The largest peer-to-peer lending platform in Lithuania is NEO Finance. Established in 2015, the platform has consistently increased its granted loans and currently has over 7,800 active investors. As a loan originator, NEO Finance is not a marketplace like Fast Invest, Mintos, or PeerBerry. NEO Finance users have more control of the platform, and there’s more insight into the identities of borrowers. This allows lenders to be more specific on whom to lend.

How it Works

You can apply for a loan on the NEO Finance platform which then does a credit risk evaluation, sets interest rates and searches for lenders to fund the loan. Investing in consumer loans is as little as €10. The average loan amount on the platform is €2,700 and the average loan term is 49 months.

Having an unlimited e-money institution license allows NEO Finance to operate anywhere in the EU. The platform is similar to a banking system where user accounts have their own International Bank Account Number (IBAN) number. Instead of sending money to NEO Finance, you send to a Lithuanian bank account under your user name. This setup gives your investment an extra safety feature.

Regulation and Licenses

Apart from its rapid financial progress, NEO Finance is also at the forefront when it comes to regulation. Other NEO Finance credentials include:

  • Supervised by the Bank of Lithuania
  • The Electronic Money Institution (EMI) license from the Bank of Lithuania
  • Is in the public list of consumer credit providers
  • Is in the public list of P2P lending platform operators

NEO Finance Investment Opportunities

NEO Finance provides consumer loans of up to €15,000. Interest rates are based on the level of investor demand and risk factor. Smaller loans have less stringent payment conditions with lower default rates. Both the loans and borrowers are categorized into three types: A, B, and C. Category C borrowers have higher interest rates as they’re riskier. The interest rate and risk factor are lower for Category A borrowers. The investor can also view different data fields concerning borrowing including assets owned, income, previous debts repaid, other liabilities, and credit score.

Buyback Guarantee

The platform offers a buyback guarantee on their loans, though it’s different from other platforms. The buyback guarantee covers 50 to 80 percent of the face value in case of loan default. But this depends on the credit score of the borrower.

Provision Fund

Same as buyback guarantee, provision fund fully covers you in case the borrower defaults on their loan. But its use is not mandatory. The Provision Fund is akin to having insurance, whereby NEO Finance buys back defaulted loans using their assets as collateral for the repurchased loans

Is NEO Finance Safe?

Authorisation and licenses from several authorities including the EMI license make NEO Finance safe. Furthermore, outstanding loans and the default rate is low, and the company has the potential to recover money from defaulters.

The NEO Finance platform ticks the correct buttons for a robust P2P lending platform. A look at the company’s annual reports offers encouraging signs to potential investors. Though yet to be profitable, NEO Finance has more cash and equivalents than what is necessary for provisions. If you’re looking for a secure platform with a high return for investors, then you should consider NEO Finance.

By Jeff Mwaura, Jeff is Kenyan based freelance writer with a focus on technology and finance.