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Post by caveman38 on Nov 12, 2015 22:13:42 GMT
What does Post 457 refer to. New to P2P and am alarmed when I see references to things I don't understand.
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arbster
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Post by arbster on Nov 12, 2015 22:18:15 GMT
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pom
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Post by pom on Nov 12, 2015 22:40:26 GMT
If you're alarmed and don't understand it, don't do it.
Assuming Arbster has identified the correct post...then I'd say that ThinCats are quite an "advanced" platform who won't be for everyone (personally I don't feel they're for me even tho I have many loans elsewhere that are larger than their minimum and so could easily fit them in my diversification strategy - and based on other threads on these boards I have one of the most diverse p2p portfolios). Maybe you should start with platforms that are simpler to understand and require a smaller initial investment. But again, if you don't have a starting point of feeling OK about potentially losing whatever you're investing (it's only as you learn more that you get more of an idea of risks) then just don't do it.
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adrianc
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Post by adrianc on Nov 12, 2015 22:51:07 GMT
<blink> Naive noob shoves money at TC. Minimum bid a grand...
Diversification...? <hollow laughter>
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Post by caveman38 on Nov 13, 2015 7:46:03 GMT
I haven't been attracted to TC. I have to date only lent through RS although I'm intending on taking a bond with Wellesley and a small bit with SS. What I was concerned about was whether other P2P's leave the responsibility of chasing debts to the lender as that is what I interpreted that to mean in the MSE post. So far I felt secure in the knowledge that the parent company dealt with this. Am I right.
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bigfoot12
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Post by bigfoot12 on Nov 13, 2015 8:02:55 GMT
I haven't been attracted to TC. I have to date only lent through RS although I'm intending on taking a bond with Wellesley and a small bit with SS. What I was concerned about was whether other P2P's leave the responsibility of chasing debts to the lender as that is what I interpreted that to mean in the MSE post. So far I felt secure in the knowledge that the parent company dealt with this. Am I right. One thing you must realise is that P2P companies differ greatly from each other. With RS you are protected by a provision fund and it acquires any bad debt and you are paid in full (assuming the provision fund doesn't run out of money). Wellesley I am slightly less familiar but I think it is similar; I am not sure if they have had a default yet. SS is very different; until this month it wasn't really P2P. You have, up to this point, been lending to Lendy rather than the underlying borrower. However, from now on you will be lending to the borrower. You might want to check the Ts&Cs, or contact them. I would have thought that they will continue to pursue failed borrowers on your behalf, savingstream is this correct? Thin cats is very minimalist. I think that some lenders knew that at the outset, but others have been surprised. From memory (but I am not a lender) one of the invoice discounting platforms is or used to be similar regarding chasing bad debt.
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Post by lynnanthony on Nov 13, 2015 8:38:56 GMT
That particular poster on MSE has a bee in his bonnet because he is in a particular failed loan on Thincats. As am I. He seems unable to accept that with P2P, some loans will fail and in the absence of a provision fund, there will be the occasional loss. High interest rates come with risk. Diversification minimises risk.
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Steerpike
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Post by Steerpike on Nov 13, 2015 8:55:23 GMT
<blink> Naive noob shoves money at TC. Minimum bid a grand... Diversification...? <hollow laughter> Some years ago that is exactly what I was and exactly what I did. At the time TC were offering Thincats Lending Club loans offering 'instant' diversification, worked for me.
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JamesFrance
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Post by JamesFrance on Nov 13, 2015 9:23:49 GMT
There will always be bad debts with P2P lending, so I would suggest that you only lend through platforms with large provision funds and accept the lower interest rates, or lend where your investment is split between at least 50 and preferably 100 borrowers. You cannot recover defaults yourself but have to rely on the platform to do that, so do try to understand how they go about it. Certainly some are much more diligent than others.
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Post by mrclondon on Nov 13, 2015 11:07:31 GMT
caveman38 that post on MSE probably refers to a particular recovery situation which has been ongoing for around 2 years and is now reaching its end game. The borrower has made (as I undserstand it, I'm not in that loan) a full and final offer of 18p in the £. The sponsors and TC have advised that to persue further legal action in this case will, on the balance of probabilities, result in a LOWER recovery. TC have asked lenders on that loan to vote to accept the borrowers full and final offer or reject it. However, TC have made clear that if lenders reject the full and final offer, they will not be funding any further legal costs in this case. So the poster on MSE appears unwilling to take the advice of sponsor and TC (the latter employed a speciast in the field of recoveries earlier this year) that further legal action will achieve no benefit. As samford71 said a short while a go "All P2P platform will have a limit on how much time and money they will spend on chasing bad debts. That is completely reasonable." Just to reiterate, this particular "secured" loan is set to realise 18p in the £. Lower than most lenders would have hoped for certainly, but the personal guarantee was unsupported (and had a legal twist in the tail) so a perfectly realistic scenario and outcome. No surprise, no need for any alarm. Capital losses on p2p loans will occur, and may even result in the loss of ALL capital on that loan. Also bear in mind that since the business failed (2 yers ago ??) the money lent to that business hasn't been earning interest. What you see as a high yield on p2p loans (10-15%) is compensation for future capital losses. To expect more than 6% after capital losses across an economic cycle is pure fantasy.
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Post by westonkevRS on Nov 14, 2015 8:01:48 GMT
I haven't been attracted to TC. I have to date only lent through RS although I'm intending on taking a bond with Wellesley and a small bit with SS. What I was concerned about was whether other P2P's leave the responsibility of chasing debts to the lender as that is what I interpreted that to mean in the MSE post. So far I felt secure in the knowledge that the parent company dealt with this. Am I right. RateSetter (RMM Ltd, as opposed to the Provision Fund) pays all Collections costs, none is taken from the outstanding debt or expensed. Collections activity comes from our margin, and this is not something we skimp on. RateSetter has teeth when needed. Even if the debt goes external, debtor additional recovery costs are added to the debt. But actually all this is irrelevant to the lender, because the Provision Fund steps in and pays all missing payments (including interest expected), and then the entire debt when appropriate. Lenders are not impacted at all. Kevin.
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james
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Post by james on Nov 14, 2015 12:33:13 GMT
Well, RateSetter doesn't charge investors directly at the moment and in fact I think that RateSetter is likely to continue to act in that way.
Yet I'm also minded to consider the case where Bondora is doing its now-usual job of setting a bad example and from June 2015 has switched to having it covered by their margin to now planning to pay external debt collection agencies a cut, without charging the borrower for costs, citing law in some places that they claim restricts charges for debt collection. Presumably they were relying on those charges being passed on to borrowers to cover their costs. This for existing loans made when they were saying they were covering costs, not just new ones, so at a stroke they have reduced the value of existing loans that might need to be sold with provision for possible future default, as well as those not performing well or actually defaulted. Of course they have a far higher default rate so the sheer amount of collection work that they have is way higher than RateSetter or mainstream consumer lending businesses in the UK have.
Still, for the RateSetter case, is any of the charging level for the RateSetter margin present to allow for these costs or is it all expected to be covered by collection charges made only on the defaulted borrowers collectively? I'm asking in part because the margin or provision funding would be an indirect cost to investors via lower passed on interest rates at loan inception time, so it wouldn't be strictly accurate then to claim that lenders aren't paying this indirect charge.
I do like the approach of a platform paying out of margin and collection charges levied on the borrower but it's also a potential platform stability or poor debt collection practice risk for lenders if the default rates become high enough for the cost to become material to the future of the platform. One reason I like it is that it provides a degree of desirable negative feedback to lending risk decision-making at the platform.
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webwiz
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Post by webwiz on Nov 14, 2015 14:54:26 GMT
I haven't been attracted to TC. I have to date only lent through RS although I'm intending on taking a bond with Wellesley and a small bit with SS. What I was concerned about was whether other P2P's leave the responsibility of chasing debts to the lender as that is what I interpreted that to mean in the MSE post. So far I felt secure in the knowledge that the parent company dealt with this. Am I right. RateSetter (RMM Ltd, as opposed to the Provision Fund) pays all Collections costs, none is taken from the outstanding debt or expensed. Collections activity comes from our margin, and this is not something we skimp on. RateSetter has teeth when needed. Even if the debt goes external, debtor additional recovery costs are added to the debt. But actually all this is irrelevant to the lender, because the Provision Fund steps in and pays all missing payments (including interest expected), and then the entire debt when appropriate. Lenders are not impacted at all. Kevin. Of course, one reason why RS can afford to be so generous in regard to defaults is that it pays interest as low as 1.3% on occasion.
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adrianc
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Post by adrianc on Nov 14, 2015 15:34:44 GMT
Of course, one reason why RS can afford to be so generous in regard to defaults is that it pays interest as low as 1.3% on occasion. Only to people who voluntarily offer their money at rates that low.
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webwiz
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Post by webwiz on Nov 14, 2015 16:21:43 GMT
Of course, one reason why RS can afford to be so generous in regard to defaults is that it pays interest as low as 1.3% on occasion. Only to people who voluntarily offer their money at rates that low. No. To people who offered their money at "Market Rate". Anyone who thinks that a fair market could ever offer 1.3% is living on a different planet to me.
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