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Post by newlender on Jun 23, 2016 19:11:21 GMT
I have just acquired a 27.5% borrower. Is this a record for Zopa so far and is it really what we should be encouraging? Anyone with an APR%? - my maths aren't up to it.
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Greenwood2
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Post by Greenwood2 on Jun 23, 2016 19:47:00 GMT
Don't worry they probably won't pay.
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ben
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Post by ben on Jun 23, 2016 19:56:58 GMT
A fair few of the loans people lend to here the borrorower is proabably paying not to far of that espeically with the pawn items. What the loan actually far? Mem y bank keeps informing me that 21% on my credit card is a bargin and I should be forever grateful to them and they can't understand why I don't snap there hands off for it.
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Post by propman on Jun 24, 2016 9:38:24 GMT
It seems the fees are 7% of net borrowing and this rate is only applied to 60 month loans with 1% fees. I make it 32.9% APR. High, but not compared with many P2P loans.
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Post by jevans4949 on Jun 24, 2016 10:10:21 GMT
The point about these loans is that Zopa (and probably anybody else) peceives that there is a high risk of default with these borrowers. The hard-headed alternative would be not to give them a loan at all. The morally defensible alternative would be to give them a charitable donation.
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wapping35
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Post by wapping35 on Jun 24, 2016 12:58:54 GMT
I see one of my recent (June 22nd) 27.5% Z+ loans is for a Holiday.
Which kind of puts it in perspective.
And my credit card interest rate is 18.9% .
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Greenwood2
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Post by Greenwood2 on Jun 25, 2016 11:47:25 GMT
Hope they've factored in the 'new' exchange rates.
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wapping35
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Post by wapping35 on Jun 25, 2016 13:28:14 GMT
I guess it could be a holiday in this country or the Channel islands, but point taken.  |
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Post by GSV3MIaC on Jun 25, 2016 13:41:02 GMT
I guess it could be a holiday in this country or the Channel islands, but point taken. I think 'this country' just became a 'Channel Island'. 8>.
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aju
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Post by aju on Jun 25, 2016 16:26:47 GMT
I picked up a 24.50% loan and the first payment was missed! - recovered by card payment 3 days later. sadly its a + loan so if they default I'm stuffed ;-)
Hopefully its the old DD not setup in time or correctly syndrome.
How would one be able to find this stuff out without having access to OldMLB - I know the comments field give some info but the true date span don't really line up in comments.
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Post by wyndstryke on Jun 26, 2016 6:30:25 GMT
I wonder what will happen with borrowers who had settled here from the EU? I suspect some may be changing their long term plans now the NF have reappeared on our streets.
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Post by Ton ⓉⓞⓃ on Jun 26, 2016 15:22:52 GMT
I wonder what will happen with borrowers who had settled here from the EU? I suspect some may be changing their long term plans now the NF have reappeared on our streets. I don't think the NF has reappeared on our streets, I'm thinking other less radical groups have stolen the wind from their sails for the moment. Going back to the OP, it's hard to say if this is defensible as we don't know the Borrowers circumstances, for some it might be freeing to have the loan at that rate; for others, perhaps many if not most, it could be bit like slavery trying to pay it off. Over time Zopa's bound to get it wrong sooner or later and make an inappropriate loan. Circumstances change what might have been freeing with the loss of an income suddenly becomes a burden. I noticed that with a rate of 26.8% almost half of the first repayment is interest. Has anyone one worked out what the rate has to be for the total payments for the whole loan to be exactly half interest and half capital. Notionally I feel that is a reasonable maximum though it will be a different rate for 3 and 5 year loans etc.
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Post by propman on Jun 27, 2016 7:58:16 GMT
I noticed that with a rate of 26.8% almost half of the first repayment is interest. Has anyone one worked out what the rate has to be for the total payments for the whole loan to be exactly half interest and half capital. Notionally I feel that is a reasonable maximum though it will be a different rate for 3 and 5 year loans etc. Not sure I follow where this limit comes from. By this basis Wonga Loans were not extortion (30 day loan for £200 on their original rate of 1% per day is "only" 29.3% interest and fees!), While 4% APR 40 year mortgage fails your test. For a 3 year loan it would be an APR of 67%, 37% for 5 years.
The moral issue I have struggled with is that most of the price for these loans is the "insurance" against defaults. While part of this is a fair charge for genuinely unavoidable risks (being unable to work, or no work available at a high enough rate to meet repayments in full), a significant proportion is based on people who are irresponsible. I have no issue with this where people have been irresponsible in the past, but people with low incomes &/or little credit history are penalised. As you say, the issue is more over whether it is acceptable to lend to them at all rather than the rate actually charged. Presumably the responsible ones actually need the money (eg motor vehicle required to reach otherwise inaccessible work, or deposit on accommodation).
Where friends who need the money are in a similar situation I have often given them the money as expecting a repayment is unreasonable and likely to cause them hardship or friction in the future.
- PM
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Post by wyndstryke on Jun 27, 2016 9:12:16 GMT
I wonder what will happen with borrowers who had settled here from the EU? I suspect some may be changing their long term plans now the NF have reappeared on our streets. I don't think the NF has reappeared on our streets, I'm thinking other less radical groups have stolen the wind from their sails for the moment. ... I was referring to the photograph in the news on Friday or Saturday of a group of NF supporters in the street with 'repatriate now' signs, I forget which city it was. Reminded me of the worst aspects of the late 70's & early '80s. -- Edit: I couldn't find that article (dread to think what Google thinks of me after all those searches), but I found a new one with the same photo: www.bbc.co.uk/news/uk-36634786Lots of hostility on the streets to people from the EU and elsewhere. If people have taken a zopa loan, and then feel that they're no longer welcome in the UK, it'd hit the Z+ default rates. -- Edit2: That particular photo was apparently taken Saturday afternoon in the centre of Newcastle outside the main metro station. www.telegraph.co.uk/news/2016/06/26/spate-of-racist-attacks-blamed-on-brexit-vote/
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Post by geoffp on Jun 27, 2016 14:35:19 GMT
I see an obvious change in Zopa+ lending policy.
Up to about 8 June I had 798 Z+ loans at an average of 11.4%
Since then I have had 380 Z+ loans averaging 16.2%.
Of the first 798 loans, 107 are at 24.5% or more. 107/798 ~ 13%
Since 8 June the 380 loans have 100 at 24.5% or more. 100/398 ~ 26%
As others have said, the maximum rate is 27.5%. Altogether I have 42 such loans, including 27 since 8 June.
I too feel uncomfortable lending at such high rates. Zopa isn't Wonga+, I try to reassure myself.
I also have a lender's worry: A lending rate of 16.2% implies that I will lose 10% of the potential interest in defaults, whereas a rate of 10-11% implies only about 4% lost from defaults.
I used to be a forecaster by profession (oil market) and I know that Zopa's 6.5% net yield target will be much harder to hit, and much more uncertain, if it relies on the subtraction of one big number to another, compared with small numbers.
To illustrate this, suppose Zopa lent at an average rate of 50%, and was targeting 6.5% net. Everything would be even more uncertain.
In these even more uncertain times, I feel uncomfortable with Zopa's lending on its Plus market at such high rates.
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