Investment Risks

Investment into loans is related to the specific risks. Each investor willing to use his/her funds through the peer-to-peer lending platform SAVY must familiarise with possible risks and assess if the risks are acceptable to him/her.

MAIN RISKS:

  • Improper performance of the financial obligations provided for in the consumer credit agreement: there may be cases where, for any reason, the consumer is unable to perform his/her financial obligations provided for in the consumer credit agreement in due time.
  • Default of the financial obligations provided for in the consumer credit agreement: there may be cases where, for any reason, the consumer does not perform his/her financial obligations provided for in the consumer credit agreement.
  • Changes in the national unemployment rate: if the unemployment rate suddenly increases, the existing borrowers in SAVY Platform in lower-income brackets are likely to fall within the group of higher risk for default and their insolvency risk would increase.
  • Insolvency of the consumer: there may be cases where the consumer fails to perform the financial obligations provided for in the credit consumer agreement addresses the court for institution of bankruptcy proceedings against a natural person during the term of the agreement.
  • Tax environment: the State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania has interpreted that the interest paid through the Platform are income of Class B; thus, it must be declared and 15% income tax must be paid by the Investor (the amount of interest not exceeding the amount of EUR 500 during the tax period is not subject to taxation). It is to be noted that the amount of paid interest cannot be decreased by the losses incurred as a result of the loans the borrowers of which fail to pay instalments in due time during the calendar year. Therefore, there may be cases where losses for the calendar year may exceed the invested amount or received interest income.

In order to minimise the afore-mentioned risks, SAVY carefully evaluates each new borrower’s application for loan by taking advantage of the status of the personal data controller granted by the State Data Protection Inspectorate, the data accumulated by the credit bureau CreditInfo, the data available in the loan risk database of the Bank of Lithuania, the data and information provided by the borrowers and other necessary information or documents. Only the applications meeting the set creditworthiness requirements which are evaluated and recognised fall within the list of loans intended for the Investors.

BORROWER SAVY RATING:

  • Class A – high reliability (0.00 – 1.40%)
  • Class B – higher-than-average reliability (1,40 – 4.99%)
  • Class C – average reliability (4.99 – 16.11%)
  • Class D – low reliability (16.11 – 41.23%)
  • Class E – the lowest reliability (41.23 – 100.00%)
SAVY credit rating Interest % SAVY credit rating Interest % SAVY credit rating Interest % SAVY credit rating Interest % SAVY credit rating Interst %
A1 8-15 B1 10 - 21 C1 14 - 27 D1 27 - 42 E1 56 - 75
A2 9-17 B2 11 - 24 C2 17 - 31 D2 35 - 50 E2 75
A3 10-19 B3 12 - 26 C3 21 - 35 D3 47 - 59 E3 75

It is to be noted that each Investor chooses the loans into which investment should be made and what amount should be invested by himself/herself; thus, the risk related to investment into the loan falls within the Investor.
In pursuance of the investment risk management, SAVY Platform allows the Investor to invest not more than EUR 500 into one consumer credit and an unlimited amount into crowdfunding projects.