jimc99
Member of DD Central
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Post by jimc99 on Sept 9, 2016 10:09:39 GMT
Kev....to what lending companies are RS lending our money? This is one area where it's difficult to be transparent. We do not name these lending businesses because of our competitive requirements but also their contractual privacy (they have the right to keep their funding choices quiet). This type of lending does make RateSetter a middle-man. And to be blunt P2P is all about cutting out the waste and inefficiency in financial services to give you lenders a better return. However we use these partners rather than do it ourselves because they are experts in their chosen fields, albeit lending on mobile phones, HP on cars, travel, etc. I'm not saying these are actual examples, but it's better to use these lending experts rather than try and do this ourselves from scratch which would be difficult and inevitably include mistakes. I hope this is somewhat useful, despite me not being able to disclose names. Either way, it all adds to our diverse lending portfolio, which we see as a safety feature and allows for further growth in lending for you. Kevin. Kevin, going back to the pie chart, RS is lending out 34% of investors money to commercial, property and other lending companies. Do they contribute to the Provision Fund? Would RS use the PF to cover defaults by these borrowers? Presumably this lending is at a higher risk of default than the 66% of personal loans made. Is there a higher contribution being made to the PF to allow for this? Is the default risk being dealt with by RS outside the PF? Do the market rates include the loans being made to these companies or do they just reflect rates for personal loans? Thanks.
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Post by dualinvestor on Sept 9, 2016 13:17:52 GMT
Well, given that RS don't publish the lending criteria for the other 5/6ths... Don't most lenders assume that their money is being lent as personal loans to individuals? RS is supposed to be a p2p platform after all. That such a large part of current loans are actually lent to other lending companies and not individuals is a concern to me, along with the seemingly ever reducing Provision Fund. I have been withdrawing all my repayments for the past 15 months. Unfortunately I can't reduce my lending to zero for another 20 months or so unless I'm prepared to take a hit of 3% or so by selling out. Just hope enough investors have similar mind sets as yours and stay with RS without questioning their practices so the platform survives until I get out. It is naive to believe that any large pltform speecialising in retail loans is either sourcing all its own borrowers or not acting like other financial insyitutions in effective "securitisation" of its loans. Originally in the UK Zopa even had a market but now manages its rates, RS does the same except lenders are free to set the minimum rate they lend at but RS will always find "borrowers" to match the lowest ones, often via "other lending businesses" You are only very rarely lending to someone who has been sourced by the platform, it is fairly easy to see the proportion on Zopa, most loans by number have a counter-party with a set of random numbers and letters, a very few have recognisable words/names, the latter I suspect are those that have applied via the web site. Pedantically you are not participating in pure P2P but PviaB2P (peer via business to peer) and for the forseeable future you are likely to be, at least until platforms become known as a major source of finance for retail borrowers. I personally do not think they aspire to sourcing all of their own borrowers because it is impractable and expensive.
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Post by westonkevRS on Sept 9, 2016 20:59:52 GMT
Kevin, going back to the pie chart, RS is lending out 34% of investors money to commercial, property and other lending companies. Do they contribute to the Provision Fund? Would RS use the PF to cover defaults by these borrowers? Presumably this lending is at a higher risk of default than the 66% of personal loans made. Is there a higher contribution being made to the PF to allow for this? Is the default risk being dealt with by RS outside the PF? Do the market rates include the loans being made to these companies or do they just reflect rates for personal loans? Thanks. Yes, every single loan RateSetter writes pays into the Provision Fund either up-front or over the lifetime. There are no free fee rides. The amount they pay into the Provision Fund varies depending on the risk of that loan, which is often partly depending on the business we are dealing with. Although commercially sensitive, much of this intermediary lending has additional safeguards linked to security taken over the lending company - as well as the loan itself. And yes the Provision Fund is used to pay all defaults. However every channel and type of business is tracked against Provision Fund usage, we don't continue if the Provision Fund is " over spending". I think the market rates are set on all loan matches, irrespective of the end type albeit property, retail or commercial. Kevin.
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oldgrumpy
Member of DD Central
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Post by oldgrumpy on Sept 10, 2016 19:27:59 GMT
"I think the market rates are set on all loan matches..."I think the market rates are set on all DAYTIME loan matches. RS decides what matches (in bulk) it won't make until 2200 - 0600 next day. I used to accept lower rates than most other platforms because I thought nearly all of the loans were to private individuals on a personal basis. As it now transpires a third of the loans are "commercial" I see little reason to accept falling rates. RS has my largest P2P chunk. That will not continue while 5 year rates are sub 6%. Tally ho! (I just had an 85% wet week in upland mid-Wales. Serve me right!! 
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hendragon
Member of DD Central
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Post by hendragon on Sept 10, 2016 21:37:55 GMT
"I think the market rates are set on all loan matches..."I think the market rates are set on all DAYTIME loan matches. RS decides what matches (in bulk) it won't make until 2200 - 0600 next day. I used to accept lower rates than most other platforms because I thought nearly all of the loans were to private individuals on a personal basis. As it now transpires a third of the loans are "commercial" I see little reason to accept falling rates. RS has my largest P2P chunk. That will not continue while 5 year rates are sub 6%. Tally ho! (I just had an 85% wet week in upland mid-Wales. Serve me right!! only 85%..that must have been our high summer. Perhaps you need to learn the word "glaw"
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Post by blanik on Sept 10, 2016 22:49:29 GMT
You are only very rarely lending to someone who has been sourced by the platform, it is fairly easy to see the proportion on Zopa, most loans by number have a counter-party with a set of random numbers and letters, a very few have recognisable words/names, the latter I suspect are those that have applied via the web site. Zopa changed from users picking their own name, to using random hex id's ( which I believe is what RS uses ), so the recognised names just indicate that such a user was registered before a certain date.
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