registerme
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Post by registerme on Apr 16, 2015 13:14:28 GMT
I got a piece of a loan back on the 9th April, the day it closed. But it hasn't been drawn down yet. I believe that if the loan is drawn down interest starts accruing from the date of the close (rather than the date of the draw down), but if the loan isn't drawn down then our funds just get returned to us with no interest. So a couple of questions...
How common is this? Because it's annoying having funds in limbo like this....
Why would a borrower not draw down the funds asap (apart from not liking the interest rate)?
Cheers,
RM
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SteveT
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Post by SteveT on Apr 16, 2015 13:31:16 GMT
Fairly regular occurance I'm afraid. Perhaps 1 in every 5 or 6 SME loans (as opposed to fixed interest rate Property loans). The reason is rarely communicated unless a subsequent new auction is listed, but is likely to be either dissatisfaction with the rate (although that shouldn't be a problem recently!!) or failure to complete the necessary paperwork in the allotted 7 days.
If you look at the "Repayments" tab after the auction closes and see "Pre-agreement" against all the payment dates, you can be pretty certain that it will draw down.
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registerme
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Post by registerme on Apr 16, 2015 14:07:50 GMT
Interesting, thanks stevet. In this case the repayments tab does say "Pre-agreement" against all the payment dates so maybe it will be drawn down in the end.
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SteveT
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Post by SteveT on Apr 16, 2015 14:36:34 GMT
I hope yours isn't the exception that proves the rule! I can't recall having a "Pre-agreement" loan fail to draw down, but I dare say it's possible...
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blender
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Post by blender on Apr 16, 2015 14:55:48 GMT
I have known it happen - but rarely.
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registerme
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Post by registerme on Apr 16, 2015 17:54:29 GMT
"Please note: This loan has not been accepted as the borrower has secured funding elsewhere, Thanks FC".
:/
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Post by norfolkblue on Apr 16, 2015 18:04:15 GMT
Happens from time to time.
I find it can occur on the ones where the borrower doesn't answer questions from lenders (which indicates both a disinterested borrower, and a borrower who will find themselves with a more expensive loan should they take it).
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TitoPuente
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Post by TitoPuente on Apr 16, 2015 20:51:31 GMT
From reading Q&As one can deduct that in many cases there are "agents" that fill out the FC application on behalf of their semi-unaware clients. When the bidding is closed they probably push it to the client to see if they bite. In most cases the client does not.
Speculating a bit more, FC may tell hesitant borrowers to take the plunge and list a loan given that there is no commitment to accept it. One can also assume that some would-be-borrowers may list a loan just to test the market and/or negotiate with their banks.
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Post by GSV3MIaC on Apr 16, 2015 21:27:49 GMT
"Please note: This loan has not been accepted as the borrower has secured funding elsewhere, Thanks FC". :/ And 12069 - borrower has come back for a 1/3rd size loan (which should get a better rate from autobidders). One hopes (beyond hope) that FC don't double-count this in the weekly double-speak.
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blender
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Post by blender on Apr 16, 2015 22:02:53 GMT
I reckon they all get counted as 'listed loans', even the property loans which do not get filled and come back again with cash back or chopped into smaller pieces.
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coop
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Post by coop on Apr 17, 2015 9:17:14 GMT
I estimate my rate of SME loans not drawing down to be about 25-30%.
However I don't really go for thm at all at the moment as there is so little to be found amongst the dross I don't find it worthwhile.
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registerme
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Post by registerme on Apr 18, 2015 9:09:26 GMT
Effectively I could have an amount of money tied up for two weeks (one week of bidding, one week of borrower thinking time) earning no interest, with the opportunity cost of not being able to invest it in another loan. The borrower can back out at any time, at no penalty, and the lender can't.
The asymmetry between lender and borrower here surprises me.
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chrisf
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Post by chrisf on Apr 18, 2015 13:50:53 GMT
I hope yours isn't the exception that proves the rule! I can't recall having a "Pre-agreement" loan fail to draw down, but I dare say it's possible... This isn't right, A list of repayments with 'Pre-agreement' next to each amount appears automatically when the auctions end, and certainly doesn't mean that the loan will draw down. When an auction has ended early and automatically goes into Pre-agreement, then usually (handful of known exceptions) it will draw down, but if the auction ended because the 7 (or 14) days ran out, then this definitely doesn't mean the loan will draw down. In the current FC climate where rates are low (although drastically improving in the last few days!), then most pre-agreement loans are tending to draw down, but during the happier times (e.g. early April 2014, November 2014) then probably only about 80-90% of loans which have ended and gone into pre-agreement have drawn down. I only get excited when I see 'scheduled' rather than pre-agreement. Like today's tasty early-closer 12264. Wahoo! and they waited until 140K of very tall money had dropped off too!
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blender
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Post by blender on Apr 18, 2015 14:09:36 GMT
Pre-agreement did not used to be automatic - there was some acceptance process presumably 'subject to contract'. When it went from blank to pre-agreement that used to mean something. Maybe the process has changed recently.
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chrisf
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Post by chrisf on Apr 18, 2015 14:13:07 GMT
Actually yes, from looking at ended loan 12306, it seems pre-agreement isn't automatic. It is still true that pre-agreement loans often don't draw down though.
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