ashe
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Post by ashe on Apr 22, 2017 17:38:24 GMT
I may be new to all this, but I'm a bit confused as to why this charge on withdrawals is a problem to some. Do some people think if the Access rate suddenly shot up to 5% that there would be no issue if everyone could withdraw with no fee/costs and start to relend at 5%?! But they haven't. The access rate is now 2.9% which is the lowest it has ever been. All my investments were made when the access rate was higher than this but still I am charged when I withdraw. Also the rate on the account is lower to allow for such access. Other platforms have equivalent accounts and do not make similar charges (ie AC and RS). I don't understand. Your quote from earlier when someone asked if there was a fee to take money out of Access was: There isn't but there is an interest rate charge....that is its the difference between market rate and the rate you invested at (if the rate has gone up since you invested) over the term of the loans. So if you invest at 2% in 5y loans and the new market rate is 2.1% then you get charged 0.1% x 5 = 0.5% or something to that effect. You get no benefit if the rate has gone in your favour (so a money spinner for them)
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bg
Member of DD Central
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Post by bg on Apr 22, 2017 17:46:51 GMT
But they haven't. The access rate is now 2.9% which is the lowest it has ever been. All my investments were made when the access rate was higher than this but still I am charged when I withdraw. Also the rate on the account is lower to allow for such access. Other platforms have equivalent accounts and do not make similar charges (ie AC and RS). I don't understand. Your quote from earlier when someone asked if there was a fee to take money out of Access was: There isn't but there is an interest rate charge....that is its the difference between market rate and the rate you invested at (if the rate has gone up since you invested) over the term of the loans. So if you invest at 2% in 5y loans and the new market rate is 2.1% then you get charged 0.1% x 5 = 0.5% or something to that effect. You get no benefit if the rate has gone in your favour (so a money spinner for them) Yes so I have been charged 5.2% of my total invested. Lets assume all my loans are 5 year loans (and the average duration is likely to be less). Then rates will have had to have gone up by over 1% to get to that charge if they were interest only. Given they are amortising then rates would have to have gone up by over 2% That just isn't the case.
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ashe
Posts: 53
Likes: 36
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Post by ashe on Apr 22, 2017 18:06:24 GMT
The 'headline' rate is 2.9%, but the recent average for an Access loan is actually 3.6%, so on a particular day it could be a bit higher or a bit lower.
You haven't said what rate your money is actually lent out at, so it's hard to say just how excessive that charge looks. You said you lent it earlier this year, and the Access lending rate has been below 3% at some points this year.
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Post by blanik on Apr 25, 2017 7:05:05 GMT
This page help.zopa.com/customer/portal/articles/1097445 says - "So that other lenders can still buy those loans from you, an extra amount needs to be credited to them. This amount represents the extra interest they would expect to earn if they lent out the same amount of money in a similar loan, but at the current rate." But doesn't describe what the current rate is. however this page www.zopa.com/lending/access-your-money accessible from secure2.zopa.com/lender/account/select_product/standard?source=view_products "how do I get my money out" says - "if one of your micro loans is at a lower rate than the lowest rate on a similar loan today, you'll need to pay a small amount to the investor taking over your loan." This link describes how I believe that compensation worked before Access/Classic/Plus. If the range for "A" loans was say 2.0% to 5.0% then you would have loans in this range, if Zopa changed the range to say 2.1% to 5.1% but changed the mix of loans then the average could go down, but the lowest rate has gone up. So loans at 2.0% would now have to pay a penalty if sold. So not clear if the current compensation is calculated against the headline rate. -- No matter how compensation is calculated, if a partial sale is requested then the loans that require no compensation are sold first. If someone uses the "Access" account for repeated deposits and withdraw, then each partial sale will sell the 'no cost' loans, leaving the lower rate loans behind. This will result in a remaining portfolio with a lower overall interest rate, and a higher proportion of 'cost to sell' loans than a buy and hold portfolio. This will show up if the whole portfolio is ever sold. It is not an "Access" account despite the name.
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Post by portlandbill on Apr 25, 2017 10:19:26 GMT
I've queried this with Zopa and the reply was wordy but not much help. Things like "this is typically a small charge" doesn't help when there's no indication of what "small" means.
They also stated that "Any charges that will apply will always be clearly detailed to you on the quotation page of your account before confirming the loan sale request". I've been looking and cant find the "quotation page". Any ideas?
Edit: Oops, found it. Just trying it out now.
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Post by portlandbill on Apr 26, 2017 13:09:08 GMT
OK, i got a couple of quotes from the website.
I asked to sell all my loans in Zopa plus and was quoted just the 1% fee, no other charges. I've only been in Plus for about 4 months.
For selling all my loans in Classic, I was quoted 0.82% + the 1% fee. I've been in classic for just over 2 years.
So nothing like the 4.8% mentioned elsewhere, and not too off putting except that I do think that the possibility of a charge over and above the fee should be more prominent on the website.
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