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Post by bluechip on Nov 25, 2015 10:46:14 GMT
I started investing with FS 6 months ago, my first two investments are now on 196 days and 195 days respectively. The first has defaulted, the second is a car that the owner is seeking an extension to raise funds. I have several more loans coming to fruition in the coming week (Yachts, Artwork, Railwayana), is it normal for loans not to pay back on the 180 day mark?
I need to shuffle some money around if that is the case as I have piled in the cash on FS over the past 6 months, but with 2 out of 2 being less than ideal it seems I have been a bit overzealous.
Is it usual to have loans go over the 180 day mark?
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SteveT
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Post by SteveT on Nov 25, 2015 10:57:59 GMT
I started investing with FS 6 months ago, my first two investments are now on 196 days and 195 days respectively. The first has defaulted, the second is a car that the owner is seeking an extension to raise funds. I have several more loans coming to fruition in the coming week (Yachts, Artwork, Railwayana), is it normal for loans not to pay back on the 180 day mark?
I need to shuffle some money around if that is the case as I have piled in the cash on FS over the past 6 months, but with 2 out of 2 being less than ideal it seems I have been a bit overzealous.
Is it usual to have loans go over the 180 day mark? You should find there are comments added to the specific loan pages explaining what is going on. FS are pretty good at keeping lenders updated these days at the end of loan terms. [To answer your specific question, yes, it happens quite a lot!]
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Post by bluechip on Nov 25, 2015 11:07:41 GMT
Thanks Stevet - yes I noticed that section which is how I know about the car requesting more time to pay the debt, it seems they are upfront and clear. I appreciate FS seem on the ball, I just wanted to know for my own financial planning if it's best not to rely on having the cash available upon the due date (or a week or so after), some of the loans I'm in for a few K so it helps knowing how reliable repayments are.
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SteveT
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Post by SteveT on Nov 25, 2015 11:14:59 GMT
If the borrower opts to renew then you can usually get your money out more or less on the due date. If they opt to repay then it can sometimes be a few days out (or a reasonable extension may be agreed by FS, as with the car). If the item is defaulted it can take many weeks / months before it can be sold and the proceeds distributed yet. And we've yet to see a property-backed loan go smelly on FS; some of those can take a very long time indeed to conclude (see Assetz Capital !)
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Post by xyon100 on Nov 25, 2015 11:33:57 GMT
How long was that, Stevet? I had the defaulted loan on SS but they were pretty hot on getting that sorted.
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SteveT
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Post by SteveT on Nov 25, 2015 11:45:24 GMT
How long was that, Stevet? I had the defaulted loan on SS but they were pretty hot on getting that sorted. Some of them pre-date my involvement on the platform but I know there are 4 or 5 property / bridging loans that hit problems in late 2014 and remain to be resolved...
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mikes1531
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Post by mikes1531 on Nov 25, 2015 14:08:18 GMT
How long was that, Stevet? I had the defaulted loan on SS but they were pretty hot on getting that sorted. Yes, SS were very quick on that defaulted loan. But it still was three months after maturity before that loan was repaid. I'm in a number of AC loans that have defaulted and they are taking quite a long time to resolve. I'd say six months would be a good result, and a year is probably not an unreasonable expectation. I have at least three AC loans that defaulted about 18 months ago where the receivers still are dealing with the mess. Interest on those still is 'accruing' but I don't expect the proceeds from the security sales will be enough to pay all the interest, especially once all the costs of the long, drawn-out, receivership are paid. Getting back to FS and bluechip's original question... Some FS security is relatively common, and buyers for those items can be found reasonably quickly, so the sale proceeds might be available little more than a month after maturity. (A lot depends on whether the borrower convinces FS that they really do intend to repay/renew so that FS delay the default while waiting for the borrower to do what they say they're going to do.) With unusual items -- a bassoon and a grand piano come immediately to mind -- markets are thin and require finding a specialist seller or waiting for an appropriate auction to be scheduled. The bassoon loan reached 310 days before being repaid, and the piano reached 286 days. Works of art also are not easy to sell, so if the borrower defaults the lenders can expect to wait some considerable time to recover their investment. The bottom line is that unredeemed items are not uncommon. (Someone here said that statistics from a pawnbrokers association showed 15% of all loans were not repaid by the borrower.) FS lenders are accruing interest at high rates for a reason. The best way to deal with this is probably by having a very diverse portfolio of loans, so that an individual loan that isn't repaid on time would have only a small effect on the overall cash flow of the lender.
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