LendMe fees fair and reasonable

LendMe fees fair and reasonable

Specialist secured peer to peer lender sets fee by risk level

Fees charged by LendMe are fair and reasonable and determined by the level of risk, says CEO Marcus Morrison. The specialist secured peer to peer lender says, unlike finance companies, its fees do not fall within the confines of the Credit Contracts and Consumer Finance Act (CCCFA).

The CCCFA says fees charged by lenders must relate to the cost of the business of administering the loan. However, because LendMe does not lend the loans itself, the CCCFA rules do not apply.

“LendMe is an intermediary, as set out in regulations governing its P2P licence. LendMe’s fees are not credit fees under the CCCFA, but LendMe does nevertheless adhere to general standards of reasonable commercial practice. LendMe is currently assisting the Commerce Commission in reviewing our business model in light of the CCCFA,” says Morrison.

LendMe’s online platform matches ‘borrowers’ wanting to borrow money with ‘lenders’ willing to lend it. Borrowers can apply for loans between $25,000 and $2 million, and lenders may fund loans in full or in increments of $1,000. LendMe’s key point of difference compared to other peer to peer lenders is that all loans are secured against borrowers’ assets, most commonly first mortgages over property.

Borrowers pay a platform fee to list their loan online with LendMe, and have to pay the fee once their loan has been fully funded. Dependent on their assessed risk score, the fee for using the platform is between 1% and 7% and is charged by LendMe to the borrower. The better a borrower’s credit assessment and loan-to-value ratio with the security, the lower the fee. There are no penalty fees for paying the loan back early.

For lenders/investors, a loan management fee of between 0.9% to 1.95% of their lending will apply for managing the loan on their behalf.

“LendMe’s fees to borrowers represent excellent value for the services provided and will continue to be charged by reference to the loan’s risk grade. So, for those loans that are considered the lowest risk (assessed through a matrix considering LVR, debt servicing and credit history) there is currently a 1% fee and for the highest risk loans it could be up to 7% of the loan amount. This is the fairest way to charge the fee because it best reflects the skill and effort applied by LendMe in assessing and then publishing the loan on the platform,” says Morrison.

ENDS

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