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Sell out
May 24, 2017 12:00:12 GMT
via mobile
Post by perfectmes on May 24, 2017 12:00:12 GMT
Hoping someone on here can help.
I've been looking to sell my 3 year contracts out as I can't be bothered with RateSetter anymore with such low rates.
My 3 contracts consist of £40 odd pence at 5.8% and expire between march and April next year.
So there's less than 1 year left and as you can see they can easily be funded at half the interest I am receiving (crazy people but that's up to them).
I've been quoted a fee of £2.77. That's about 7% of my remaining capital which I just can't get my head around and my email has been replied to explaining it's because of the 2 years interest I've received? Does this make sense? That interest was paid by the borrower and I've received it they can now give this loan to someone and only pay them 3% interest and pocket the difference. I could understand if rates were now 8%, but then I wouldn't be selling just reinvesting the repayments.
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Post by gidoppp01 on May 24, 2017 14:10:12 GMT
For £40 sake, don't pay RateSetter extra fees for selling out. Just leave money in holding account and withdraw whenever available.
I am sure you can figure out how to make the best of your money. Just check out the forum.
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Sell out
May 24, 2017 14:30:34 GMT
via mobile
Post by perfectmes on May 24, 2017 14:30:34 GMT
Thanks that's what I'm doing and it was fine when I had rolling money coming in because I could withdraw everyday but now it's just a few under the £10 I was trying to get It back in one go.
Just wondered if anyone could explain the fee.
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Post by gidoppp01 on May 24, 2017 15:02:06 GMT
It's just a sell out fee to get whatever amount available to be sold. The sell out option does not guarantee to sell out all the loans on a 5 year market.  In your case £2.7 fee is not worth it, unless you find a 5000-1 winner like Leicester winning the premiership in 2016. |
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r00lish67
Member of DD Central
Posts: 2,691 
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Post by r00lish67 on May 24, 2017 15:16:12 GMT
It's just a sell out fee to get whatever amount available to be sold. The sell out option does not guarantee to sell out all the loans on a 5 year market. In your case £2.7 fee is not worth it, unless you find a 5000-1 winner like Leicester winning the premiership in 2016. Easy, just bet on Man Utd to beat Ajax 8-6 tonight with their goalie to score first!
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david42
Member of DD Central
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Post by david42 on May 25, 2017 9:24:58 GMT
I've been quoted a fee of £2.77. That's about 7% of my remaining capital which I just can't get my head around and my email has been replied to explaining it's because of the 2 years interest I've received? Does this make sense? The early access terms are specified here. There is a worked example here. In your case Ratesetter retrospectively works out what your £40 would have earned if you had put it on shorter term markets for the previous two years, and charges you the difference between that amount of interest and the interest you actually received. This approach makes it particularly expensive to exit near the end of the contract term, which you are trying to do. The Ratesetter sellout terms do not give you any benefit for the fact that the contracts could easily be funded at half the interest you are receiving. But you would have to pay the difference if the current funding costs were higher than the rates on your contracts. As I understand it, Ratesetter sellout terms are deliberately mean to discourage opportunistic trading and short term investors. So don't expect to apply a fairness test to the terms.
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Post by GSV3MIaC on May 25, 2017 17:54:07 GMT
The badness of the early exit deal has been discussed extensively .. folks really ought understand how you can get out (if at all) before getting in. Not just RS, but in general.
The 'fee free sellout' when RS changed the T&Cs a couple of months go was the ideal opportunity to duck the excessive costs, but it's too late now ... 8>.
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Sell out
May 25, 2017 20:15:25 GMT
via mobile
Post by perfectmess on May 25, 2017 20:15:25 GMT
Yes I know there was a fee free sell out I decided against it as I wanted the account open and didn't want to lose the 5 years rates I have.
It seems a strange way to work fees out but its down to £2.30 today so hopefully by summer it will have gone down more.
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Post by gidoppp01 on May 25, 2017 20:30:24 GMT
Yes I know there was a fee free sell out I decided against it as I wanted the account open and didn't want to lose the 5 years rates I have. It seems a strange way to work fees out but its down to £2.30 today so hopefully by summer it will have gone down more. I have about £230 in RateSetter 5 year income. The max I can sell out is about £130 for a fee of £9. If I sell out £17, it will cost me £0.06, equivalent to 0.35%,
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am
Posts: 1,495
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Post by am on May 28, 2017 9:28:20 GMT
Yes I know there was a fee free sell out I decided against it as I wanted the account open and didn't want to lose the 5 years rates I have. It seems a strange way to work fees out but its down to £2.30 today so hopefully by summer it will have gone down more. I have about £230 in RateSetter 5 year income. The max I can sell out is about £130 for a fee of £9. If I sell out £17, it will cost me £0.06, equivalent to 0.35%, RateSetter handle early withdrawals on a last in first out basis. This minimises (most of the time - 11 vs 13 month old contracts might be an exception) the cost of sellouts. It is also means that the average sellout costs as advertised on the website don't represent what happens if you've been in for a while and need to access all your money. Sellout is also cheaper when interest rates have fallen; anyone investing now who finds that they need to sell out in 3 years time is at risk of being hammered. The sellout terms are defensible, but I don't approve of RateSetter's characterisation of sellout as low cost. PS: I've just checked out sellout quotes for my holdings - 8.5% for 3 year, and 5.3% for 5 year (the 5 year has some younger contracts, while the 3 year contracts are all around 2 years old).
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