Last updated on 24 March 2021 by Reza
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The Bondora platform is one of the 5 largest P2P platforms (January 2021) in Europe. Bondora was founded during the financial crisis in 2009. Thus, the platform has the longest track record among all major European platforms.
Especially beginners appreciate Bondora, because Bondora makes it as easy as possible for its investors to invest in P2P loans.
Introduction of Bondora as a P2P platform
Bondora (Bondora Capital OÜ) was founded in 2009 during the financial crisis by Pärtel Tomberg. The platform is based in Tallinn, Estonia and is supervised by the Estonian Financial Supervision Authority.
Bondora Capital OÜ at a glance
- More than 140,000 investors
- Approx. 400 million euros in loans extended
- Lending in Estonia, Finland and Spain
- Investors can only invest fully automatically
- Expected returns are between 6.75% p.a. and 12% p.a.
- Investments possible from as little as 1 euro
- Secondary market is offered
- Simplified tax certificate is offered
Who can invest on Bondora?
Individuals living in a country of the European Economic Area can invest on Bondora. Investors from other countries can be admitted by Bondora if they have sufficient assets or income.
At the current time (as of February 2021), it is not possible for companies to invest on Bondora.
Intermediation of P2P loans on Bondora
Loans on Bondora are brokered directly by the platform.
Borrowers must apply directly on the website. Loans are granted only to people residing in Estonia, Finland and Spain.
You can see what the online application looks like on Bondora's Estonian page.
When granting a loan, Bondora asks for some information from potential borrowers, including:
- Personal data
- Employment information
- Income information
- Information about liabilities
These are typical details that banks also ask for during the lending process. After successful lending, the loan is then offered on the platform.
A special feature of Bondora is that you cannot individually select the loans you want to invest in. You have to invest via fully automated strategies.
Ratings on Bondora
Bondora has established AA, A, B, C, D, E, F and HR ratings to classify the risk of loans. A loan with a rating of AA has the highest creditworthiness and the lowest risk, while the opposite is truefor loans with a rating of HR.
Collateralization of loans on Bondora
The platform brokers unsecured consumer loans.
Bondora was founded during the financial crisis, which is why a great emphasis was placed on stability from the very beginning. There are few other European platforms that have been on the market as long as Bondora.
Bondora's investment products meet necessary minimum requirements and the main investment product "Go and Grow" works with a risk buffer . How this works in detail was explained by CEO Pärtel Tomberg on YouTube at the beginning of the Corona crisis.
Direct brokerage of loans on Bondora
What investors also like about Bondora is that the platform does not use loan origin ators. Loan originators are non-banks that provide loans. The loans are then offered to investors via platforms.
This creates another risk for investors on top of the other known risks of P2P lending. If a loan originator goes bankrupt, all loans that were brokered through that loan originator can be irretrievably lost.
On Bondora, investors do not have to worry about this risk. Likewise, the platform reports regularly and very transparently on the current developments within its loan portfolio.
The platform is monitored by the Estonian Financial Market Authority , which is not the case for all comparable platforms to date. Furthermore, the platform's annual report shows that it operates profitably and sustainably . In addition, it is very easy for investors to invest on Bondora. Investors only have to choose a suitable investment product and the platform takes care of the rest.
Since 2009, many investors have had very positive experiences with Bondora. There is no other way to explain that the platform is still there.
The transparency, the automatic investment products and the robustness during past crises make Bondora a very interesting platform especially for beginners.
How did Bondora perform during the Corona crisis?
At the beginning of the Corona crisis, many investors wanted out of their P2P loans, which also presented Bondora with major challenges.
Bondora offers its investors the "Go and Grow" product, which allows investors to earn a return of 6.75% p.a. and get their money back every day.
The product has a flaw, however, because if a large number of investors want out at the same time, not all of them can be paid out immediately. Bondora Go & Grow invests in a loan portfolio that consists of thousands of loans with different maturities and ratings, which is why only limited liquidity is available on a daily basis.
Therefore,during the crisis Bondora was forced to curb disbursements, but in the end all investors got their money. Nevertheless, some investors felt cheated and railed against the platform, as Bondora had previously advertised daily availability of the invested capital.
After the Corona crisis calmed down again, a countermovement set in and investors were eager to invest in P2P loans on Bondora again.
The platform itself responded by rationing its "Go and Grow" product. Currently, only €400 per investor per month can be invested (as of February 2021). Just as at the beginning of the crisis, when many investors felt cheated, exactly the same investors rumbled against the platform that it takes them too long until they can fully invest their money again.
The current reduced supply is explained by the fact that the platform has stopped or sharply reduced lending in Finland and Spain, which is why there are fewer loans available to investors.
In summary, Bondora has done well during the crisis. While some investors were also a bit incensed that they did not get out of their loans immediately ( on a daily basis) as promised, overall there were no major disappointments.
Therefore, it can be expected that Bondora will actually benefit from the crisis in the long run, as it has proven its crisis resilience.
Advantages and disadvantages of Bondora
- Investing on Bondora is very easy. You can choose from three fully automated investment products.
- Bondora takes care of the entire process. If borrowers don't pay their loans, the platform collects the loans.
- Investors pay virtually no fees. There is only a low fee of €1 charged on withdrawals.
- You can exit your investments very quickly at any time. The product Bondora Go and Grow is actively advertised. If you invest through the other investment products, you can exit quickly through the secondary market.
- Very transparent reporting on lending.
- You can't choose which loans you want to invest in. You choose a product and specify your terms, then it automatically invests.
- All loans are unsecured. To be fair, we should mention that this is the norm for short to medium term loans.
- If the platform goes bankrupt or loans default in rows, you can lose a high percentage of your money.
- The loans are offered without repurchase guarantees, but this can also be seen as an advantage, as repurchase guarantees can give investors a false sense of security.
Signing up as an investor with Bondora
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1. register as a user on Bondora
First you visit the website and click on Register ("Register now"). Then enter your e-mail address, first and last name and cell phone number.
The mobile number must be correct, because you will receive an SMS with an activation code during the registration process.
2. activate your e-mail address
You will then receive an email from Bondora to verify your email address and set a password. Click on the green button in the email and follow the instructions.
3. verify your bank account and yourself
After logging in, you will need to provide some identification information. You need to verify your bank account and yourself. This can be done online and is done in less than 5 minutes.
The verification is completed with a few more personal details.
Deposit and withdrawal at Bondora
All deposits and withdrawals at Bondora are made through a central account. The deposits are thereby assigned to the users via the purpose of use.
If you want to deposit money, click on the button " Deposit" after you have logged in.
After that you will be shown how to deposit money to your account. You have to make a bank transfer.
It is important that you specify the purpose of the transfer correctly.
It can take up to three days until you see the deposit on your account. If you do not see the money 4 days after the deposit, you should contact Bondora support.
To withdraw your money from Bondora, you must first transfer the desired amount from your investment account to your wallet (account) at Bondora.
To do this, click on your account, for example Bondora Go & Grow and click on "Transfer to wallet". After that, select the amount you want to transfer.
Now you click on the "Withdraw money" button in the left menu, select the amount and click on "Confirm".
Invest in P2P loans on Bondora
On no other platform can you invest in P2P loans as easily as on Bondora.
The platform offers its investors three investment products with different risks and returns.
The most important product of Bondora is without a doubt Go & Grow.
Bondora Go & Grow
With Bondora you can expect a return of 6.75%.
With Go & Grow, Bondora takes care of the entire investment process. You can't make any adjustments.
Bondora Portfolio Manager
With the Portfolio Manager you can choose from different investment styles. The main difference between the investment styles is the risk-return ratio.
You can choose between:
Therefore, if you want to avoid risks, it might make sense for you to invest via the portfolio manager with the "ultra-conservative" or "conservative" setting.
Bondora Portfolio Pro
In Portfolio Pro you can make most of the adjustments.
For example, you have the option to exclude countries and risk classes (ratings of loans).
Also with Portfolio Pro you can choose between three investment styles:
An interesting advantage of this product is that you also have the possibility to control the maximum investment per borrower.
Secondary market on Bondora
Bondora offers its investors a secondary market. To invest on the secondary market, you need to invest through the Portfolio Manager or Portfolio Pro investment products.
What returns can be achieved on Bondora?
On Bondora you can expect returns between 6,75 % p.a. (Go and Grow) and 12 % p.a. (Portfolio Manager and Portfolio Pro).
Be aware that the more risk you take, the higher the probability that loans will default.
What costs and fees does Bondora charge investors?
As an investor you can invest on Bondora for free.
Only for withdrawals Bondora charges you a fee of 1 €.
Can I automatically invest in P2P loans on Bondora?
On Bondora you can only invest in P2P loans automatically . You can choose between three investment products on Bondora to invest with: Go and Grow, Portfolio Builder and Portfolio Pro.
Can I select individual loans on Bondora?
No, this is not possible on Bondora.
Risk of investing on Bondora
Investing on Bondora is associated with risks. The platform brokers consumer loans that can default.
If you tend to invest in loans with a higher rating, you can reduce the risk of default. However, it is not possible to invest in loans without defaults, they are part of the lending business.
How reputable is Bondora?
Bondora has been on the market since 2009 and has been through two major crises. The company is supervised by the Estonian Financial Market Authority and operates profitably.
Accordingly, Bondora can be considered a reputable platform.
What are the default rates on Bondora?
Default rates on Bondora vary greatly between individual ratings. For example, default rates for loans with ratings between A and AA are less than 5% and then gradually increase up to 30%.
Historical figures from Bondora have shown that default rates across all loans originated range from 20% to 25% per year.
Is a buyback guarantee offered on Bondora?
Loans on Bondora are offered without a buyback guarantee. However, this does not have to be a disadvantage. Buyback guarantees on loans can give investors a false sense of security.
Are the loans on Bondora protected by the deposit insurance?
No, the loans on Bondora are not protected by the deposit insurance.
Taxes: Tax income from P2P loans on Bondora.
The platform supports its investors in taxing the income.
Prepare tax return on Bondora
To prepare your tax return, you can generate a tax report under the menu item "Reports".
Bondora will then provide you with a statement of your income (and losses). After that you only have to enter these figures in your tax return.
Register with Bondora now
The easiest way to find out if Bondora suits you as a P2P platform is to start investing on Bondora.