What is NEO Finance?

As for all real estate crowdfunding platforms, NEO Finance is a financial platform that allows investors to invest in loans, along with other investors, in exchange of payment of interests over time. NEO Finance is a platform that has been around a while already, as it was founded in 2015. They are based in Vilnius, Lithuania.

What I really like about this platform is that they are the first platform in Lithuania to get an unlimited e-money institution licence (EMI). This license ensures the safety of their clients money, which is the most important point when investing on a Peer-to-Peer lending platform. I will come back to this point when talking about the risks of investing on the platform.

They currently have around 14,000 investors registered on their site, and nearly funded 100 million Euros worth of loans.

What returns can I expect from investing on NEO Finance?

The returns you can expect on NEO Finance depends on which loans you invest in, which I will tell you more about when we'll see how to use the platform. Currently, with loans listed on the platform (on the primary & secondary markets) you can get up to 20% annual returns, and they advertise an average annual return of 15.57% for investors. This is above what you would usually get from other platforms that are usually around 10-12%. However, we'll see in the next section that this also comes with the cost of increased risk compared to other platforms.

Is it safe to invest on NEO Finance?

The question of the safety of the investors funds is central when investing on a Peer-to-Peer lending platform, as they will be managing all the money that you deposit on the platform and invest it in the loans. When reviewing a new platform before adding it to my portfolio, I look at three things: what the platforms offers in terms of guarantees, the company itself (and their team), and finally the source of the projects present on the platform.

Risks & guarantees on NEO Finance

On NEO Finance, higher interests rates mean that there is no systematic buyback guarantee on loans (meaning the platform would just give you back the money if a borrower doesn't pay).  However, to reduce the risks taken by investors on the platform, NEO Finance has two mechanisms in place.

First, they have a buyback mechanism where they will use the collateral associated with the loan to give back between 50 and 80% of the loan to investors in case there is a problem with the payment from the borrower.

Then, on some loans, there is an additional protection from a provision fund, that is there to cover the rest of the money and therefore completely pay back investors in case a loan is not paid back.

Note that as I mentioned before in the introduction, they also hold an EMI license, meaning additional safety for the investors funds on the platform.

The company & the team

As I mentioned earlier, the company is operating from Lithuania, and as for all platforms I add to my portfolio I checked if the company was officially registered in Lithuania, and it is indeed.

They also are completely transparent about their team on their website, with a complete description of the role of each person in the team, which is also something I appreciate seeing on a platform.

As for all the platforms I review before investing on it, I checked the profiles of people in their management team, for example their chairman. I quickly find that he has a long track record in the field of finance, for example having been a member of the board at BNP Finance for over 9 years now.

Loan originators

On NEO Finance, the loans are provided by the platform itself as they are also a loan originator. This has the advantage of them being in complete controls over the loans that are published on their platform, however I would have liked to see also more diversity in terms of loan originators.

Getting started with NEO Finance

It is actually really easy to get started with NEO Finance and have your money start generating rental income on the platform.

The first step is to open an account and get verified. This was done really quickly, and including the ID verification part it was all done in under 5 minutes.

Next, you will have to deposit funds in your account to start investing in loans and generate interests. This is also really to do with NEO Finance, as you can do it via a bank transfer.

Once this is done, you can actually start investing in loans on the platform. For that, the first option is to check the primary market:

From there, you can immediately see the loans that are currently available, and get some details about those loans like the interest rate, loan type, term, and also if the provision fund is available on that loan.

I also noticed that loans on the platform are being funded really quickly, and therefore there are sometimes no loans available on the primary market at all. However, there are two ways to solve this issue on NEO Finance.

The first way is to use the secondary market, where you can buy shares in loans that have already been funded. When I first started to use NEO Finance, there were many more loans available on the secondary market than on the primary market:

Then, you also the auto-invest function which I really recommend using. You will be able to set criteria for loans that you want to invest on, and this auto-invest function will just do the rest. Especially on a platform where the volume of loans is limited, this will make sure that all your investments are full automated and that you never miss a new loan.

I also recommend always choosing projects where the provision fund is available, to make sure you get your money back in case the loan defaults.

As for all the platforms I review, I also tried to withdraw money, and the money was back on my account in just 1 day.

My Results so far with NEO Finance

I only invested in one loan so far on NEO Finance (as well as activated the auto-invest function), and it should give me a return of 15% annually. It is of course too early to talk about long-term yields on the platform, but I can say that so far everything went smoothly and I will definitely invest more on the platform in the future.