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What risks are associated with investing through Monestro Marketplace?

As with any investment, investment through Monestro carries some degree of risk. Each investor is responsible for evaluating associated risks before making an investment.

1. Borrower Credit risk/Default risk
There is a possibility that the borrower will not make future scheduled payments; thus, the investor may lose part or all of the investment made. The amount of possible loss, if any, would depend on the loan risk. In the case of an unsecured loan (i.e. all loans made available on the platform), the repayment will depend on the successful recovery of outstanding amount from the borrower, resulting in a higher loss, if any, compared to the secured loan. Associated risks are mitigated by Loan Originators having to retain „Skin in the game“ and for investors to opt for loans with a Buyback Obligation.

2. Loan Originator’s Default risk
In the unlikely event that a Loan Originator goes out of business or fails to deliver its agreed obligations. This could result in outstanding claims and putting performance of the Buyback Obligation provision at risk. Monestro may (but is not obliged) to represent the investors in recovering their claims against the Loan Originator by, for example, enforcing the security (if any) provided to secure the Loan Originator’s obligations, assigning the investors’ claims to a third party (possibly for a fee which is lower than the nominal amount of the claim), entering into settlements or purchasing the claims from the investors using the reserve (if any). However, Monestro is not obliged to take any action.

3. Cash flow timing risk
All payments from an investment in a loan are directly linked to the borrower’s actual payments. There may be situations in which the borrower makes a payment after the scheduled payment date; as a result, the investor may receive cash flows later than expected. Depending on the loan agreement’s clauses and circumstances, the investor may be compensated for late payments with late payment fees (penalty).

4. Prepayment risk
The borrower usually can repay the loan early, which is generally done by repaying the principal and accrued interest up to the date of early repayment. If the investor had invested at a premium, the investor would lose the premium’s unamortised part.

5. Reinvestment and Liquidity risks
There is a possibility of loss when re-investing earned profit in a loan with a lower interest rate or when earned profit remains non-invested on your account. Therefore, it is advised to closely follow payment schedules or, as well as to adjust and think through your Auto invest plan.
Additionally, when selling your investment on Secondary Market – it is advised to keep in mind that there is a possible risk of not acquiring a buyer fast enough. Therefore, it is reasonable to make your loan more attractive for buyers using the sell at a discount or premium dynamics.

6. Monestro default risk
In the unlikely event of Monestro’s insolvency, investors will be given full information from Monestro’s database on the transactions they have concluded within the Marketplace framework. The insolvency administrator of Monestro may transfer the servicing of all loans and investments to an appropriate manager, if reasonably possible.

7. Market, legislation, economic downturn risk
As with any financial market – the market for P2P loan investment can experience changes and fluctuations. The Estonian Ministry of Finance is preparing a new draft law which aims to cover different P2P and crowdfunding models and is expected to be adopted in late 2021. These changes can affect our business model and processes in the future. To mitigate and forecast this risk, we are examining Loan Originator’s economic environment and monitoring ongoing changes in its regulations as part of our Due Diligence.

With numerous factors such as economic downturns, crisis and certain geopolitical events, it is hard to predict adverse effects and future outcomes. As with other investment fields, these factors could affect the overall market – and thus the value of your investment and its liquidity. Therefore it is suggested to diversify your investments among different asset types and across geographies.

What is Monestro?

How is Monestro’s platform regulated?

Who can invest?

What is the minimum amount that can be invested?

What currencies can I invest in?

Are there any fees for investors?

How do I make money from my investments?

How liquid are investments?

What are the typical returns on Monestro Marketplace?

How does our affiliate program work ?

How do I create an account?

Why do I need to verify?

Why do I need to verify again?

What documents are accepted as proof of identity?

What data is stored during verification?

Which browsers are supported for verification?

How can I make a deposit?

What happens if I send currency different from the currency in my bank account?

I entered incorrect payment details. What happens with my deposit?

Can I make a deposit from an account that is not held under my name?

How can I make a withdrawal?

Can I change the bank account to which I withdraw money?

How can I add my new bank account?

Will I be charged for a withdrawal?

How long does it take to withdraw money to my bank account?

Is it possible to secure Monestro account with two-factor authentication?

How to invest?

What is the Primary Market?

What is the Secondary Market (coming soon)?

What is the Premium/Discount on the Secondary Market (coming soon)?

How is the interest calculated?

How is interest divided between the seller and buyer of a loan on the Secondary Market (coming soon)?

Can I cancel my investment?

How do I earn from my investments?

How can I forecast expected income from my investments?

How can I exit my investment (before the loan reaches maturity)?

How are my earnings taxed?

How are my investments secured?

What risks are associated with investing through Monestro Marketplace?

What happens if Monestro goes out of business?

What is Auto Invest?

Can I invest manually and automatically at the same time?

What is the minimum amount for investing with Auto Invest?

How to find out if there are matching loans to my Auto Invest criteria?

Can I edit Auto Invest portfolio?

Can Auto Invest portfolio invest on the Secondary Market?

Will Auto Invest invest in loans that I already have manually added into my portfolio?

My Auto Invest portfolio has stopped investing, why?

Who is a Loan Originator?

What is Skin in the game?

What loans are issued to the borrowers?

Can I know who the borrower is?

What happens if borrower defaults on their payments?

What is a Buyback Obligation and how does it work?

What happens if a Loan Originator cannot complete its Buyback Obligation or other commitments ?

What is a Voluntary Reserve, and how does it work?

Why our Lithuanian loans have a borrower risk rating and how to understand it?

What happens if a Loan Originator goes out of business?