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Post by bikeman on Mar 20, 2017 12:15:38 GMT
Just wanted to share a recent experience with Ratesetter.
I grabbed a 1 year rate of 3.5% with Ratesetter only to have the loan paid off within 5 days! I was under the impression that funds were spread across loans but apparently not.
Thankfully I had it set to reinvest in the rolling market because had it been reinvested in the 1 year the rate would have been let at a lower 2.9%.
Ratesetter ignored my emails so I telephoned them but sadly the woman in cust svces basically said tough these things happen.
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Post by jackpease on Mar 20, 2017 12:27:56 GMT
Unfortunately this is par for the course and can be especially annoying (and probably more common) if you manage to grab some good rates during a spike.
It is a 'feature' of ratesetter rather than an error which is why you may be encountering indifference
Jack P
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adrianc
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Post by adrianc on Mar 20, 2017 13:31:27 GMT
I grabbed a 1 year rate of 3.5% with Ratesetter only to have the loan paid off within 5 days! I was under the impression that funds were spread across loans but apparently not. If you put a single batch of money up, it may all go to one loan. If you put several smaller consecutive batches up at the same rate, they are likely to be aggregated to one loan. Borrowers are "at the front of the queue", just the same as lenders are. If there's a £10k borrower request gets matched at 3.5% on the 1yr market, then the first £10k from the lender queue goes off into a corner with that £10k borrower request, and the paperwork gets done. The next few lender requests might all be £200, to cover a withdrawal. If you happen to have a £5k offer at the front of the queue, then your money is lent more widely. And that's why you don't tick the "reinvest at market rate" box... Yup. That's the way it works.
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ashtondav
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Post by ashtondav on Mar 20, 2017 15:49:52 GMT
What does the APR work out at on a 5 day loan, I wonder?
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adrianc
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Post by adrianc on Mar 20, 2017 17:12:51 GMT
What does the APR work out at on a 5 day loan, I wonder? Same as if it went the full year...
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pikestaff
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Post by pikestaff on Mar 20, 2017 17:23:17 GMT
What does the APR work out at on a 5 day loan, I wonder? Same as if it went the full year... This is true for lenders but is is true for borrowers? Do they pay any upfront fees?
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adrianc
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Post by adrianc on Mar 20, 2017 17:25:30 GMT
Same as if it went the full year... This is true for lenders but is is true for borrowers? Do they pay any upfront fees? Well, it won't have been a 5 day loan for the borrower...
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pikestaff
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Post by pikestaff on Mar 20, 2017 17:28:37 GMT
This is true for lenders but is is true for borrowers? Do they pay any upfront fees? Well, it won't have been a 5 day loan for the borrower... If you are suggesting it was probably a second-hand loan I would agree. Or do you have in mind something more underhand?
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adrianc
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Post by adrianc on Mar 20, 2017 17:34:28 GMT
Well, it won't have been a 5 day loan for the borrower... If you are suggesting it was probably a second-hand loan I would agree. Or do you have in mind something more underhand? No, exactly that. RS don't write 1yr loans.
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Post by WestonKevTMP on Mar 20, 2017 18:50:35 GMT
If you are suggesting it was probably a second-hand loan I would agree. Or do you have in mind something more underhand? No, exactly that. RS don't write 1yr loans. Yes they do, property development loans.
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Post by WestonKevTMP on Mar 20, 2017 18:54:47 GMT
This is true for lenders but is is true for borrowers? Do they pay any upfront fees? Well, it won't have been a 5 day loan for the borrower... It would have been 5 days in the end, but wouldn't have been planned to be so short at the start. It would have been paid pack early in cooling period (commonish, especially if rates are high) or cancelled for whatever reason (rare). Despite what some conspiracy crazies might think, your money never gets swapped with cheaper money within a live existing loan. Kevin.
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pikestaff
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Post by pikestaff on Mar 21, 2017 9:38:41 GMT
...It would have been paid pack early in cooling period (commonish, especially if rates are high) ... Thanks, I'd forgotten about that possibility. Seems like the most probable answer.
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Post by Deleted on Mar 21, 2017 16:27:29 GMT
So there's no way to ensure diversification on Ratesetter loans?
If I put £10k in and want to split it into 100 x £100 loans, do I really have to place 100 orders and spread them out to make sure they don't get aggregated?
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Post by GSV3MIaC on Mar 21, 2017 18:44:30 GMT
Yes. Although if you spread them across different markets you can place 3 at once.
The idea is/was that the PF covers losses (or if it can't all lenders are going to be aggregated anyway), so the fact you have all your eggs in one basket is not an issue .. but whoever designed that didn't allow for the early repayment scenario.
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adrianc
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Post by adrianc on Mar 21, 2017 19:27:12 GMT
So there's no way to ensure diversification on Ratesetter loans? If I put £10k in and want to split it into 100 x £100 loans, do I really have to place 100 orders and spread them out to make sure they don't get aggregated? 'course, it'll get naturally diversified over time anyway, as repayments get reinvested. (5yr market assumed, of course - the rolling isn't long enough to worry about, and the extra return for the 1yr isn't worth worrying about, imho)
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