benaj
Member of DD Central
Posts: 4,862 
Likes: 1,591
|
Post by benaj on Apr 30, 2018 15:42:13 GMT
 Loaded 2k on the 18th, all matched on the 27th April. Now, I have just discovered I am not getting 6% for 5 years. My weighted average interest rate is 5.84%, average loan size is £133.59, 15 loans in total. Any thoughts?
|
|
toast
Member of DD Central
Posts: 158
Likes: 90
|
Post by toast on Apr 30, 2018 17:03:58 GMT
You might have picked up some older loan parts at less than 6% from other lenders who were selling them. In such cases you will receive a payment from the selling lender to compensate you for the lower rate. "Accrued interest" I think is the Lending Works term for this.
Behind the "More" link in the "On Loan" box, it will say something like...
So I don't think you've been diddled!
|
|
|
|
Post by Matthew on May 1, 2018 11:52:53 GMT
You might have picked up some older loan parts at less than 6% from other lenders who were selling them. In such cases you will receive a payment from the selling lender to compensate you for the lower rate. "Accrued interest" I think is the Lending Works term for this. Behind the "More" link in the "On Loan" box, it will say something like... So I don't think you've been diddled! Such payments will actually show up as 'interest received'. Accrued interest represents interest accruing on your loans since their last repayments i.e. it would reset to 0 for each loan on a payment date. If that's not the case, do raise the point with customer service and they will no doubt be able to resolve. We are thinking of implementing a better way to handle the reassignment of older loan chunks in a way that doesn't cause this confusion, but it would involve having multiple lender rates on the same loan which is also not ideal!
|
|
|
|
Post by albermarle on May 1, 2018 16:36:53 GMT
Loaded 2k on the 18th, all matched on the 27th April. Now, I have just discovered I am not getting 6% for 5 years. My weighted average interest rate is 5.84%, average loan size is £133.59, 15 loans in total. Any thoughts? At least good that the £2K was leant across 13 loans as sometimes it can be just one or two . You can not control how this happens , unless you really drip feed your money in, say £500 at a time.
|
|
ashtondav
Member of DD Central
Posts: 1,805
Likes: 1,087
|
Post by ashtondav on May 1, 2018 17:35:43 GMT
Granted. But diversification is not an issue if there is a good PF and also insurance.
LW’s product covers that - yes?
|
|
benaj
Member of DD Central
Posts: 4,862
Likes: 1,591
|
Post by benaj on May 2, 2018 8:00:18 GMT
You might have picked up some older loan parts at less than 6% from other lenders who were selling them. In such cases you will receive a payment from the selling lender to compensate you for the lower rate. "Accrued interest" I think is the Lending Works term for this. Behind the "More" link in the "On Loan" box, it will say something like... So I don't think you've been diddled! Such payments will actually show up as 'interest received'. Accrued interest represents interest accruing on your loans since their last repayments i.e. it would reset to 0 for each loan on a payment date. If that's not the case, do raise the point with customer service and they will no doubt be able to resolve. We are thinking of implementing a better way to handle the reassignment of older loan chunks in a way that doesn't cause this confusion, but it would involve having multiple lender rates on the same loan which is also not ideal! Hi Matthew , I hope you find a better way to handle these soon. I have to admit it is a little bit confusing. After matched 2k for the loans, I have £2010 in the actual loan book and the weighted average interest rate is 5.84%., but the actual outstanding amount is £2003, and capital & interest repaid is about £7. However, on the dashboard, it only shows £2003 with no other cash left except the referral bonus. If my maths is correct, lending £2003 @ 5.84% is not the same as £2000 @ 6%. Could you please explain the maths of how it really works for loan reassignment?
|
|
|
|
Post by Matthew on May 2, 2018 18:58:34 GMT
Such payments will actually show up as 'interest received'. Accrued interest represents interest accruing on your loans since their last repayments i.e. it would reset to 0 for each loan on a payment date. If that's not the case, do raise the point with customer service and they will no doubt be able to resolve. We are thinking of implementing a better way to handle the reassignment of older loan chunks in a way that doesn't cause this confusion, but it would involve having multiple lender rates on the same loan which is also not ideal! Hi Matthew , I hope you find a better way to handle these soon. I have to admit it is a little bit confusing. After matched 2k for the loans, I have £2010 in the actual loan book and the weighted average interest rate is 5.84%., but the actual outstanding amount is £2003, and capital & interest repaid is about £7. However, on the dashboard, it only shows £2003 with no other cash left except the referral bonus. If my maths is correct, lending £2003 @ 5.84% is not the same as £2000 @ 6%. Could you please explain the maths of how it really works for loan reassignment? Hi benajWithout looking into your account I'll have to assume slightly based on your explanation above. The £2,010 is presumably the total gross amount you've lent - if you lent £2,000 and had a £10 repayment which was subsequently reinvested, this would show as £2,010 gross lent in your loan book (£2,000 net capital on loan still). The £2,003 on the dashboard is the capital outstanding (which would include any reinvested interest you've received) plus any accrued interest (which would not have been credited to your account yet). You must have received (or accrued) at least £3 in interest so far to have £2,003 currently on loan. When you purchase a loan chunk from another investor, any interest shortfall (for example if you're expecting 6% and the chunk you're acquiring is 5.84%) is calculated using the rate differential applied to the chunk for the remainder of the loan term. You'll receive this shortfall upfront as interest on taking over the loan. Unfortunately, it's not quite as simple as comparing £2,000 at 6% versus £2,003 at 5.84%. Consider this scenario: You take over a loan chunk of £50 at 5.84% which only has 3 days left until the end of the loan. You receive an upfront payment to compensate for 3 days at 0.16% on £50. After 3 days, you receive the full £50 repayment plus 3 days of interest at 5.84%, after which you can reinvest the £50 (and a bit) into a new loan, probably paying 6%. Hope this helps - let me know if still not clear.
|
|
|
|
Post by albermarle on May 3, 2018 11:21:17 GMT
Granted. But diversification is not an issue if there is a good PF and also insurance. LW’s product covers that - yes? The insurance is probably only applicable in a minority of defaults, then t he PF will cover all remaining defaults , until it runs out.... In case of a recession this has to be a possibility , even for what seems to be one of the more solid P2P platforms . If this point was reached then would normally be better to be well diversified , or you could have bad luck with a big loan of yours defaulting. On the other hand LW have said in case of things getting bad, and the PF being exhausted, there would be a 'pooling event' This effectively means all lenders would suffer equally regardless of which loans they were in. In this case diversification would become irrelevant. However I am not sure exactly when this pooling event would kick in, and how well it would work ( not tried before ), so probably diversification is still not a bad idea to be on the safe side.
|
|
benaj
Member of DD Central
Posts: 4,862
Likes: 1,591
|
Post by benaj on May 17, 2018 22:52:54 GMT
Well, may be some experts can understand why I am not getting 6%.
For example, I acquired £193.84 of loan_ID(5890) @ 5%, lending works paid me short fall interest £0.81, the interest I will receive for the next 12 months is around £8.49, so Total interest received is £9.30
if I acquired a new loan @ 6% for £193.84, the interest I will receive for the next 12 months is around £10.69
The difference is £2.2. It seems lending works is not compensating for this the first year, let alone for the rest repayment schedules.
|
|
IFISAcava
Member of DD Central
Posts: 3,664
Likes: 2,988
|
Post by IFISAcava on May 17, 2018 23:59:05 GMT
Well, may be some experts can understand why I am not getting 6%. For example, I acquired £193.84 of loan_ID(5890) @ 5%, lending works paid me short fall interest £0.81, the interest I will receive for the next 12 months is around £8.49, so Total interest received is £9.30 if I acquired a new loan @ 6% for £193.84, the interest I will receive for the next 12 months is around £10.69The difference is £2.2. It seems lending works is not compensating for this the first year, let alone for the rest repayment schedules.might the amortisation schedules be different?
|
|
benaj
Member of DD Central
Posts: 4,862
Likes: 1,591
|
Post by benaj on May 18, 2018 5:40:31 GMT
Well, may be some experts can understand why I am not getting 6%. For example, I acquired £193.84 of loan_ID(5890) @ 5%, lending works paid me short fall interest £0.81, the interest I will receive for the next 12 months is around £8.49, so Total interest received is £9.30 if I acquired a new loan @ 6% for £193.84, the interest I will receive for the next 12 months is around £10.69The difference is £2.2. It seems lending works is not compensating for this the first year, let alone for the rest repayment schedules.might the amortisation schedules be different? the old loan has 3 years left. Now I have recalculated the total interest I receive for lending £193.84 @ 5% for 3 years plus the £0.81 short fall interest and the total interest I receive for lending @ 6% for 3 years, it seems about right now. Matthew I wish Lending works has a better way presenting the compensation in the dashboard to avoid confusion. However, this wouldn't have solve the issue if I am interested for lending 5 years only. Reason being, after the 3 years, the money will be reinvested on the 5 year contract. Assuming I want my money back after borrower paying back the loan @ 5% and lending @ 6% in the next 2 years, would lending works sell the loan automatically without charging selling fees (quick withdraw fee)? The quick withdraw fee is 0.6% for the amount being withdraw
|
|
|
|
Post by Matthew on May 20, 2018 18:00:31 GMT
might the amortisation schedules be different? the old loan has 3 years left. Now I have recalculated the total interest I receive for lending £193.84 @ 5% for 3 years plus the £0.81 short fall interest and the total interest I receive for lending @ 6% for 3 years, it seems about right now. Matthew I wish Lending works has a better way presenting the compensation in the dashboard to avoid confusion. However, this wouldn't have solve the issue if I am interested for lending 5 years only. Reason being, after the 3 years, the money will be reinvested on the 5 year contract. Assuming I want my money back after borrower paying back the loan @ 5% and lending @ 6% in the next 2 years, would lending works sell the loan automatically without charging selling fees (quick withdraw fee)? The quick withdraw fee is 0.6% for the amount being withdraw Thanks for the feedback benaj. Do you have any suggestions on how you'd like to see this compensation presented in your account? Would be happy to make changes to make it easier to follow. On your other point, there is no guarantee that you'll end up with only 5-year loans anyway as you can be allocated any loan with a term ranging from 48-60 months in the 'up to 5 years' market, in addition to the remaining term of loans which were originally 48-60 months. In addition, remember that borrowers can (and often do) settle loans early, so there is a good chance funds become available again sooner than intended. We don't currently offer a fixed-date exit product, rather you'd have to either wind down your loans (allow them all to repay and withdraw those repayments) or sell immediately and incur a fee in order to fully exit on your desired exit date. However, what I would say is that P2P is probably not the right product for someone who wants to invest for say 1-2 years, much like equities. You'd generally want to be lending for 5+ years, especially on platforms without a Shield-type product where the impact of defaults on your returns is not linear. If a shorter term, guaranteed instant-access style product is needed then P2P is potentially not the right investment. Thanks.
|
|
benaj
Member of DD Central
Posts: 4,862
Likes: 1,591
|
Post by benaj on May 20, 2018 18:40:40 GMT
Matthew, to be fair the lending works dashboard is easy to navigate, but I feel a few things are missing. I would like to see the following in the account summary:- - Annualised rate: actual return instead of weighted average return - Total shortfall interest earned - recent update of late/nonperforming loans - total earning from referral For each individual loan, I feel the followings are more important:- - principal remaining - repayments left - lending rate Regarding the CSV, i think it's better to have at least one column for payment in and a separate column for payment out. The current CSV I download from lending works requires me to spend time to understand the transaction. Thank you for listening.
|
|
|
|
Post by Matthew on May 20, 2018 18:50:33 GMT
Matthew , to be fair the lending works dashboard is easy to navigate, but I feel a few things are missing. I would like to see the following in the account summary:- - Annualised rate: actual return instead of weighted average return - Total shortfall interest earned - recent update of late/nonperforming loans - total earning from referral For each individual loan, I feel the followings are more important:- - principal remaining - repayments left - lending rate Regarding the CSV, i think it's better to have at least one column for payment in and a separate column for payment out. The current CSV I download from lending works requires me to spend time to understand the transaction. Thank you for listening. Thanks very much for taking the time to provide feedback. I will pass this on to our product team for consideration when we next make updates to the dashboard area. Enjoy the rest of your weekend.
|
|
|
|
Post by Matthew on May 21, 2018 9:44:35 GMT
Matthew , to be fair the lending works dashboard is easy to navigate, but I feel a few things are missing. I would like to see the following in the account summary:- - Annualised rate: actual return instead of weighted average return - Total shortfall interest earned - recent update of late/nonperforming loans - total earning from referral For each individual loan, I feel the followings are more important:- - principal remaining - repayments left - lending rate Regarding the CSV, i think it's better to have at least one column for payment in and a separate column for payment out. The current CSV I download from lending works requires me to spend time to understand the transaction. Thank you for listening. On the subject of feedback, we have a small group of 'hero lenders' who we speak to from time to time to discuss proposed updates, new feature releases, general feedback etc. If you're interested in becoming more involved, please email cs@lendingworks.co.uk and let them know you're interested. Many thanks.
|
|
