Loan duration is a crucial factor for many investors and their strategy. Bondora generally offers durations between 3 and 60 months, although you will find the majority of loans we issue have a duration of at least 36 months. This is also due to our company philosophy – we are a long-term loan provider, not a short-term loan provider. We believe that a borrower who is willing to commit to a loan for a longer period, at much better interest rates, is much more financially responsible than one who, for example, is willing to take a loan for the next 30 days at incredibly high interest rates.
There are several reasons why investors prefer either short or long-term loans. Short-term loans mean that your money is available again earlier and can be used for other things. However, this also means that the money is reinvested more often, which can result in waiting times and your money not working for you. In general, short-term loans come with a higher risk of default for the reasons we mentioned above.
In contrast, long-term loans mean that you, as an investor, have better calculability and regularity of your income, but a disadvantage is your capital will remain illiquid for a longer period.
Please note: The final maturity of a loan may differ from the initial one, as loans can occasionally be rescheduled or repaid early. We encourage you to consider Bondora as a long-term investment when using Portfolio Pro. This way, you can also take advantage of the compounding effect and make real strides toward building your wealth.
Watch this video to learn more about loan durations on Portfolio Pro: