jnm21
Posts: 441 
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Post by jnm21 on Aug 15, 2016 9:33:36 GMT
Thanks wyndstryke - I spoke to Zopa on Friday, who confirmed that calculations are to 8 d.p.
I still fail to see how rounding (on a relatively small number of loans, with seemingly 1 repaid to the exact round amount lent on the day lent; possibly cancelled) can go 1p out one way on one screen & 1p out the other way on another. I work with SQL DB & I am very mathematical, but I can't see how. Yes if I had hundreds of loans of different ages & lengths, with repayments coming in all over the place, then yes I would not have a clue; that is one reason why I am out - if I don't trust their calcs now, I won't have a clue later on. It is the trust that is important, not the 2p difference.
Anyhow, them pausing my investments because I asked for a sell estimate (IMHO not a mandate to do anything) was the final straw. I have lifted nearly 2/3 my investment & requested near another 1/3, so far losing 1p. (Not sure how when the rate estimate has not changed & there is 'no fee to sell in Access' I have been charged - either their rounding again or their system realising that the rates given to me were an insult!)
Anyhow, looks like it is only going to cost me pennies to get out of Zopa & I am glad to do so - still can't believe that they lend money at <1.5%, albeit the cream of the crop borrowers - IMHO in a capital art risk product that should be criminal.
If it was not for wanting platform diversity, then I would put my money in RS (but I note that their rates are dropping too - hopefully will recover - the weekend seems to cause a dip).
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Post by propman on Aug 15, 2016 10:20:09 GMT
The problem arises when allocating payments they do so in whole pennies. I think the shortfall or excess is allocated to those with the largest discrepancy in the 3rd decimal place. So if 6 lenders were all owed .4p, the borrower would repay 2p (2.4p rounded) that would be given to 2 of the 6 with the other 4 out of pocket. So the balances don't relate to exactly what will be received, but overall it should level out.
As an aside, I have never understood why/how the purchase of sellout loans works as these are done to 8dp. It would certainly be easier if these were also in exact pennies as the current procedure leaves the offer with fractions of a penny that could only ever be used on similar purchases, while the recipient can only withdraw whole pennies (in total, several loans will be accumulated to a extra penny). I think timing of payments can also create an issue as all payments are the same despite interest accruing differently in different length months.
That said, Zopa should only be a lending option if you trust them as so much is under their control.
- PM
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jnm21
Posts: 441
Likes: 166
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Post by jnm21 on Aug 15, 2016 16:53:21 GMT
Yes propman, whole pennies would make it leaner, but I suppose when the micro loans are so small, accuracy is important. It is not like they can ask the borrower to repay several pounds more every other month so that it divides evenly (I'm guessing that larger loans will have hundreds of lenders).
Anyhow, as you say Zopa investing is about trusting their system, I don't, so I'm out. Once the current sellout (my second) goes through, I'll be down to <£100 in Zopa.
Thank you to everyone who has advised me.
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Post by dualinvestor on Aug 15, 2016 18:42:19 GMT
Thanks wyndstryke - I spoke to Zopa on Friday, who confirmed that calculations are to 8 d.p. I still fail to see how rounding (on a relatively small number of loans, with seemingly 1 repaid to the exact round amount lent on the day lent; possibly cancelled) can go 1p out one way on one screen & 1p out the other way on another. I work with SQL DB & I am very mathematical, but I can't see how. Yes if I had hundreds of loans of different ages & lengths, with repayments coming in all over the place, then yes I would not have a clue; that is one reason why I am out - if I don't trust their calcs now, I won't have a clue later on. It is the trust that is important, not the 2p difference. Anyhow, them pausing my investments because I asked for a sell estimate (IMHO not a mandate to do anything) was the final straw. I have lifted nearly 2/3 my investment & requested near another 1/3, so far losing 1p. (Not sure how when the rate estimate has not changed & there is 'no fee to sell in Access' I have been charged - either their rounding again or their system realising that the rates given to me were an insult!) Anyhow, looks like it is only going to cost me pennies to get out of Zopa & I am glad to do so - still can't believe that they lend money at <1.5%, albeit the cream of the crop borrowers - IMHO in a capital art risk product that should be criminal. If it was not for wanting platform diversity, then I would put my money in RS (but I note that their rates are dropping too - hopefully will recover - the weekend seems to cause a dip). They don't actually lend money at those rates, there is their fees to add on and the arrangement fee, the borrower is probably paying more than 4, possibly 5% APR.
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jnm21
Posts: 441
Likes: 166
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Post by jnm21 on Aug 15, 2016 22:12:01 GMT
True - I hope you realise I knew that.
I abbreviated; replace lend with 'lend at rates that yield investments'.
I get the impression that they are courting the sub 4% loans.
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Post by wyndstryke on Aug 16, 2016 7:45:08 GMT
It's all about competing for the top in the league tables. Pity the original Zopa forums disappeared because you could have read through our anguished discussions there, but basically a huge number of borrowers only look at the tables in places like money supermarket. So all the banks fight for the top spots at particular lending amounts - 5000, 7500, 10000, 12500, and have to give that rate to at least 51%(?) of the people who apply at those particular amounts. The profit comes from the 49%, and also from the people who are after different amounts.
Zopa tried to avoid having to do that, but found that if they dropped down the table even slightly, the number of borrowers would drop significantly.
Therefore one tip for borrowers is to always ask for the headline loan amounts!
As a lender, I have to put it into the 'necessary evil' category. It's definitely the case that Zopa's lending volumes increased dramatically when they migrated from having us pick the rates, to being a more packaged product which appeared on the tables.
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Post by fuzzyiceberg on Aug 16, 2016 8:26:27 GMT
I abbreviated; replace lend with 'lend at rates that yield investments'. I get the impression that they are courting the sub 4% loans. Like all investing its all about risk/reward balance. Easy enough to have the possibility of ending up with higher rates if you take more risk.
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jnm21
Posts: 441
Likes: 166
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Post by jnm21 on Aug 17, 2016 7:44:47 GMT
I agree that higher rates are available for higher risk, but in theory if you trust Ratesetter equally (which I think I do, just not confident to stick to it alone), you can have a better overall rate (both 1 & 5 years) with no greater risk & at least you can decide the term & rate before your money is lent.
I saw Zopa feature in the MSE email today - loans with a rate of 4.1% - IMHO that is OK if you are a bank with access to free cash (deposit accounts), but for a P2P with platform, rainy day fund & investor to get a cut, it simply does not add up for me.
Anyhow, just a handful of loans to go & I'm out. Another (minor) gripe is that Zopa don't seem to use Faster Payments.
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