stevio
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Post by stevio on May 11, 2017 9:49:12 GMT
Why should smaller investors get a benefit over larger investors? Surely CO should be equally fair to all types of investors? By that token then, why isn't the cashback offer "equally fair to all types of investor"? Many platforms use underwriters to fill large loans, for which they typically earn higher returns but face lower liquidity if/when they want to sell later. My suggestion would be no different. A structure where someone with deep pockets can bank £4000 cashback by parking £100k in the loan, then immediately list much of it for sale without penalty and block the SM for every other small Collateral lender, has some pretty obvious flaws... CO run a business, not a charity. They need to encourage larger investors to survive, hence the tiered structure. FS do exactly the same. Particularly with loans this size, if the bigger investors didn't invest, these loans would be a non-starter for small investors as they would never fill. Large and small investors have equal opportunity to list on the SM. Its a feature of the SM, if there is over supply then things won't sell. Allowing one type of investor to jump the queue is flawed
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on May 11, 2017 11:57:16 GMT
Not entirely sure comparisons to FS hold true.
On FS big investors are locked in if they want to get the incentive @) because its interest not cashback b)becuase it is only paid at term for amounts held to term ... the bonus interest is therefore compensation for holiding to term. On Collateral, big investors can take the money and run, (on paper) no incentive to hold to term. On FS, there is therefore an advantage for small investors in increased liquidity and the ability to mitigate risk and tax by exiting early. The nature of the SM also makes this potentially easier with the avaliability of discounts to 'jump' the queue and individual listings which mean a queue is financial not time based. Plus interest is earnt while a part is up for sale. On Collateral, its one queue (is there a queue view, cant remember) and no interest is paid. This potentially acts as a disincentive for BH to leave but as they have already got a large payout, a short term loss while queueing has a smaller impact on overall return than for a small investor, and the incentive isnt taxable.
The more I consider this loan the more it looks like a liquidity trap, especially for small investors who arent getting the return in exchange for the risk of being stuck in until term. If the loan is underwritten, from drawdown you will see underwritten funds, big hitters all looking to exit, potentially swamping the SM and without any real source of funds coming in. Unless Collateral has an unseen pipeline of large loans with incentives I cant see any source for large amounts of new funds entering the platform to provide liquidity as BH arent going to bother with £50 here, £200 there.
So investors in this loan need to do there DD first and then rely on luck/rapid platform expansion if they dont wont to risk holding to term.
Personally Im sticking to the bling, motos and small property stuff, got enough potential illiquid property elsewhere.
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Investor
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Post by Investor on May 11, 2017 12:01:39 GMT
Classic complex version of the Game Theory of the Prisoner's Dilemma. COL have a loan (Chelsea) that filled very quickly for £595k and the current daily churn on that is quite minimal. Hence, with no other information, we can assume that money is there to at least this value and probably well above. Yet this loan has only received £380k of funding in a couple of days. Those who have access to MT will be able to see the aggregate totals of this loan that is being held there even with the threat of Imminent payment, showing that it is perceived as a high quality loan. I would agree with others that the issue around perceived future liquidity is what is holding this back, although I think if all the BH's (not sure of the dictionary definition of this but I would think I fall into this category) who are holding back on this could somehow align their knowledge of the sums available, this one would launch quite easily and SM liquidity would not actually be much of an issue. Ask yourself how much you would invest in this if it were currently at 90%? I know my answer Whilst everyone is waiting for someone else to make the first move, I think this might end up back with MT @ 12% without cashback where amusingly it will fill instantly. Before anyone points this out, yes I am part of the problem not part of the solution. As collateral seemed to listen to my last post and implemented a Cashback incentive, I would invite them to contact me via PM if they wish to discuss how a pledge system may also be required to get this launched.
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Post by GSV3MIaC on May 12, 2017 9:20:57 GMT
/mod hat off
This loan actually caused me to try to remember my CO login and come for a look, but I'm afraid 0.25% CB vs 4% for big flippers doesn't do it for me (look at property loans on FC to see why not). I also have to wonder, if MH are debating whether they can float a much smaller loan than this successfully, CO think they can do it. Maybe CO have more/bigger underwriters. If most of it is heading to BHs with 4% CB, then why not float the whole thing at 14% flat, which would still probably land them, and reduce the 'flip now for instant profit' motive.
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nd
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Post by nd on May 12, 2017 9:58:14 GMT
I'd already put in what I was comfortable with and the cashback incentive didn't make me want to up it, especially as I think the SM will be difficult on this one of it ever reaches 100%. The incentive doesn't seem to be drawing in the big hitters either.
At the moment I'm invested in this via MT and COL and watch with interest as to how it will resolve.
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star dust
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Post by star dust on May 12, 2017 11:36:27 GMT
I haven't been watching constantly by any means, but it's still only c.30% full and I've not seen any single investments over £20k. I think it’s a pity they didn’t consult with forum members on this first – they wouldn’t have needed to be specific about the loan. Whilst the horse has bolted on the initial cash-back framework deployed; I hope they are considering further strategies to get it filled, perhaps a cut-off date for the current cash-back offer, or the underwriter drip-feed trick used (at least in the past by Lendy (nee SS)) example here. Or possibly more prisoner dilemma’s, but it worked for them (Lendy (nee SS)) at the time, an extra time limited cash-back incentive for the last bit of a loan - link.
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greatmarko
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Post by greatmarko on May 12, 2017 11:48:08 GMT
...I hope they are considering further strategies to get it filled, perhaps a cut-off date for the current cash-back offer, or the underwriter drip-feed trick used.. ...or raising the rate from 12% to 13%?
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Steerpike
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Post by Steerpike on May 12, 2017 11:50:22 GMT
Very few Collateral investors will buy this loan on the secondary market because they will have their fill on the PM with cashback, so in practice flipping is unlikely to be a significant factor and a £100k investment will net 16% to 17% over the term of the loan, assuming of course that it doesn't overrun too much and returns 100% capital.
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oldgrumpy
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Post by oldgrumpy on May 12, 2017 11:51:11 GMT
I think it probable that plenty of so-called BHs are looking at this, but will be mobilized to act when a cut-off date is indicated so they don't miss out. In the meantime, gradual take-up is likely.
(Now, where's that shilling I found under the cupboard?)
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gt94sss2
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Post by gt94sss2 on May 12, 2017 11:56:12 GMT
Well someone just took 95K so its up to 37% but I agree with others, a higher interest rate would have been much more preferable to having tiered cashback levels and would have led me (at least) to invest more than I currently plan too..
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oldgrumpy
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Post by oldgrumpy on May 12, 2017 12:02:07 GMT
Very few Collateral investors will buy this loan on the secondary market because they will have their fill on the PM with cashback, so in practice flipping is unlikely to be a significant factor and a £100k investment will net 16% to 17% over the term of the loan, assuming of course that it doesn't overrun too much and returns 100% capital. Which equates to around 21% apr during the term, which is tasty to say the least. I expect big hitters are watching, and will be galvanised into action when they think the loan will fill or will have a date set to close the opportunity. I just hope COL can actually afford it. (Now, where's that half-crown I found under the cupboard yesterday?) Oh, that "Timeout - bad gateway" I got when doing my earlier post didn't actually stop it getting through. Now, what's the apr on a shilling growing to a half crown in about eleven minutes. Anyone would think OG has been lying!
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Post by dan1 on May 12, 2017 12:02:45 GMT
Well someone just took 95K so its up to 37% but I agree with others, a higher interest rate would have been much more preferable to having tiered cashback levels and would have led me (at least) to invest more than I currently plan too.. Which must mean that this BH originally staked just £5k. It'll fill quickly with a few more.
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guff
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Post by guff on May 12, 2017 12:39:15 GMT
I haven't been watching constantly by any means, but it's still only c.30% full and I've not seen any single investments over £20k. I think it’s a pity they didn’t consult with forum members on this first… Indeed, but there are a fair few chunks of £5k going through at the minute. I guess the lure of that extra 0.5% is proving to be irresistible.
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metoo
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Post by metoo on May 12, 2017 14:04:59 GMT
Presumably the interest rate is agreed with the borrower, whereas the cashback comes from Col?
Probably even BHs sometimes need time to mobilise 100k?
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Post by Deleted on May 12, 2017 15:14:00 GMT
I remember when MT would have been concerned about taking on this loan, and at least one which was pulled because it was just too big. COL have to work out if this is too big for them and if not withdraw. All part of the growing up game. Right now, as a lender, I'd rather the bling and cars roundabout kept going a bit longer as my interest will dwindle once the big property loans start flowing through the portal, but each to their own.
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