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Post by bikeman on Jun 19, 2017 12:23:00 GMT
Sorry if this is a bit obvious but I notice that loan repayment schedules are interest only. I guess this suits AC in that at the end of the term the borrow is likely to refinance but as a lender I am concerned that towards the end of the term it gets very much harder for me sell on the loan and the potential for default rises rapidly if they can't refinance.
Am I alone on thinking that business loan repayments should include the principal? Are all p2p lenders lending on these terms?
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Post by yorkshireman on Jun 19, 2017 12:29:27 GMT
Sorry if this is a bit obvious but I notice that loan repayment schedules are interest only. I guess this suits AC in that at the end of the term the borrow is likely to refinance but as a lender I am concerned that towards the end of the term it gets very much harder for me sell on the loan and the potential for default rises rapidly if they can't refinance. Am I alone on thinking that business loan repayments should include the principal? Are all p2p lenders lending on these terms? Not all AC loans are interest only, you will find that a number of loans drawn down this year include principal repayments.
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ilmoro
Member of DD Central
'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 Jun 19, 2017 12:58:56 GMT
Varies platform by platform. Some only do amortising, some only interest only, some a mixture of amortising, interest only, retained interest, interest at term. AC does all of them and loans that start on interest only and then become amortising after a certain time.
On AC the potential for default is constant over the term of the loan (unlike some other platforms) as can be seem by looking at the suspended loans. Despite this I dont find it difficult to sell loans close to term or even loans that have had a monitoring event, as there seems to be sufficient demand on the platform to generate sufficient churn to enable an exit (the automated accounts assist this)
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Post by lynnanthony on Jun 19, 2017 19:00:46 GMT
One thing I look at on every loan is exit strategy. (As in, is there one?). A development loan has a natural exit: sell the property, pay off the loan. Or if the property is to be retained after development for letting, refinance (elsewhere?) at a lower rate makes sense. But on some business loans that are not fully amortising the stated "exit by refinance" is too vague for me and I'm out. It sometimes can seem to be just kicking the tin can down the road a bit. (Loan 196 198 for instance).
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Post by preacherman100 on Jun 22, 2017 19:17:11 GMT
So where does it say on each loan if it is monthly interest repaid only or a bit of capital and interest paid each month (amortised)?
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
Posts: 10,840
Likes: 11,068
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Post by ilmoro on Jun 22, 2017 20:00:58 GMT
So where does it say on each loan if it is monthly interest repaid only or a bit of capital and interest paid each month (amortised)? In the credit report or if its already launched look at the repayments tab ... if it mentions principle every month then its amortising
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Post by df on Jun 22, 2017 22:33:22 GMT
One thing I look at on every loan is exit strategy. (As in, is there one?). A development loan has a natural exit: sell the property, pay off the loan. Or if the property is to be retained after development for letting, refinance (elsewhere?) at a lower rate makes sense. But on some business loans that are not fully amortising the stated "exit by refinance" is too vague for me and I'm out. It sometimes can seem to be just kicking the tin can down the road a bit. (Loan 196 198 for instance). 198 is interest only loan, not partially amortising. It is secured by first legal charge over property, the same as development loans. Unfortunately, development loans don't always have "natural exit". Selling properties can be a very long process.
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