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goPeer Review: Peer-to-Peer Lending for Canadians

goPeer Review: Peer-to-Peer Lending for Canadians

One of the challenges Canadian investors face is finding ways to diversify their holdings beyond stocks and bonds. Real estate offers an opportunity, but the barriers to entry can be steep, depending on how you invest. However, the rise of various fintech apps has created opportunities that didn’t exist a few short years ago.

About Peer-to-Peer Lending

Peer-to-peer (P2P) lending is a form of crowdfunding that allows individuals to borrow money from large numbers of investors who have pooled their funds on a single fintech platform. Borrowers avoid traditional lenders’ regulations and red tape, while investors gain exposure to a new asset class with the potential for above-average returns.

What Is goPeer?

goPeer is a Canadian-owned, Toronto-based peer-to-peer lender offering personal loans up to $35,000 and a unique opportunity for investors to own an alternative investment.

In this goPeer review, I’ll explain how the platform works for borrowers and investors (with a greater focus on the latter.) I’ll share the key features, the risks, the pros and cons, and more.

goPeer At-A-Glance

For borrowers:

  • 100% Canadian P2P lender
  • Apply for home improvement, debt consolidation loans, and more
  • Loan amounts up to $35,000
  • Terms of 3 or 5 years
  • Interest rates as low as 8%
  • Upfront fee, no prepayment penalties

For investors:

  • 10% annualized net return (since inception, as of December 31, 2022)
  • Invest as little as $10 per loan
  • Fixed-income asset class with low correlation to stocks and bonds
  • Borrowers make fixed monthly repayments, with interest (direct deposit to your account)
  • 1.5% annual servicing fee (no management or transaction fees)
  • No fees for deposits or withdrawals
  • Auto-Invest feature allows you to compound your interest

How goPeer Works

goPeer’s concept is simple. Their crowdfunded lending platform connects borrowers who need loans with private investors willing to lend money in exchange for a higher-than-average return on their investment. Privacy is paramount, so the personal identities of borrowers and investors are kept strictly confidential.

Borrowing with goPeer

While this review focuses more on the investment side of the equation, here’s how goPeer works for borrowers.

To borrow money from goPeer, you must meet the following criteria:

  • Be 18 and over
  • Have a credit score of at least 600
  • Have a regular source of income of at least $15,000 per year
  • Canadian resident for at least three years

For borrowers, the process boils down to three steps:

  1. Head to the goPeer website and apply for a loan online. Applying only takes a few minutes, and you can do so from home – no need to travel to a bank branch for a formal meeting with a loan officer. You should get a response from goPeer within 24 hours.
  2. If approved, you can select the loan offer that works for you. Many individual investors will fund your loan, and goPeer is an intermediary of sorts. With investment minimums of only $10, you may have hundreds of investors contributing to your loan.
  3. Once investors fund your loan, goPeer will deposit the money directly into your bank account.

According to goPeer, you can apply for loans up to $35,000, with repayment terms of 3 or 5 years. Interest rates vary but can be as low as 8% (at the time of this writing).

goPeer does charge an origination fee at the time of setup, but there are no early repayment fees or other hidden charges, according to goPeer.

Click here to Borrow Money with goPeer

Investing with goPeer

Like Lending Loop with small business loans, goPeer allows Canadians to diversify their investment portfolio beyond stocks, bonds, and real estate. Because it’s a crowdfunding platform, it doesn’t require a significant investment.

You can invest as little as $10 per loan, although goPeer recommends a minimum investment of $1000 and spreading it across multiple loans to diversify your holdings. 

Investors earn 100% of the loan return after goPeer has deducted the 1.5% servicing fee. For example, if a loan has an interest rate of 10%, investors would earn 8.5% on their investment.

Getting Started

It’s easy to become a goPeer investor. Here are the steps:

  1. Head to the goPeer website and open your free account.
  2. Create a profile by answering a few questions about your investment objectives.
  3. goPeer will match you with loan grades they feel are suitable based on the information you provide.
  4. Transfer your funds to goPeer and start investing.

Invest with goPeer today

goPeer Investor Types

All new goPeer investors are classified as non-eligible, meaning they can invest a maximum of $10,000 annually on the platform. However, you can qualify as an Eligible or Accredited Investor and have your status upgraded. Let’s take a look at the specifics for each type of investor:

Non-Eligible: Regular investors can invest up to $10,000 per year with goPeer

Eligible: You must meet one of the following criteria: Net income, before tax, of $75,000 or higher in the previous two calendar years; Net income, alone or with your spouse, of $125,000 or higher in the last two calendar years; net assets, alone or with a spouse, exceeding $400,000.

Accredited: Net income before tax of $200,000 or higher in the previous two years; Net income before taxes of $300,000 or higher when combined with a spouse; Financial assets of at least $1 million alone or with a spouse. Financial assets don’t include the value of your home. Net assets, alone or with your spouse, of $5 million or more. This amount consists of all assets minus any debt.

Note: You are expected to exceed the minimum income levels listed above in the current year.

The goPeer Platform

Once you’ve moved funds into your account, you can begin investing using the goPeer platform. You’ll see a list of loans in the goPeer marketplace. Select the loans that match your investment objectives (risk, timeframe).

While the borrower’s identity is never revealed, you can see pertinent information on each loan, such as their annual income, occupation and industry, credit score range, debt-to-income ratio, etc.

Once you’ve purchased your investments, you can monitor your portfolio on the goPeer platform. You can see the status of your various loans at a single glance, i.e., in repayment, delinquent, matured, or charged off.

goPeer’s Auto-Invest feature will find loans based on your investor profile (preferred risk grades) and purchase them automatically using the cash balance of your account. This is an optional feature.

Invest with goPeer today

Is goPeer Safe?

It’s important to note that any money you invest through goPeer is not guaranteed, and the CDIC does not insure your principal. This is why it’s crucial that you only invest money that you could stand to lose.

That said, goPeer has taken several steps to reduce investor risk, including assessing every credit application and only granting approval to creditworthy borrowers.

They make diversifying your investment across numerous loans easy by offering a low $10 minimum investment per loan. You could invest $1000 and spread it across 100 loans, reducing your overall risk.

Also, if a borrower defaults on their loan, goPeer’s collections and recovery team does their best to recover your money.

goPeer Pros and Cons

As an investor, there’s a lot to like about goPeer, but it’s not all positive. Here’s my list of pros and cons:

Pros:

  • 100% Canadian platform
  • Registered with FINTRAC
  • goPeer funds are held with Canadian banks
  • Low minimum investment of $10 per loan
  • Ability to select different loan grades and increase potential returns
  • goPeer offers transparency by publishing loan statistics on their website
  • Auto-Invest feature makes it easy to reinvest your earnings
  • Borrowers must have a solid credit history

Cons:

  • 1.5% annual servicing fee
  • Yearly maximum investment amount of $10,000 for non-eligible investors
  • There is risk involved; principal and return are not guaranteed
  • If goPeer needs to collect on a loan, they can charge a fee of up to 35% on collected funds
  • Unsecured loans come with more risk

Invest with goPeer today

goPeer Review: The Bottom Line

I really like the concept of P2P lending. It’s one of the most accessible ways to diversify your investments outside stocks and real estate. I’ve had a good experience with other P2P platforms and like what I see with goPeer.

They’re a Canadian company registered with FINTRAC, Canada’s financial intelligence unit. I appreciate the transparency they provide by publishing loan statistics. Most of all, I like the return potential, the low minimum investment requirement, and the ability to diversify by investing in multiple loans and loan grades.

With that in mind, always use caution when purchasing any alternative investment. goPeer portfolios are not without risk, and your funds are not guaranteed. Remember, when it comes to P2P lending, only use the money you can afford to lose. 

Comments

  1. Don McMillan

    So, what I see is:
    1. A high risk borrower who is willing to pay extra high interest because the reguler lending institutions will not offer a loan.
    2. An at risk lender who is one of a high number who could try to collect legally and will have a very difficult time doing so because you do not know who you are lending the money to.
    3. A no risk platform which charges a 1.5% fee if all is good and up to an additional 35% fee if it’s not good. It’s unclear who owns this platform and additonally clear that the platform owner bears no risk whatsoever.

    As they say in the Dragon Den “I’m out”

  2. Mark

    Tom I think this is a good overview. I’m a current GoPeer investor and I’ve been very impressed with it.

    The one thing I’d add to your diversification discussion is that you can diversify across industry, province, and job types. Those stats and information that you mention are really important for me to diversify.

    I also would contrast this to some other options for private lending, such as Wealthsimple. They offer private investment services, but it is targeted at those with assets under management with WS of $100K+. This makes GoPeer a good entry for smaller investors.

    I’ve had very good experience with the customer service team as well. They have responded to some of my questions promptly and haven’t sugar coated things.

    Overall you can count me as one who is in support of this platform, I would highly recommend.

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