Investing in loans involves certain risks. Any Investor wishing to employ their money through the P2P lending platform SAVY must be aware of the potential risks and assess whether these risks are acceptable to them.
Main risks:
- Improper fulfillment of financial obligations under a consumer credit agreement – there may be cases when, for some reason, the consumer credit recipient does not fulfill the financial obligations under the consumer credit agreement in time.
- Default in the consumer credit agreement – there may be cases where, for some reason, the consumer credit recipient does not fulfill the financial obligations in the consumer credit agreement at all.
- The country’s unemployment rate has changed – if the country’s unemployment rate rises sharply, it is likely that existing low-income SAVY borrowers will be included in the group of higher-risk borrowers and their risk of insolvency will increase.
- Insolvency of a consumer credit recipient – there may be cases when a consumer credit recipient does not fulfill the financial obligations provided for in the consumer credit agreement and will go to court to initiate natural person bankruptcy proceedings during the agreement.
- Tax environment – The State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania has clarified that interest paid through the Platform is Class B income, therefore it must be declared and 15% income tax must be paid by the Investor (personal income tax exceeding 500 euros during the tax period). It is noted that the amount of interest paid cannot be reduced by the loss incurred during the calendar year due to loans that the recipients do not pay on time. Therefore, there may be cases where the loss for a calendar year may exceed the amount invested or interest income received.
To minimize the risk, SAVY carefully assesses each application of a person applying for a loan using the status of personal data controller granted by the State Data Protection Inspectorate, the data collected by the credit bureau “Creditinfo”, the data of the Bank of Lithuania’s loan risk database, data and information provided by borrowers, and other necessary information or documents. Only applications that have been assessed and found to be eligible will be included in the list of loans to investors.
SAVY rating and probability of default ( % ):
- Class A – high reliability (0 – 2,5 %)
- Class B – higher than average reliability (2,5 – 6,7 %)
- Class C – average reliability (6,7 – 16,9 %)
- Class D – low reliability (16,9 – 36,5 %)
- Class E – lowest reliability (36,5 – 100 %)
Interest ranges according to ratings (loans starting from 300 € to 10 000 €):
| Rating | Interest % | Rating | Interest % | Rating | Interest % | Rating | Interest % | Rating | Interest % |
| A1 | 5 – 11 | B1 | 12 – 20 | C1 | 18 – 25 | D1 | 24 – 29 | E1 | 75 |
| A2 | 8 – 14 | B2 | 14 – 22 | C2 | 20 – 27 | D2 | 26 – 30 | E2 | 75 |
| A3 | 11 – 17 | B3 | 15 – 24 | C3 | 22 – 28 | D3 | 28 – 36 | E3 | 75 |
Interest ranges according to ratings (loans starting from 10 001 € to 30 000 €):
| Rating | Interest % | Rating | Interest % | Rating | Interest % | Rating | Interest % | Rating | Interest % |
| A1 | 5 – 11 | B1 | 9 – 20 | C1 | 12 – 25 | D1 | 16 – 29 | E1 | 75 |
| A2 | 7 – 14 | B2 | 10 – 22 | C2 | 13 – 27 | D2 | 18 – 30 | E2 | 75 |
| A3 | 8 – 17 | B3 | 11 – 24 | C3 | 14 – 28 | D3 | 20 – 36 | E3 | 75 |
It is important to emphasize that the investor chooses which loans to invest and how much to invest in, so the risks associated with investing in a loan fall on the investor.
To manage investment risk, the SAVY Platform allows the Investor to invest a maximum of EUR 500 in a single consumer loan and an unlimited amount in crowdfunding projects.
