Rob
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Post by Rob on Sept 14, 2015 11:42:24 GMT
I have been comparing two loans, 20998-01 and 20434-01. Both are nominally for 4 months, there is a difference of 4 days between them.
20998 is for €50,000 @ 12%, total interest is €842.70
20434 is for €30,000 @ 15.3%, total interest is €1022.58
The total interest seems disproportionate between the two loans. To compare:
If I multiply the second loan by 5/3 to get a loan the same amount as the first one (€50,000), the total interest becomes €1704.30.
If I now multiply this by 12/15.3 to get the interest rate the same as the first one (12%), the total interest becomes €1336.71. This is a lot more than the €842.70 paid by the first one.
Having scaled the loan amount and interest rates of the second loan to match the first one, I would have have expected roughly the same amount of interest as they are for almost identical durations.
What is going on here? Are the interest rates quoted incorrect?
Also, why is the first interest payment very small on 20998 when this is when most capital is still owed? This doesn't occur on 20434.
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Post by martins on Sept 14, 2015 14:40:11 GMT
Rob, thank you for your question. The interest rates are quoted correctly. All loans on the Mintos platform are pre-funded by loan originators. Thus, loan originators will earn the interest for the whole loan up to the moment when loan is put on the platform and for the part that is not assigned to investors after the loan has been put on the platform. The two loans you refer to differs at when they were put on the platform. Loan 20998 was issued to the borrower on 07/08/2015 and put on the Mintos platform on 11/09/2015. Therefore, the loan originator receives all the interest up to 11/09/2015. That is also why the first interest payment in the Payment Schedule is very small - it is interest for the period from 11/09/2015 to 15/09/2015. Loan 20434 was issued to the borrower on 03/08/2015 and put on the Mintos platform on 13/08/2015. Thus, the loan originator receives all the interest up to 13/08/2015. The first interest payment in the Payment Schedule is for the time period from 13/08/2015 to 15/09/2015. We hope it helps and let us know if you have any further question about this.
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Rob
Posts: 138
Likes: 36
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Post by Rob on Sept 15, 2015 8:59:26 GMT
Thank you, Mintos, it all makes sense now. So the first interest payment available to lenders on the platform will vary depending on when the loan was put on the platform relative to its issue date (and, obviously, when the lender buys their part as I know you pay interest pro-rata for fractions of a month). As demonstrated by loan 20998, this can have a big effect on the total interest for a short-duration loan. Therefore, to increase transparency, would it be possible to include the date the loan was put on the platform in the information available?
I notice, also, that for loans from Capitalia and Mogo that come on the platform months after their issue, there is no payment history available (only that monthly payments have been made). Would it be possible to get the full history from the originator and display it so that investors can better judge the borrower's likelihood of paying on time?
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Post by martins on Sept 15, 2015 20:44:05 GMT
Rob, we have noted the request to add a Loan Listing date. Some investors have asked it before, but it is not a frequently requested addition. For the time being we don't plan to add dates for the payments made before the loan is put on our platform. That would involve quite a bit of work on loan originator's side in tracing and transmitting the historic payments on automated basis and would also require certain rework of our system.
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