littleoldlady
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KL ISA
Oct 5, 2018 20:49:07 GMT
Post by littleoldlady on Oct 5, 2018 20:49:07 GMT
Does anyone understand how the ISA works? The money is invested for a fixed term but is then invested in loans of varying terms. Two questions:
1) What happens if a loan defaults whilst the ISA is still running?
2) What happens if a loan defaults after the ISA has been repaid?
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KL ISA
Oct 6, 2018 13:55:34 GMT
Post by Ace on Oct 6, 2018 13:55:34 GMT
Hi littleoldlady, I've had a scan through Kuflink's website and can't find the full answer to your questions. I presume that the answer to your second question is that it wouldn't affect you. Once your ISA has matured the loan will be passed on to another lender. It looks like the answer to your first question is that you are liable to suffer loss of interest and capital for any loans that default within your ISA, hence the warning that your capital is at risk. The mechanics of this, and of how you might later benefit from recoveries, particularly after that ISA matures, is a complete mystery. I withdrew my original capital from Kuflink when they removed their true 20% skin-in-the-game and failed to deliver on their promises to fully explain how the new system would work, following some botched attempts on here. They've had plenty of time to include this info on their website, but haven't bothered to do so. It left me with the feeling that they didn't really know themselves and would muddle through if and when it happened. I left my cashback and interest invested as I feel that they had some fairly solid loans and are pretty good at their upfront DD, and I'd like to see how they develop. I fail to see any benefit in investing in their Auto/ISA accounts since it is simple to diversify across similar loans in the self-select at much higher rates. Higher rate tax payers can get a slight advantage by investing in the 3 or 5 year ISA over the self-select, but would be better to use the ISA allowance elsewhere. Also investing in self-select has better security as they benefit from Kuflink's 20% first loss guarantee compared to 5% in the Auto and ISA accounts. As they pay interest on all of their loans on the first of each month it requires minimal effort to log in and invest the combined interest in a new loan/loans once a month. The minimum investment is only a couple of quid. Just some random musings on a wet Saturday afternoon. Despite all of the above, I quite like Kuflink really  |
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littleoldlady
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KL ISA
Oct 6, 2018 16:32:03 GMT
Ace likes this
Post by littleoldlady on Oct 6, 2018 16:32:03 GMT
I agree with much of what Ace says. I am only in the ISA because KL gave 3% cashback up front making 6.99% for one year which is reasonable and also it is a transfer in from a BS paying 1% so does not affect this year's allowance. It seems likely that lenders carry the risk of default, but they do not tell us how much we have invested in each loan (only the total loan) so we cannot judge the extent of the risk. AFAICS they cannot stop you withdrawing (or transferring out) funds at the end of the fixed term whether or not there are other lenders prepared to take on the loans. Maybe they keep a cash reserve to meet withdrawals (hence the lower rate) but what happens when this is exhausted? They have not yet had a default and ISTM that they do not expect or anticipate having one, or at least they do not seem to have thought through how they will deal with one. BTW Ace might want to change the word "second" in the third line of his post to "first". |
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KL ISA
Oct 6, 2018 17:48:20 GMT
Post by Ace on Oct 6, 2018 17:48:20 GMT
Oops, sorry your name got auto-uncorrected as well  I agree, not that I wish it on them, but it will be very interesting to see how they handle their first default. |
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oldtimer
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Post by oldtimer on Oct 6, 2018 20:49:13 GMT
I don't understand why Kuflink are so reluctant to include self select in an ISA. ( I have queried this several times with them but never got a satisfactory answer). I would invest a lot more if they did. I am not prepared to tie money up for 5 years to get a lower rate than you can get with self select even though there are tax advantages.
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IFISAcava
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Post by IFISAcava on Oct 7, 2018 9:27:49 GMT
I don't understand why Kuflink are so reluctant to include self select in an ISA. ( I have queried this several times with them but never got a satisfactory answer). I would invest a lot more if they did. I am not prepared to tie money up for 5 years to get a lower rate than you can get with self select even though there are tax advantages. And no SM. As an auto-invest ISA you get 5% for locking up your money for 3 years (or 5.35% for 5 years), with no early exit possibility, compared to 5.1% (before bonuses - 7.1% with bonuses at the moment if you leave for 9 months) at AC with 30-day access.
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littleoldlady
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KL ISA
Oct 7, 2018 10:45:32 GMT
Post by littleoldlady on Oct 7, 2018 10:45:32 GMT
I don't understand why Kuflink are so reluctant to include self select in an ISA. ( I have queried this several times with them but never got a satisfactory answer). I would invest a lot more if they did. I am not prepared to tie money up for 5 years to get a lower rate than you can get with self select even though there are tax advantages. And no SM. As an auto-invest ISA you get 5% for locking up your money for 3 years (or 5.35% for 5 years), with no early exit possibility, compared to 5.1% (before bonuses - 7.1% with bonuses at the moment if you leave for 9 months) at AC with 30-day access. The ISA as currently designed is a complete non starter without CB. Mine matures this week and it looks like I will have to transfer it out. But where to?
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Post by wiseclerk on Oct 7, 2018 11:08:38 GMT
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IFISAcava
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KL ISA
Oct 7, 2018 11:10:27 GMT
Post by IFISAcava on Oct 7, 2018 11:10:27 GMT
And no SM. As an auto-invest ISA you get 5% for locking up your money for 3 years (or 5.35% for 5 years), with no early exit possibility, compared to 5.1% (before bonuses - 7.1% with bonuses at the moment if you leave for 9 months) at AC with 30-day access. The ISA as currently designed is a complete non starter without CB. Mine matures this week and it looks like I will have to transfer it out. But where to? Agreed - only the 3% CB made it worthwhile. I'm overweight in property loans (and maxed out to platform limit with AC) so sending it to Lending Works for a 6% fire and forget component of the portfolio for now.
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oldtimer
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KL ISA
Oct 7, 2018 12:25:45 GMT
Post by oldtimer on Oct 7, 2018 12:25:45 GMT
The ISA as currently designed is a complete non starter without CB. Mine matures this week and it looks like I will have to transfer it out. But where to? Agreed - only the 3% CB made it worthwhile. I'm overweight in property loans (and maxed out to platform limit with AC) so sending it to Lending Works for a 6% fire and forget component of the portfolio for now. Yes its lending works for me too at the moment
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