P2P Loan Broker
Banks make money by lending them out and charging interest on the loan. Now, you can do the same, through a company named Brocc.
Through Brocc, it is possible for individuals to invest in the lucrative Swedish credit market.
As a lender, you never interact directly with the borrower. All transactions are handled by Brocc. You simply sit back and receive interest payments into your Brocc account.
Brocc was launched in 2016 and is regulated by Swedish law. The company has to follow the rules set by Finansinspektionen, Sweden´s financial supervisory authority.
For each loan application, Brocc makes an individual credit risk assessment. Some applications are denied, while others are offered approval if they accept the interest rate, repayment period and other conditions set by Brocc.
The interest rate is set based on the result of the credit risk assessment. For some loans, the interest rate is just around 5 percent. For others, it is above 18 percent. Lenders do not get the full interest amount; some of it goes to Brocc. Always check the exact terms and conditions before you lend any money through Brocc.
As an investor, you decide yourself if you want to lend money to applicants with a high credit rating, low credit rating – or something in between. You decide on each individual loan. This means that you can decide how much risk you are willing to accept.
Some lenders at Brocc build up extensive investment portfolios filled with a multitude of loans. This way, they can tinker with the overall risk – just likey they would do when investing in the stock market.
How much capital is required to get started?
If you want to lend money through Brocc, you have to deposit a minimum of 1 000 USD into your Brocc account.
The smallest possible Brocc loan is 1 000 USD and the largest one is 35 000 USD.
The duration of a Brocc loan is set individually for each loan. The most extreme short-term loans are to be repaid within 6 months. The longest-running loans are approved for a repayment period of 10 years.
A borrower is always allowed to repay their loan quicker than agreed, and this is quite a common thing among Brocc borrowers.
The secondary market for loans
Brocc runs a secondary market for loans where lenders can sell loans to other lenders. Individual loans change hands on this market, as well as investment portfolios consisting of several loans. On the secondary market, you can trade loans the same way as other brokers let you trade Forex or CFD certificates.
Are the loans secured by property?
No, only unsecured loans are offered through Brocc. Brocc is not a pawn shop and they do not offer ”pink slip” car loans, real estate mortgage loans or any other type of loan secured by property.
Who are the borrowers?
- Brocc only accepts borrowers residing in Sweden.
- Borrowers must be aged 18 or above.
- Brocc makes an individual credit risk assessment for each application.
Statistics from Brocc show that the typical Brocc borrower is around 40 years old, have steady employment and earn around 30 000 SEK per month. This is just an average though and many borrowers do not fit this mould.
Data from Brocc show that a common reason to borrow through Brocc is to obtain the required cash downpayment when buying real estate or a condo. Many borrowers also use a loan from Brocc to finance a car purchase or to pay for home renovations. Last but not least, if you have a good credit rating, you can save money by taking out a loan with Brocc and use the cash to immediately pay back more expensive credits that you have accrued, such as credit card debt.