jfm
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Post by jfm on Feb 18, 2016 20:50:28 GMT
Is there any indication of the profitability of the business? The accounts show negative net assets, although that is not unusual for a private company. A profitable business would mean less chance of needing to test the value of those security pledges.
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Investboy
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Trying to recover from P2P revolution
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Post by Investboy on Feb 19, 2016 16:00:15 GMT
also would it be possible to put what type of cars they are i.e so we can have a guess if age/valuation is in right ball park Agree, Make, model and year would be nice to see in the pdf. For us lenders it is more important I guess than REG****.
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alanp
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Post by alanp on Feb 19, 2016 16:32:32 GMT
They are USED cars and as someone who has spent the last few weeks looking at trading one in for another the values are: LOW if it is your one that you are trying to shift HIGH if it is one you are trying to buy. Strange that isn't it
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scraggs
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Post by scraggs on Feb 21, 2016 17:49:13 GMT
Hi Ed I would be interested to know where 70% of retail value compares to the trade value of these cars, there will be quite a bit involved to move these cars on, do you have a plan if they were to go pear shaped, ie: a dealer prepared to take the lot ? Would be nice to have an answer to this question if possible please Ed. I assume you are not a car dealer yourself, so I think it's a valid question to ask.
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Post by MoneyThing on Feb 21, 2016 20:49:42 GMT
Evening,
For the price range, age and class of vehicles (e.g. Vauxhall Zafira/Astra/Mariva, Citreon Grand C4 Picasso, Ford Focus/Fiesta), that make up the typical stock:
The Trade value (the price dealers will pay), represents c. 83% of the Retail value (the price dealers will sell).
As such, 70% of the Retail value represents c. 84% of the Trade value.
Whilst we have no direct experience in selling cars on a commercial basis, I do have a number of contacts in this business and feel confident that if the need did present itself we could sell these vehicles at a price that would be better than Trade.
I would also mention that we were at the borrower's operation on Thursday and I can report that the business is doing well and growing strongly, with a good atmosphere amongst the team. We will continue to visit them on a regular basis to spot check the cars (stock as well as the remote cars under HP contracts), and view their accounts.
Kind regards,
Ed
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scraggs
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Post by scraggs on Feb 22, 2016 12:29:02 GMT
Evening, For the price range, age and class of vehicles (e.g. Vauxhall Zafira/Astra/Mariva, Citreon Grand C4 Picasso, Ford Focus/Fiesta), that make up the typical stock: The Trade value (the price dealers will pay), represents c. 83% of the Retail value (the price dealers will sell). As such, 70% of the Retail value represents c. 84% of the Trade value. Whilst we have no direct experience in selling cars on a commercial basis, I do have a number of contacts in this business and feel confident that if the need did present itself we could sell these vehicles at a price that would be better than Trade. I would also mention that we were at the borrower's operation on Thursday and I can report that the business is doing well and growing strongly, with a good atmosphere amongst the team. We will continue to visit them on a regular basis to spot check the cars (stock as well as the remote cars under HP contracts), and view their accounts. Kind regards, Ed Thanks for clearing that up Ed
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james
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Post by james on Mar 11, 2016 10:36:29 GMT
I would also mention that we were at the borrower's operation on Thursday and I can report that the business is doing well and growing strongly, with a good atmosphere amongst the team. We will continue to visit them on a regular basis to spot check the cars (stock as well as the remote cars under HP contracts), and view their accounts. And there's nothing quite like persona visits. Nicely done!
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shimself
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Post by shimself on Mar 14, 2016 11:28:08 GMT
So looking at the 80% / 50% loans - ie the cars which HAVE been sold, in particular and assuming it's typical AE365
Some of the cars show outstanding capital greater than the 80%GGR value, and some less. I assume then that those with greater capital outstanding are fairly recent sales, and the others are older, maybe even some years old. These old ones all have ref CLCnnnnn. Have these debts been bought from someone else to make up the numbers?
What happens if a more recent hire purchase goes bad, because reclaiming just the car will lead to a loss?
Are you aware of and can you reveal any industry standard rules of thumb for recovery costs and efficacy?
In broad terms the interest due is of the same order as the outstaning capital (o/s interest total 162K, o/s capital 188K), which implies a fairly high APR, which in turn implies a fairly low credit rating for the car buyer. Can you tell us any more about that?
What proportion of these loans default do you know?
How did these sort of businesses fare in the last downturn do you know?
Thanks
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Post by MoneyThing on Mar 14, 2016 14:03:51 GMT
So looking at the 80% / 50% loans - ie the cars which HAVE been sold, in particular and assuming it's typical AE365 Some of the cars show outstanding capital greater than the 80%GGR value, and some less. 1) I assume then that those with greater capital outstanding are fairly recent sales, and the others are older, maybe even some years old. 2) These old ones all have ref CLCnnnnn. Have these debts been bought from someone else to make up the numbers? 3) What happens if a more recent hire purchase goes bad, because reclaiming just the car will lead to a loss? 4) Are you aware of and can you reveal any industry standard rules of thumb for recovery costs and efficacy? In broad terms the interest due is of the same order as the outstaning capital (o/s interest total 162K, o/s capital 188K), which implies a fairly high APR, which in turn implies a fairly low credit rating for the car buyer. 5) Can you tell us any more about that? 6) What proportion of these loans default do you know? 7) How did these sort of businesses fare in the last downturn do you know? Thanks Afternoon shimself, I will revert back with a fuller response shortly, however in the meantime please see initial comments below: (I have added numbering to your email for simplicity) 1) Correct. 2) No. This was simply a change to the way they reference their loans. 3) They are under contract to swap out a defaulted loan in the event it goes into default. 4) Will revert back on this. We are in the process of drawing up an educational report (ER) to share with lenders to explain more about this market. 5) The APR is high for this market as the borrower base is sub-prime. Will provide further information when we publish the report. 6) As per 4) 7) Will look to see if we can put together to answer this also. Kind regards, Ed
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Post by Deleted on Mar 14, 2016 14:44:17 GMT
It is worth going on the borrowers website to see the sort of cars we are talking about.
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shimself
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Post by shimself on Mar 14, 2016 18:53:15 GMT
Thanks Ed for a quick to the point reply. Kudos
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Post by MoneyThing on Mar 15, 2016 13:33:54 GMT
Thanks Ed for a quick to the point reply. Kudos Please see below for some further explanation from the borrower: 3) "The security in the tranche will be replaced and therefore values maintained, when we repossess a car then we “make good” and re-sell and refinance, so this negates any bad debt write off. We also have GPS trackers on our vehicles so we can always locate them." 4) "Because most lenders do not fit tracking devices the [AE] recovery rate is significantly higher than those for other lenders, our typical recovery cost is £250. However, it needs to be taken into account that firstly, the vehicle would be replaced in the security by a new asset and secondly the asset would in most cases (90% + to date), would be resold to a new consumer. All of this is somewhat irrelevant due to the replacement aspect as mentioned above." 5) "Your document [AE] Introduction listed with the first tranche was clear as to our market sector (Introduction to [AE]:- MoneyThing would like to introduce you to our new lender partner, [AE], trading as [CLC]. [AE] are first and foremost an asset based lender. They specialise in providing vehicle finance to the near-prime and sub-prime marketplaces under Hire Purchase agreements.) We don’t credit score as this is irrelevant in this sector, instead we carry out robust income and expenditure checks looking at customers bank statements which shows us what they earn and what they spend, then we see if they have any disposable income which they are able to maintain payments for a new vehicle." 6) "AE’s business model allows for 2.5% of previous months’ loan book to go into a default and repossession scenario. This has not however been the case as it is currently running at approximately 1.5%. This does not mean that 1.5% of cases do not pay and get repossessed, we also take vehicles back when the customer is in difficulties in line with FCA treating customers fairly (this is termed as Early Termination). Again these vehicles are “made good”, resold and refinanced." 7) "Dramatic growth; in times of financial difficulty mainstream lenders tighten their criteria and more consumers move into the sub-prime arena but still need to get vehicles. Also if interest rates increase, as the largest proportion of consumers in this sector are tenants rather than homeowners, increases in interest rates in the market typically have less impact on them." Kind regards, Ed
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