8% CD, would you invest?

A new company is offering 7.75% 3year CD. The company does not have the big name like Fidelity or Bank of America but it is offering a great rate of return. Of course the company is offering a legal contract guaranteeing 8% rate and principal back.

The investment is not federally insured but the high rate of return is achieved by lending personally loans with a historic(over 3 years) 3% default. The company claims it will cover that default which will not affect the 7.75% rate.
The company also offers a plan with reduced rate of 7% by which money will be paid back to you quarterly.

Would you invest? If not please state why.
Thanks!!!!

My advice is no!
I invested in a high yielding investment several years ago which went belly up. It was also giving me ~8%. With a high return you also get higher risk. 3yrs is a long time, there could be a scandal that is uncovered and your money disappears.

Who is the company? Do they have a website explaining the CD? I'd be pretty leery, but would examine it further.

That doesn't even make any sense. Is the bond insured? If it is, there's no reason for this company to pay that kind of interest rate; the market would buy a CD at a very low interest rate as long as it's insured, as insured bonds are basically risk-free. Offering that kind of interest rate on a risk-free asset is like throwing money into the garbage.

Given this information, the bond must be uninsured, right? If so, since this is not a big-name company, I'd probably be reluctant to buy it. If they have to offer this kind of an interest rate to attract deposits, they're probably in tough financial shape. There's no such thing as a free lunch in finance. You get returns commensurate with the risk you take.

Sounds fishy. What "company"? Are you talking about a bank or what? If not, it's not really a CD - its an at-risk investment.

No, I would not invest. First, the lack of insurance gives me pause. Second, I earn better than 7.75% on other investments so tying up my money for a lower rate of return when I have no control for three years with an unproven company makes no sense. Anyone can write any contract they want--what are you going to do if they tank or can't keep their terms? There usually is fine print that gets them off the hook and as you were told, you can forget about winning a court case.

The company "covers" a 3% default rate--how? Unless it's a government you can only pay out what you take in. Who knows what their overhead is? Cashflow issues? Etc?

no. Too many unknown=high risk.

NO
DO NOT INVEST.
especially if you are being pitched this as a CD... the claim that they are similar is FRAUDULENT...

if they are calling it a bond issue...and YOU chose to call it a CD that is different... in that case i dont have enough info to decide..

personally from the info provided I would not invest.
there are better options than a no-name new company... 3% over risk-free rate doesnt compensate you for your risk.

watch out.