spiral
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Post by spiral on Feb 21, 2016 18:04:25 GMT
pikestaff, I checked this on my mum's account today and although not showing the same issue as yours, I'm sure that it appeared to show no accrued interest as it subtracted it from the capital. I thought I'd recheck your screenshot but because of your particular anomoly, it doesn't present itself that way' Unfortunately, I'm not able to recheck as I'm not round my mum's now. I'm sure it appeared something like: On loan £1000 Capital returned £990 + Outstanding interest £10 - fees £0 = £1000 This would imply that although it indicates accrued interest is being paid, it is being subtracted from the capital therefore substituting interest (and a tax burden) for a capital loss and ultimately only returning the amount you have on loan. Would you be so kind as to recheck your figures just to confirm if I'm right or whether as an aging citizen, my memory is just playing tricks with me.
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pikestaff
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Post by pikestaff on Feb 21, 2016 22:26:56 GMT
spiral - I don't think it's that. My numbers on Friday did not add up to par, and Saturday's screenshot was as it should be. The two par figures agreed and there was interest as well. Though I've not gone as far as recalculating the interest to see if that's right, which I will do before I push the button. However, I'm expecting that to be Thur/Fri so a few days to wait. This is my last post on the subject until then.
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am
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Post by am on Feb 21, 2016 22:34:09 GMT
pikestaff , I checked this on my mum's account today and although not showing the same issue as yours, I'm sure that it appeared to show no accrued interest as it subtracted it from the capital. I thought I'd recheck your screenshot but because of your particular anomoly, it doesn't present itself that way' Unfortunately, I'm not able to recheck as I'm not round my mum's now. I'm sure it appeared something like: On loan £1000 Capital returned £990 + Outstanding interest £10 - fees £0 = £1000 This would imply that although it indicates accrued interest is being paid, it is being subtracted from the capital therefore substituting interest (and a tax burden) for a capital loss and ultimately only returning the amount you have on loan. Would you be so kind as to recheck your figures just to confirm if I'm right or whether as an aging citizen, my memory is just playing tricks with me. I tried a quote earlier and it offered to pay me back all the capital and all the interest. I think that you get charged a bit off the capital (the assignment fee) if the current rate is higher than the rate on your holdings, i.e. you can't cash in and relend at a higher rate because when the higher rate is available you have to pay an assignment fee to compensate for the difference.
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james
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Post by james on Feb 22, 2016 5:12:39 GMT
Most other P2P platforms have more established secondary markets, where a loan of any length can be sold at a premium or at the original rate. If a 5yr loan could be sold on at a premium or, indeed, at a fairly small discount or more - then what would be the point of the 3yr, 1yr and monthly markets? Assuming that the Protection Fund pays out, the shorter markets offer a guaranteed exit at a predetermined time with no additional cost to the lender. The longer ones offer higher interest rate risk, that is the chance that general rates may rise during the loan term, and also the assurance of the rate for a longer time unless a borrower repays early. As a purely practical matter I've yet to see a P2P platform where lenders had difficulty selling longer term loans with shorter terms remaining. One aspect of that is that the initial higher risk period has normally passed and the loans are likely to be in the longer term lower default risk period compared to new shorter term loans. Countering that to some degree is that those wanting a longer term might also be inherently higher risk if they did so on the basis of inability to repay at the shorter term rate, but this is mostly moot for lenders if it is assumed that a protection fund will pay for defaults. At least for unsecured loans to consumers, all three platforms I've looked at face a relative shortage of investor demand compared to borrower demand for longer term loans, providing an incentive to encourage lenders to lend for longer initial terms.
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spiral
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Post by spiral on Feb 24, 2016 14:14:49 GMT
, I checked this on my mum's account today and although not showing the same issue as yours, I'm sure that it appeared to show no accrued interest as it subtracted it from the capital. I thought I'd recheck your screenshot but because of your particular anomoly, it doesn't present itself that way' Unfortunately, I'm not able to recheck as I'm not round my mum's now. I'm sure it appeared something like: On loan £1000 Capital returned £990 + Outstanding interest £10 - fees £0 = £1000 This would imply that although it indicates accrued interest is being paid, it is being subtracted from the capital therefore substituting interest (and a tax burden) for a capital loss and ultimately only returning the amount you have on loan. Would you be so kind as to recheck your figures just to confirm if I'm right or whether as an aging citizen, my memory is just playing tricks with me. OK, just checked my mum's account again, this time with screenshot and my memory wasn't playing tricks. The interest IS deducted from the capital before cashout thus creating a capital loss and a potential tax liability when no profit has occurred. Something is clearly not right here. Attachments:
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Post by Deleted on Feb 24, 2016 14:48:39 GMT
OK, just checked my mum's account again, this time with screenshot and my memory wasn't playing tricks. The interest IS deducted from the capital before cashout thus creating a capital loss and a potential tax liability when no profit has occurred. Something is clearly not right here. The way I understand it is - it's saying (in a slightly confusing way) that in order to give you 1000, it only needs to deduct 990 from your loans, and makes up the rest with accrued interest. At least, thats the way I interpreted it when I've done cashouts.
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Post by Deleted on Feb 24, 2016 14:57:37 GMT
Yep, I've just checked a no-fee monthly sellout I did recently.
I asked for 5k.
It took 4998.85 out of my loans (so my monthly on loan amount reduced by this)
It made up the balance by giving me 1.15 of accrued interest.
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alender
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Post by alender on Feb 24, 2016 16:14:25 GMT
, I checked this on my mum's account today and although not showing the same issue as yours, I'm sure that it appeared to show no accrued interest as it subtracted it from the capital. I thought I'd recheck your screenshot but because of your particular anomoly, it doesn't present itself that way' Unfortunately, I'm not able to recheck as I'm not round my mum's now. I'm sure it appeared something like: On loan £1000 Capital returned £990 + Outstanding interest £10 - fees £0 = £1000 This would imply that although it indicates accrued interest is being paid, it is being subtracted from the capital therefore substituting interest (and a tax burden) for a capital loss and ultimately only returning the amount you have on loan. Would you be so kind as to recheck your figures just to confirm if I'm right or whether as an aging citizen, my memory is just playing tricks with me. OK, just checked my mum's account again, this time with screenshot and my memory wasn't playing tricks. The interest IS deducted from the capital before cashout thus creating a capital loss and a potential tax liability when no profit has occurred. Something is clearly not right here. Try clicking all, I think what happens is that your total will be the amount of initial capital + interest. If you just ask for the amount you have in the initial capital it will work the interest and capital to give you that amount leaving the rest still invested, approx the interest earned.
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spiral
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Post by spiral on Feb 24, 2016 16:19:37 GMT
Thanks everyone. I've never used cashout before so just typed the amount on offer into the box. I hadn't even noticed the "all" button.
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alender
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Post by alender on Feb 24, 2016 16:36:33 GMT
Easy mistake to make, it took me a few minutes to work it out, capital, interest etc. and I have been in the banking for a lot of my working life.
Perhaps RS should also say how much is left still invested on this screen.
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james
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Post by james on Feb 24, 2016 22:21:47 GMT
OK, just checked my mum's account again, this time with screenshot and my memory wasn't playing tricks. The interest IS deducted from the capital before cashout thus creating a capital loss and a potential tax liability when no profit has occurred. Something is clearly not right here. The way I understand it is - it's saying (in a slightly confusing way) that in order to give you 1000, it only needs to deduct 990 from your loans, and makes up the rest with accrued interest. At least, thats the way I interpreted it when I've done cashouts. I think that's not what it's saying in the screen shot provided but I'm not familiar enough with RateSetter to know. The screen shot starts saying Monthly, value 2176.93. the calculation for exit value s given as: Capital returned: 2176.17 Outstanding interest (accrued but not paid): £2.76 Fees 0 = 2176.93 So all I think that is happening in this specific screen shot is that the "Monthly" number is showing the combination of outstanding capital and accrued interest and when the sale value is calculated the two pieces are split and displayed separately. So I think there's no issue here except perhaps less clarity than there might be in the Monthly number being a combination of capital and interest and the calculation for sale showing the split between the two. However, there are three other possible cases where there can be something which might be perceived as undesirable, while entirely accurate and correct according to the terms and conditions: 1. higher interest rates, capital value at sale is lower than the amount outstanding because a reduction in capital is needed to increase the interest rate for the buyer. I don't know how this information is presented when it happens. 2. lower interest rates, capital value at sale is higher than the amount outstanding because it takes less capital to deliver the current interest rate to the buyer. RateSetter doesn't pay this higher value, instead it is diverted to the protection Fund. I don't know how this diversion information is presented when it happens. 3. term adjustment. If you sell, RateSetter pretends that you signed up for the shorter term elapsed so far rather than the longer one. RateSetter does some calculation involving looking up various rates then makes a deduction from capital if the return would be lower. I don't know whether they also make corresponding adjustments to interest paid on your account to remove the income tax effect of having been paid interest then having it clawed back - might be done say by not deducting capital but instead placing an interest deficit on the account to reduce future interest bill, hence delivering the tax undoing. I assume that if rates for the shorter term were higher, they just keep the difference instead of paying it to you. I don't know how information about these things is presented when they happen. There are enough interesting cases that it might be handy for someone to put up screen shots showing all of the various permutations and how they are displayed pre- and post-sale.
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Post by Deleted on Feb 25, 2016 6:51:53 GMT
I think that's not what it's saying in the screen shot provided Yes it is. I have a copy+paste of my own sellout record, reconciled exactly with my account history. That is how it worked for me.
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spiral
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Post by spiral on Feb 28, 2016 18:02:33 GMT
Has anyone worked out yet if there is a penalty applied when cashing out at a higher rate than the current loan contracts? Unfortunately my Mum's rates have been higher than current rates whenever I've checked so it wouldn't apply and the website just states "One month access account - no fees for early withdrawal " but in the generic "What's the catch" section, it states: "At the time of selling out, the rates available on RateSetter may have risen since you started to lend. So a gap needs to be filled between your rate and the rate the new lender taking on your contracts needs so that they don’t lose out." It makes no exclusion for the "access" account so 2 conflicting statements.
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alender
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Post by alender on Feb 29, 2016 18:32:01 GMT
Does anyone know which monthly contracts is chosen if you do a part withdrawal and have multiple contracts?
As an example if I have £1000 at 3% maturing 10/3/2016, £1000 at 4% maturing 15/3/2016 and £1000 at 3% maturing 20/3/2016. If I ask for £1000 will it come from:
1. The loan with the highest rate. 2. The loan with the earliest maturity date. 3. The loan with the latest maturity date. 4. Spit between all 3 loans.
This scenario assumes there are lenders offers available to cover all the loans.
Perhaps Kevin can help it he can spare the time.
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Post by westonkevRS on Mar 1, 2016 7:07:02 GMT
Does anyone know which monthly contracts is chosen if you do a part withdrawal and have multiple contracts? As an example if I have £1000 at 3% maturing 10/3/2016, £1000 at 4% maturing 15/3/2016 and £1000 at 3% maturing 20/3/2016. If I ask for £1000 will it come from: 1. The loan with the highest rate. 2. The loan with the earliest maturity date. 3. The loan with the latest maturity date. 4. Spit between all 3 loans. This scenario assumes there are lenders offers available to cover all the loans. Perhaps Kevin can help it he can spare the time. Actually: 5. The loan with the most recent (newest) contract dates. This was coded on the basis that these latest loans would be closest to the current market rate this making any fees and impact of sell-out minimal. I'm sure others have what they consider better ways to have coded this, but the above is transparent and fair and easiest to explain in terms of its logic. If it isn't already there, I'll ask for it to be added to the FAQs. Kevin.
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