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Post by oppsididitagain on Jan 8, 2019 10:32:43 GMT
Im not sure if this has been said before.
I understand there are certain rules/procedures in place to protect borrowers and there is a 'cooling off period' for most things you buy.
However, some of my loans that were matched in the 1YR over the last 2 weeks have been repaid. One loan only lasted 1 day. I was getting matched between 5.4 and 5.7 and now the market is back to 3/3.5% giving the borrower the opportunity to access the cheaper money.
If you switch this around, If I were to cancel my loans early I would be charged a fee by RS of X as per their T&C's
Are we compensated for loans that are paid off early ?
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Post by GSV3MIaC on Jan 8, 2019 11:03:49 GMT
No you are not .. early repayment is a risk you take (as a lender) and a facility available to you at any time (as a borrower). There is no penalty (and that's a legal requirement during the cooling off period, IIRC).
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Post by oppsididitagain on Jan 8, 2019 11:41:31 GMT
No you are not .. early repayment is a risk you take (as a lender) and a facility available to you at any time (as a borrower). There is no penalty (and that's a legal requirement during the cooling off period, IIRC). Thanks for the response, I wonder if RS will let the borrower go back into the market place straight away or they have to complete a new application paying any 'arrangement fees' etc ? Personally I think we should be compensated in someway - Maybe they should pay the remainder of that months interest.
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rscal
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Post by rscal on Jan 8, 2019 12:30:50 GMT
There is absolutely no notice these early repayments are going to happen either which makes for awkwardness in lending it out again. Taken with the lack of diversification of lender (where all your money goes to a single borrower because .... 'provision fund') are we being ill-served by the RS model? The way I see it, they have nailed their colours to the mast in operating the platform with this particular model. [And is it done this way by any other competitors I wonder?]
My equation looks something like: Ratesetter <=> The door
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benaj
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Post by benaj on Jan 8, 2019 12:44:40 GMT
Early repayments are part of p2plending. I personally don't like a good loan repaid early and swapped for "worse rate" loan, but it is a lot better than any late repayment or default IMHO.
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nyneil
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Post by nyneil on Jan 8, 2019 16:50:53 GMT
No you are not .. early repayment is a risk you take (as a lender) and a facility available to you at any time (as a borrower). There is no penalty (and that's a legal requirement during the cooling off period, IIRC). Thanks for the response, I wonder if RS will let the borrower go back into the market place straight away or they have to complete a new application paying any 'arrangement fees' etc ? Personally I think we should be compensated in someway - Maybe they should pay the remainder of that months interest. Some time ago, RS told me there was no link between the rate i'm paid and the rate the borrower pays. From this, I infer that RS has a pool of loans which it fills as cheaply as possible; as the low rate money is used up, they have to progressively offer higher rates to the lenders to fill the loans. This does not affect the rate offered to the borrower.
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Post by gravitykillz on Jan 8, 2019 17:30:13 GMT
When is rolling going to go above 4% ? This was quite common in September and October. Now its rarer than the dodo.
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sd2
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Post by sd2 on Feb 15, 2019 13:47:05 GMT
Thanks for the response, I wonder if RS will let the borrower go back into the market place straight away or they have to complete a new application paying any 'arrangement fees' etc ? Personally I think we should be compensated in someway - Maybe they should pay the remainder of that months interest. Some time ago, RS told me there was no link between the rate i'm paid and the rate the borrower pays. From this, I infer that RS has a pool of loans which it fills as cheaply as possible; as the low rate money is used up, they have to progressively offer higher rates to the lenders to fill the loans. This does not affect the rate offered to the borrower. If I wanted to borrow £5,000 or even less I would borrow more and use a peer to peer. I would borrow £7500 (cheapest rate and use zopa) over the best period of time. I would then pay back the £2,500 (assuming it would cost me nothing) immediately. Alternatively invest the £2,500 at a higher interest. Zopa will give me 3.3% at £7,500. I have been doing something similar with zero interest credit card money for years.
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sd2
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Post by sd2 on Feb 15, 2019 13:51:09 GMT
No you are not .. early repayment is a risk you take (as a lender) and a facility available to you at any time (as a borrower). There is no penalty (and that's a legal requirement during the cooling off period, IIRC). Thanks for the response, I wonder if RS will let the borrower go back into the market place straight away or they have to complete a new application paying any 'arrangement fees' etc ? Personally I think we should be compensated in someway - Maybe they should pay the remainder of that months interest. Each time you apply for a loan your credit score falls. Mine fell from 980 to 870 when opened two new bank accounts and closed one. The latter according to MSE does effect your credit score.
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benaj
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Post by benaj on Feb 15, 2019 16:20:59 GMT
There are Hard and soft credit checks. RS does "soft" credit check when borrowers apply, same as Zopa, their checks do not affect credit check score. www.ratesetter.com/blog/article/what-happens-when-we-check-your-credit-scoreHSBC does a lot hard credit check even when you are applying a current account without overdraft facility.  Here are things could contribute higher credit score according to Clear score:- - You don't have any court judgements, bankruptcies or Individual Voluntary Arrangements - You have no accounts in default or repossession - You've been on the electoral roll at your current address for a long time - You've made very few applications for credit in the past year - You have held at least one of your accounts for several years - Very few/none of your accounts have overdue payments - Your largest credit card limit is relatively high - You have stayed within your credit card limit in the past year - You're using a small amount of your total credit card limit (below 50%) - Very few/none of your secured loans or mortgages have overdue payments - Your current Telecoms balance is relatively low |
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Post by bricktop on Feb 15, 2019 19:22:03 GMT
There are Hard and soft credit checks. RS does "soft" credit check when borrowers apply, same as Zopa, their checks do not affect credit check score. www.ratesetter.com/blog/article/what-happens-when-we-check-your-credit-scoreHSBC does a lot hard credit check even when you are applying a current account without overdraft facility. Here are things could contribute higher credit score according to Clear score:- - You don't have any court judgements, bankruptcies or Individual Voluntary Arrangements - You have no accounts in default or repossession - You've been on the electoral roll at your current address for a long time - You've made very few applications for credit in the past year - You have held at least one of your accounts for several years - Very few/none of your accounts have overdue payments - Your largest credit card limit is relatively high - You have stayed within your credit card limit in the past year - You're using a small amount of your total credit card limit (below 50%) - Very few/none of your secured loans or mortgages have overdue payments - Your current Telecoms balance is relatively low As I understand it RS soft search at application and hard search if/when approved. That's a common model for loans. Lenders just have an ID and financial crime check which doesn't affect your credit score.
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rscal
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Post by rscal on Feb 24, 2019 15:11:04 GMT
Wow, I'm just nosing around my RS account this afternoon and I spotted a 1 year loan (4.8%) scheduled for early repayment tomorrow, Monday, after 7 months. So now I can be ready for that 'Your Investment has Completed Early' email when it does/doesn't come! Thanks for the early heads up guys, perhaps you could make this a feature?
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Post by RateSetter on Feb 27, 2019 11:15:14 GMT
Good morning everyone. We hope the following helps clarify some of the points above:
When someone applies for a personal loan, we conduct a soft credit check to provide a quote. We then perform a hard credit check as part of processing the full application.
A borrower may repay early without penalty, and this helps attract good quality loan applicants.
Investors may be matched to:
1. A new loan. New loans start with a term of between six months and five years, however borrowers may repay some or all of their loan early.
2. An existing loan that is being released by another investor wishing to access their money early. Investors may choose to release their investment at any time, so the outstanding term of these loans varies and some can be quite short.
We think the ability for investors to access their money early is an important feature with many benefits. We recognise that having money repaid early may be inconvenient, however, by selecting automatic reinvestment investors can ensure that their money continues earning regardless of when it is repaid by a borrower.
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nyneil
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Post by nyneil on Feb 28, 2019 23:29:17 GMT
Good morning everyone. We hope the following helps clarify some of the points above: #snip We recognise that having money repaid early may be inconvenient, however, by selecting automatic reinvestment investors can ensure that their money continues earning regardless of when it is repaid by a borrower. This is only true if the lender is prepared to accept the low 'market rate', which for the 1 year market is often less than 4%.
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sl75
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Post by sl75 on Mar 1, 2019 12:53:14 GMT
This is only true if the lender is prepared to accept the low 'market rate', which for the 1 year market is often less than 4%. However, the opportunity to get matched at a higher rate in the first place would not have been present if borrowers were not able to pay back early without penalty - if that had been the case, there would have been fewer borrowers, so the demand would easily have been satisfied by those prepared to accept a lower interest rate for use of their money.
You've already had your compensation for early payback in the form of being able to charge an interest rate as high as you did and still have enough demand to get matched.
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