benaj
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Post by benaj on May 18, 2018 9:14:02 GMT
My Friday whinge of the day: loan downgraded after 1 repayment
One of my accounts picked up a SM loan on the 4th may, FC lending algorithm bought the loan for £19.59 and paid accrued interest of 15p. Loan got downgrade on the 16th May after making one repayment. :-(
Checking in the loan with comments, I was surprised the borrower managed to get a loan in the first place after reading "what's is the nature of your business?".
The borrower said:-
"The funds will be used to Pay HMRC PAYE. The reason why we fell behind is because from the beginning of P****** A******* we have been back office support Pertemps. In April 2017 a bank took over the ledger and a reduced cost and did not put resource in collecting our cash and also did not allocate funds correctly in the ledger which caused us some problems. They did admit fault and and released me from my fixed term agreement without penalty. Consequently we have moved moved to another supplier for office support who specialise in recruitment industry. This moved happened last week. So going forward the company will be in a better position. In 2017 since we did this move was first time in 9 years we have experienced cash flow problems."
Nothing explain the nature of the business, great isn't it?
I must be unlucky to pick up this loan, unless someone knows how to pick and sell these loans. I do accept some business can be downgraded after 1 month, but getting a SM loan and downgraded within 2 weeks makes me feel suspicious.
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blender
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Post by blender on May 18, 2018 13:31:57 GMT
Sounds like an FC A+ borrower to me. An A+, recently dealt out to me, has just cancelled the direct debit, after three payments I think, and consequently the loan has gone late. How can a new borrower be A+ turning over £50k pa and making profits just over £10k? Clearly it's just a one man band and anything can happen to him/her. How is that an A+ risk, with no security?
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benaj
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Post by benaj on May 18, 2018 14:39:46 GMT
not a a+, the lending rate of this loan is 19+%., FC credit score is below 10, but business relative score is 68!!! According to the management account, reported profit for 2017 is £399k
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pickles
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Post by pickles on May 19, 2018 7:57:02 GMT
How about Expansion/growth (53210)?
Low credit score suddenly jumps from 30 to 90 in Feb, so they get an FC loan at "A" grade. £200k loan with a turnover of under £100k.
They didn't even make the first payment!
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invester
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Post by invester on May 19, 2018 9:12:42 GMT
I am pleased that someone else has mentioned these loans, as I have got both of them.
These loans absolutely stink - I can't remember if it was on this platform or not, but is there some kind of exception made for loans that go bad before the first payment, and investors are covered by some means of apology?
The medical one seems nothing short of a disgrace. They took out a smaller loan and paid it off, presumably to get the 'trusted borrower' tag. Then get the big loan and run off with it.
Can accept a business failing but these examples don't seem legit to me.
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Post by mrflibble on May 21, 2018 8:54:21 GMT
Yep, I was thinking about posting something similar about 53332; I got it on the PM, so at least I've had one repayment.
I guess we'll have to wait and see what happens. Payment was due yesterday, so they're only a day late so far. I wonder who it was that filed the winding-up petition; maybe HMRC themselves.
I did think it was a bit dodgy a while ago - I've always had a bit of an aversion to tax payment loans, since if a company has been spending the money they should have been putting aside for tax, then that just smacks of bad accounting. Also, it was listed as "Working Capital Loan" rather than "Tax Payment Loan" which looked a bit suspicious, like they were trying to disguise it.
If it all goes belly-up, I'm not convinced that there'll be any recovery. Loans to recruitment companies seem to be particularly dangerous, since I doubt they have many (if any) assets.
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r00lish67
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Post by r00lish67 on May 21, 2018 9:01:35 GMT
I guess we'll have to wait and see what happens. Payment was due yesterday, so they're only a day late so far. I wonder who it was that filed the winding-up petition; maybe HMRC themselves. You could search for the company name on Companies House and take a look what's filed for them if you'd like to know. beta.companieshouse.gov.uk/
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Post by mrflibble on May 22, 2018 10:32:40 GMT
I can see some charges, including a recent mortgage which rather rings some alarm bells, but can't see any reference to a winding-up petition. I guess if it were HMRC they wouldn't be listed as having a charge, since they have automatic right to the company's assets anyway.
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zlb
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Post by zlb on May 30, 2018 20:36:42 GMT
There are 'safe' loans on Z which default straight away as well...
Are FC loans safer though? Can claims be made against a business like these mentioned here, more easily than a Z individual?
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benaj
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Post by benaj on May 30, 2018 20:59:16 GMT
'Safe loans'? yes, those property development loans have security charged and some reported a healthy return like 12% last tax year before the removal of manual secondary market.
Other loans have director guaranteed, but to be honest, I am more happy with FC recovery team. At least more frequent updates and I have seen full recovery some times. The data does suggest FC net return last 3 years is 19.7%.
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invester
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Post by invester on Jun 8, 2018 8:58:49 GMT
53210 now downgraded before the first payment!
I could be dreaming but was there not a discretionary refund for a loan that went pop before repaying a penny, or was that another platform?
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markr
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Post by markr on Jun 8, 2018 11:58:16 GMT
I could be dreaming but was there not a discretionary refund for a loan that went pop before repaying a penny, or was that another platform? There have been a few cases where FC has refunded lenders for loans that have gone bad, I think I've been in three (Sh*t House, the jeans and another one I can't recall offhand).
I doubt that they'd do it now in the Autobid world, since we don't choose our own loans any more their argument presumably will be as long as the loan book overall reaches the predicted returns then FC has met their promises to investors.
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pickles
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Post by pickles on Jun 8, 2018 17:20:51 GMT
53210 now downgraded before the first payment! I could be dreaming but was there not a discretionary refund for a loan that went pop before repaying a penny, or was that another platform? It was downgraded back in April, a week *after* the first payment was missed (the borrower having cancelled the direct debit). It is now defaulted. It's very fishy that the credit rating jumped, giving them an A grade loan when it should have been a D or E. But as they clearly had no intention of paying anything back, why would they care what rating they had? I have to be circumspect about this - I signed up for random selection so am happy to expect loans that I would not have touched under self-selection. However, this one does look as if it's likely to be deliberate fraud on one side, and either negligence or collusion on the other..
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Post by listener on Jun 12, 2018 18:51:27 GMT
I agree, it seems very odd that this loan was listed as Working Capital, rather than tax payment, not that we have any choice in selection any longer. Also, I agree about the peculiar "nature of the business" statement.
Has anyone asked FC re their decision to take on this loan?
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