Mintos Review: Is it good? Don't invest before you read this! (2/2023)
Skanstes 50, LV-1013 Riga
4.26 of 5Invest now on Mintos
5 of 5
Financed Loans (50%)
5 of 5
Interest & Risks
Ø Interest (50%)
3.3 of 5
Warning Signals (50%)
3 of 5
Auto Invest (20%)
5 of 5
Buyback Guarantee (20%)
5 of 5
Secondary Market (20%)
5 of 5
Tax Report (20%)
5 of 5
5 of 5
- Incl. investor protection
Comparatively high Ø interest rates
Invest free of charge
Automatic investment function
Currently 2 warning signals
How good is Mintos?
If that's what you want to know, then keep reading.
We took a close look at the platform and tell you whether it's worth it.
In this test, we show you:
What is Mintos?
Mintos is a P2P platform based in Riga, Latvia, founded in 2014.
It offers P2P loans to investors from loan originators who are independent of the platform.
This explains why Mintos is also called a P2P marketplace, and why there have been several spin-offs of intermediaries in the past.
Since its inception, the platform has funded more than €8 billion worth of loans, making it the largest P2P platform in Europe.
How does Mintos work?
If you want to invest on Mintos, you first need to register as an investor and deposit money via a bank transfer.
By the way, with this deposit you also confirm the account to which withdrawals can be made.
After that, you can invest directly in the offered loans.
You only have to invest a minimum amount of €50, and you can either invest manually or automatically via Auto Invest.
Furthermore, you can invest in two markets on Mintos: This is the primary market (initial issuance of loans) or the secondary market (loans from other investors).
On Mintos, you do not invest directly in loans, but through securities in loan pools (multiple loans).
These securities are collateralized with these loans, and accordingly their value depends on them.
That is why they are called asset-backed securities.
The securities differ according to:
Country (origin of the loans),
Interest rate (coupon),
Below we will look at a simple example.
Example of a security on Mintos (Mintos Note)
Interest rate: 21
Term: 3 years
Amount: 500.000 € (converted)
If you invested €5,000 in this security, you would invest over it in 1% of the bundled loans.
Each security on Mintos has an official security identification number (ISIN or WKN), which you may know from other securities such as ETFs or stocks.
In the following, we would like to present the most important features of the platform.
This means that the platform must comply with strict regulations and offer investor protection of €20,000 per investor.
The average interest rate of the loans on Mintos is 12.32% and loans with a minimum of 6% to a maximum of 21% are offered.
In comparison, the average interest rates are slightly above average and there are some platforms that offer higher interest rates.
Which platforms offer higher interest rates?
Among the regulated platforms, there is only one that offers strikingly higher interest rates than all the others and that is Neo Finance with about 15%.
Otherwise, you can only get higher interest rates at non-regulated platforms, including Lendermarket (approx. 14%) and Esketit (approx. 13%).
However, you have to accept that these platforms do not offer investor protection and that you have to expect a higher platform risk.
More than 80 loan brokers offer loans on Mintos. In Europe, there is no other platform with such a large offer, and you can find an overview of all brokers on the overview page of Mintos.
In the case of some loan originators, we have found that there are overlaps in ownership with Mintos companies, for example with the company Eleving (formerly Mogo), to which several loan originators belong.
One of the owners of Eleving is Aigars Kesenfelds, who in turn was involved in the founding of Mintos and most likely also holds (large) shares in the platform until now.
This situation could be a conflict of interest. However, Mintos is displaying this connection openly on its blog. Mintos told us that for these companies, the same rules are applied to calculating the Risk Scores as for any other loan broker.
If you think this is an issue for you, you can avoid this by choosing not to invest in loans from loan brokers owned by Eleving.
The various loan brokers offer a wide variety of loan types, including:
Forward Floan Loan,
Auto loans and
Consumer loans, car loans and Payday Loans have the largest share of the offer.
The P2P loans come from more than 30 countries, where most of them are from the following countries:
Loan terms range from 1 month to up to 80 months.
Mintos Risk Scores
The investment success on Mintos mainly depends on the loan originators not getting into a financial mess.
That is why the Mintos Risk Scores (formerly Ratings) were introduced.
The Mintos Risk Scores are intended to give investors an idea of how reliable a loan provider is.
The Mintos Risk Scores are assigned from 0 to 10 and consist of 4 sub-scores:
Loan Portfolio Performance: 40%
Loan manager efficiency : 25
Repurchase strength: 25
Cooperation structure: 10
The following applies: The lower the Mintos Risk Score, the higher the risk of financial difficulties with a credit intermediary.
Scores (ratings) with associated risk levels are assigned:
Low Risk: 10 to 8
Medium risk: 7 to 5
Increased risk: From and below 4
The risk scores are continuously adjusted, and various triggers have been defined as of which a risk score is recalculated.
For example, a recalculation occurs when the percentage of late loans of an intermediary increases.
If it's worth the effort, you can select each loan you want to invest in individually.
This makes sense, especially if you are just starting out investing and don't want to wait for Auto Invest to invest for you.
Over a long period of time, however, it is less advisable to invest manually, as you would have to select hundreds of loans regularly.
At Mintos, you can choose from three preset strategies that differ by their return and risk profile:
You also have the option to set your own strategy, where you can specify the following settings:
Primary Market or Secondary Market (Primary Market is the default),
Investment per loan (loan pool or debt package) and
Diversification (Dynamic, Custom, Disabled).
Different from many other platforms is the diversification setting.
With it, you define the maximum amount of money you want to invest per loan broker.
For example, you can specify that you want to invest in the loans of each intermediary in the same proportion: To achieve this, you need to select "Equalize" for this setting.
Spread investments over many loan originators
On Mintos, loan originators drop out again and again.
This means for you, in the worst-case, partial or total loss of your investments in the loans from these intermediaries.
Therefore, you should spread your investment amount over as many loan originators as possible.
Buyback Obligation (formerly Guarantee)
On Mintos, some loans are offered with or without a buyback obligation.
If a loan is offered with Buyback Obligation, the platform will explicitly mention it (gray sign with checkmark).
If a loan with buyback guarantee is delayed for more than 60 days, it will be bought back and the investors will receive their originally invested capital and the lost interest as compensation.
The buyback bond used to be called a guarantee
Many investors assumed that a Buyback Guarantee, as the word guarantee suggests, would apply in all cases.
But this is wrong because the value of the Buyback Obligation depends on the reliability of the respective loan originator.
If the intermediary can no longer pay or gets into difficulties due to other circumstances, the buyback obligation also loses its value.
On the secondary market, you can sell your loans in the short term or buy loans from other investors.
It is hardly different from the primary market, except that the discounts and premiums for the loans are displayed.
In our opinion, it is well arranged, and you can invest in a loan with just one click.
What we like most is that Auto Invest also allows you to automatically invest in the secondary market.
In our experience, this is not possible with many other platforms.
You can easily compile the information you need for your tax return on Mintos.
A tax report is offered for each year, which you can download.
The platform offers a native app for iOS and Android.
Compared to the website, however, the app does not offer you any additional functions.
A look at the Apple and Google Store reviews shows that most users are satisfied with the app.
How much does investing on Mintos cost?
For investors, Mintos is almost completely free.
Only sales on the secondary market are charged a fee of 0.85% of the sale amount. There is also a fee for currency exchanges.
Apart from these exceptions, the platform does not charge any fees for investments and no fees are charged for deposits, withdrawals or other transactions.
Warning signals (red flags)
Currently, we would see the following warning signals with Mintos.
#1 Frequent unexpected defaults by loan brokers.
For a Platform with the size of Mintos, loan defaults, as well as loan originators defaults, are inevitable.
For example, the following loan originators have defaulted in the past:
The defaults came as a great surprise to many investors and also to us because the mentioned originators all had at least an average credit score as measured by their Mintos Risk Scores.
Nevertheless, the intermediaries defaulted within a few days and without any real warning.
As a result, repayments for loans from them were stopped, and they were marked as "pending".
Or to put it a little differently: Investors have to hope that they will see their money again.
Based on these experiences, we would rate the usefulness of the Mintos Risk Scores as rather limited.
Nonetheless, based on the platform average investors were able to make profits. This underpins the importance of diversification. Investors should spread (diversify) their investments on Mintos as broadly as possible.
#2 Loans from Russia and Ukraine
Mintos is also affected by the war in Ukraine, but this is not astounding due to the size of the platform.
The platform is trying to recover the outstanding amounts from its investors and regularly informs about it on its blog.
We don't really expect this to have a major impact on Mintos, but for completeness, we list this warning signal.
Frequently asked questions
Below, we address some questions that are often asked about the platform.
How secure (reputable) is Mintos? Is Mintos legal?
From our point of view, there is no doubt about the safety of Mintos.
As mentioned, the platform is supervised by the Latvian Financial Market Authority and a funded loan volume of more than €8 billion already speaks for itself.
Is Mintos a Ponzi scheme?
Many people distrust Mintos as a P2P platform.
This is because they assume that with high single-digit or double-digit interest rates, there must be a catch and that it is inevitably a Ponzi scheme.
But first, let's clarify what a Ponzi scheme is.
"A Ponzi scheme is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. Named after Italian businessman Charles Ponzi, the scheme leads victims to believe that profits are coming from legitimate business activity (e.g., product sales or successful investments), and they remain unaware that other investors are the source of funds. A Ponzi scheme can maintain the illusion of a sustainable business as long as new investors contribute new funds, and as long as most of the investors do not demand full repayment and still believe in the non-existent assets they are purported to own." (Source: Wikipedia)
In terms of Mintos, this would mean that existing investors do not receive payments from P2P loans that actually exist.
Instead, the deposited capital is used by new investors and unnoticed Mintos enriches itself proportionally from the payments until the system is exposed.
A Ponzi scheme often has devastating consequences, such as the case of billionaire fraudster Bernie Madoff, which resulted in financial damages of approximately $65 billion.
Although each Ponzi scheme operates a little differently, they all have in common that they thrive on intransparency.
For Mintos to be a Ponzi scheme, we believe the following conditions would have to be met:
The management team has colluded and is deliberately deceiving the public.
Despite regulation, Mintos can influence the Latvian Financial Market Authority and provides it with completely false data.
The auditor EY has falsely audited Mintos's annual reports several times.
A large majority of loan originators have allowed themselves to be corrupted.
In order for the aforementioned conditions to be met, several independent individuals and parties would have to coordinate with each other at once.
We consider the likelihood that this is the case with Mintos to be almost impossible.
It should be mentioned, however, that fraudulent schemes can never be ruled out, as the Wirecard fraud scandal has shown.
But such events are exceptional and are therefore also referred to as Black Swan Events, which should not occur, but still, they sometimes happen.
How does Mintos make money?
Mintos makes its money from three sources of revenue:
Commissions from loan originators,
one-time transaction fees from loan brokers and
Foreign currency fees for investors.
The most important source of revenue is the commissions from loan originators: they represent about 90% of the total revenue.
Who owns Mintos?
To date, the ownership structure of Mintos has not been finally clarified.
In any case, it can be assumed that the two founders Martin Sulte and Martin Valters are still involved in the company today.
On the About Us page of Mintos, other investors are mentioned by name who were involved in the founding:
Maris Keiss (co-founder of 4finance and Mogo or Eleving),
Aigars Kesenfelds (co-founder of 4finance and Mogo or Eleving),
Kristaps Ozols (co-founder of 4finance and Mogo or Eleving) and
Alberts Pole (co-founder of 4finance and Mogo or Eleving).
However, it is not possible to clarify whether all the aforementioned individuals still hold shares in Mintos today.
In this context, however, it is often speculated that, in addition to the two founders, Aigars Kesenfelds holds large shares in the platform.
Furthermore, Mintos raised more than €6.55 million on Crowdcube in 2020 via a crowdfunding campaign.
How can I invest in short terms on Mintos?
Some P2P platforms, such as Twino, are particularly popular with investors because they mainly offer payday loans.
These loans are so popular because they have high-interest rates and low default rates. And in case a loan ever defaults, the loss is limited as only low loan amounts are given.
If you also want to focus on Mintos only on loans with short terms, you just need to set the Auto Invest correctly.
For the remaining terms, you choose to invest only in loans with a term of up to one month.
And if you would like to know what kind of loans you will invest in, you can see it on the overview page of the loan brokers.
On the page you filter the loan originators by the loan type "Pledge type group payday" and you get a complete overview to all loan originators that offer these loans.
What about the withholding tax on Mintos?
The platform includes a withholding tax of 20% from your earnings.
However, with a residency certificate from your tax office, you can maybe reduce the tax to 10%.
With an average interest rate of 12.23%, you are left with 9.8% after taxes, or about 11% (with a certificate).
Mintos is a safe P2P platform with an official regulation and a financed loan volume of more than €8 billion. The platform offers investors attractive interest rates and the use is free of charge except the sales fees on the secondary market.
Registration takes only a few minutes and after an initial deposit, the practical Auto Invest can be used within minutes to determine which loans to invest in.
Auto Invest also allows investing in the secondary market, which few other platforms also offer.
However, Mintos also has some weaknesses.
We would like to see more commitment from the platform when it comes to evaluating loan originators. Exactly what the Mintos Risk Scores should do.
In summary, we consider the platform to be recommendable and in our opinion, there is hardly any way around Mintos.
As before, no other platform offers such a wide range of P2P loans, which differ by type, country and term.
However, the key to success on Mintos is spreading (diversifying) your investment capital across as many lending intermediaries as possible, even if that means adjusting your personal investment goals.
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Last updated on 12 December 2022