A complete review of p2p lending platforms in malaysia

The popularity of P2P lending in Malaysia has surged at an exponential pace since its introduction in 2016. To date, SC had issued licenses to six P2P lending platform operators in Malaysia. It’s not surprising that such investment has received an overwhelming response since its debut. Many investors begin to diversify their investment portfolios to include P2P lending as an alternative investment due to its lucrative returns and low entry requirement. A general question that investors would definitely ask before getting their toe wet in P2P lending. “Which is the best P2P lending platform in Malaysia?”.

Here’s the complete review of P2P lending platforms in Malaysia which I’m going to share with you after having a thorough comparison of each platform. What is Peer-to-Peer Lending (P2P Lending)?

There are six licensed P2P lending platform operators in Malaysia. Based on SC guidelines, a P2P lending operator must be incorporated under Companies Act 1965 with a minimum paid-up capital of RM5 million. A P2P operator also needs to put in place a diligent risk scoring system and ensure compliance of the SC approved platform rules. Besides, the operators must place the amounts deposited by both investors and issuers in a 3rd party trustee account before making any disbursement.

There’s no risk rating assigned to each investment note, unlike other platforms. Funding Societies provides a qualitative aspect of the investment notes based on its analysis on the issuers. The analysis provides investors with information regarding the Company’s background, historical audited financial information, Director’s repayment records, litigation status, etc.

More importantly, Funding Societies offers high investment opportunities in terms of the frequency of investment notes issued on its platform. This is definitely a BIG deal for me. A simple interest rate of 12% per annum with monthly repayment (principal + interest) is equivalent to an effective interest rate of 21.5% per annum. The effective interest rate is calculated on the assumption that you will re-invest each monthly repayment with the same interest rate of 12% p.a.

Though Funding Societies is my all time favourite, I do hold a small portfion of my portfolio in QuicKash as well. You may be puzzled as to why will I choose QuicKash to invest in P2P lending. As depicted in the table above, the service fee for QuicKash doesn’t look competitive. It also appears to be at the higher end as compared to other platforms.

QuicKash has low investment opportunities and the interest rates on the investment notes are generally lower. Yes, I know. It contradicted with the main reason why I choose Funding Societies. Obviously, I don’t have a stake in QuicKash that compel me to hard sell it to you. The main and the only reason why I choose QuicKash is all about diversification.

The beauty of QuicKash is that it charges the issuers a guarantee fee upfront for guarantee services provided by third-party guarantee corporation. It deducts directly from the financing amount. QuicKash claims all investment notes with good credit rating come with a principal guaranteed element. It discloses that the investors will never lose their principal investment amount even if the issuer fails to repay.

However, the investment opportunity that QuicKash offers is significantly lower than Funding Societies. You need to be really patient to invest through QuicKash. Also, its interest rates typically range from 8% – 9% p.a. only. In contrast to Funding Societies, it offers investment notes that generally yield 12% – 16% p.a. Getting Started with QuicKash

First off, I’ll start with Alixco and Nusa Kapital. I got to be brutally honest with you, these two are never my options. I’ve signed up an account with Alixco, the process is fairly simple and straightforward. But the biggest problem is that Alixco offers extremely limited investment notes with small amounts. Here’s the quick snapshot of the investment notes: Alixco’s investment opportunities

Though the investment opportunities are not as high as Funding Societies, B2B Finpal offers quite a fair number of investment notes. The only drawback is that the service fee charged by B2B Finpal is relatively higher than the other P2P lending platforms. It charges the investors a service fee equivalent to 30% of the interest earned. Besides, it doesn’t provide such detailed financial performance and other background information like what Funding Societies provides for investors to do their own due diligence before investing.

The other reason why I don’t use B2B Finpal is that it’s very troublesome to maintain my P2P lending investments across too many P2P lending platforms. After comparing all factors such as investment opportunities and credit assessment other than the fees, Funding Societies remains my favourite choice. Again, it’s individual preference and it’s really up to you. The Bottom Line