given.

For more information please see the How to Lend page.

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