kaya
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Post by kaya on Oct 8, 2014 19:28:35 GMT
The 1% fee probably dampens the market somewhat, but even so, could someone please enlighten me as to why some people put up loan parts for sale at really greedy mark-ups which translate into awful buyer rates? Why would anyone ever buy them? Does anyone ever buy, for example, an 11% loan for a miserable 6.5% return? Are they mad if they do? How much mark-up are you prepared to pay?
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Oct 8, 2014 20:35:41 GMT
The 1% fee probably dampens the market somewhat, but even so, could someone please enlighten me as to why some people put up loan parts for sale at really greedy mark-ups which translate into awful buyer rates? Why would anyone ever buy them? Does anyone ever buy, for example, an 11% loan for a miserable 6.5% return? Are they mad if they do? How much mark-up are you prepared to pay? People who do it are mostly flippers who grab the loan at auction and then make a quick profit. Why do people buy? I admit its an odd one but I suspect one answer is diversification. The flow of loans is quite eratic on the platform and anyone wanting to diversify a portfolio quickly (reducing their risk/defualt %) would have to resort to the SM to do so. 6.5% is a discount to the headline rate but a premium to what is available from banks and some other P2P platforms. Another answer would be bots which some people use to manage their investments and will generally grab anything within a certain (often quite wide)criteria (lot of threads on FC board in particular on them). My initial investment on the platform was on the SM but at much lower markups than offered now which I consider prohibitive. Ive shifted most of my p2p to secured lending sites AC, SS, Wellesley, Ablrate, and just roll my repayments into new loans on FK because I like supporting SME & prefer it to FC due to higher rates and better comms with lenders. Now FK are moving into bridging loans that may change of course
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wysiati
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Post by wysiati on Oct 9, 2014 10:36:55 GMT
On FK the seller also receives no compensation for accrued but unpaid interest so this is another effective cost of exit which feeds into premia attached to secondary market loan parts.
On some loans, depending upon timing, you would be taking a hit of up to c.2% just to sell. Not quite 'Ratesetter/ThinCats-esque' but among the higher (exit) cost platforms.
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kaya
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Post by kaya on Oct 10, 2014 18:58:33 GMT
Thanks for your replies. Still hard to believe anyone actually buys at such low rates, since there are always others available at far better rates - yet people go to the trouble of offering them, so who knows. Should add, miserable loan part rate offers are a phenomena of other platforms too, and the FK system can sometimes work in your favour - only last week it was possible to pick up discounted loan parts with effective rates of up to 28%! Fine if they don't default!
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Post by jackpease on Oct 11, 2014 7:04:34 GMT
I've got a couple of dozen loan parts for sale atm - if they are priced at or near the 'best' rate for that loan then i find that you only just cover your costs, and even if you pitch it as the 'best' rate it doesn't fly off the shelf. Are you looking at loans past their half way mark? Bear in mind that long loans in their final months attract lower (perhaps pointlessly low) rates on many platforms eg FC and Rebs Jack P
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