nrw
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Post by nrw on Jun 19, 2017 20:35:40 GMT
Car loans represent 28% of my current loan book in Z+, but 67% of my defaults (across a reasonably diversified £six_figure portfolio). Am I an outlier or others seeing similar?
Are these car loans looking dodgy (I seem to recall that the press has been concerned about the consumer debt being racked up by car loans - but think that relates more to balloon payments and low residual values than it does to straightforward Zopa personal loans for cars)?
I've just dropped more cash into Z+ on the assumption that queues are likely to build as the new ISA gets its rocks on.
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Greenwood2
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Post by Greenwood2 on Jun 20, 2017 5:26:12 GMT
I'm pretty sure there is no check on what the money is actually used for. It could be that borrowers with some financial problems just use car loan because it's a common reason to borrow (and sounds better than pay off my gambling debts  ). |
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stevio
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Post by stevio on Jun 20, 2017 5:54:17 GMT
Maybe worth discussing on the general board as car loans not just restricted to Z
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metoo
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Post by metoo on Jun 20, 2017 20:47:02 GMT
Given that car loans are a specific offering, (why) do they not register a charge over each car as security?
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metoo
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Post by metoo on Jun 20, 2017 20:48:04 GMT
Maybe worth discussing on the general board as car loans not just restricted to Z Do any other platforms offer personal car loans, as opposed to credit facilities for dealerships?
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stevio
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Post by stevio on Jun 20, 2017 21:56:43 GMT
Given that car loans are a specific offering, (why) do they not register a charge over each car as security? I think they do, when I worked for a bank, thats what we did anyway, P2P might be different The amount was based on the value of the car, typically requiring a deposit You can also take a non secured personal loan too, but it based on multiples of income I thought cars as assets in general (dealership and individual) may be worth discussing CO and FS have also done car loans, although CO say they only lend to businesses
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Greenwood2
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Post by Greenwood2 on Jun 21, 2017 6:41:21 GMT
Given that car loans are a specific offering, (why) do they not register a charge over each car as security? If we're talking Zopa, I don't think they are a specific offering it's just what the borrower says they are using the loan for.
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Post by davee39 on Jun 21, 2017 8:36:26 GMT
A Zopa+ 'car loan' is much the same as any other loan in Zopa+ and not linked to the potential bubble/crash of personal contract hire.
Zopa have been trialing a separate secured car loan product (hire purchase), but I understand this is for commercial funding channels, not retail p2p.
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nrw
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Post by nrw on Jun 21, 2017 12:31:32 GMT
Given that car loans are a specific offering, (why) do they not register a charge over each car as security? Presumably this would dramatically increase the complexity, requiring an uneconomic inspection and valuation of each car - which can only practically be avoided by distributing the loans through dealer channels where the value of the asset is assured.
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metoo
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Post by metoo on Jun 21, 2017 12:57:36 GMT
Given that car loans are a specific offering, (why) do they not register a charge over each car as security? Presumably this would dramatically increase the complexity, requiring an uneconomic inspection and valuation of each car - which can only practically be avoided by distributing the loans through dealer channels where the value of the asset is assured. Yes, Zopa would would have weighed up the cost of a charge on every car loan vs the reduction in default losses. Lending has to be cost effective and easy to sell, but Zopa have always been keen on borrower quality. Have you compared Zopa's borrower-risk ratings for your standard loans vs the car loans?
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aju
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Post by aju on Jun 21, 2017 16:25:29 GMT
Presumably this would dramatically increase the complexity, requiring an uneconomic inspection and valuation of each car - which can only practically be avoided by distributing the loans through dealer channels where the value of the asset is assured. Yes, Zopa would would have weighed up the cost of a charge on every car loan vs the reduction in default losses. Lending has to be cost effective and easy to sell, but Zopa have always been keen on borrower quality. Have you compared Zopa's borrower-risk ratings for your standard loans vs the car loans? I'm not sure zopa do it this way anyway - it seems they may be using all singing all dancing methods that are very complicated see p2pindependentforum.com/thread/9177/zopa-assesses-credit-riskif you understand it then feel free to explain it to lesser mortal such as myself. ;-) God forbid this is not a similar avenue as the crash CDS methods. (Credit default swaps I think they were called) no one understood those until it was too late ;-)
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metoo
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Post by metoo on Jun 21, 2017 17:32:43 GMT
I'm not heavily into Zopa, but if you go to 'Loan book' in the menu bar, there are pie charts showing your risk distribution according to the Zopa 'markets'. At the bottom of the page is a button for 'Download entire loan book (CSV)'. If you open that, all your loans are there, and 'Market' is column D, showing the market (equivalent to a risk band) for every loan you have lent. If you can work a spreadsheet then you could analyse your defaults there.
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Post by GSV3MIaC on Jun 21, 2017 20:28:10 GMT
But since, afaik, you can't actually affect it much (i.e. say 'I don't want to make any loans against motor car purchases') there's not a lot of mileage to be had from (us) spending time and effort analysing it .. one hopes that the platform(s) might be doing that (or something a lot more detailed). On platforms where I do have some control, I do look at the data occasionally, and deduce that lawyers are a very bad bet. 8>.
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metoo
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Post by metoo on Jun 21, 2017 21:42:35 GMT
The question of interest was whether the car loans are turning out riskier than the others in the same Zopa market, given that specific car loans are a newer area for Zopa (?), or whether the car loans are consistent with their 'market'/risk band. nrw may have some insight? |
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nrw
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Post by nrw on Jun 22, 2017 7:40:01 GMT
The question of interest was whether the car loans are turning out riskier than the others in the same Zopa market, given that specific car loans are a newer area for Zopa (?), or whether the car loans are consistent with their 'market'/risk band. nrw may have some insight? Well the data looks worse when analysed in this way, as car loans are rated low risk generally. 'Loan purpose' = 'Car' is spread across all markets, but skewed to lower risk markets (all 'Loan purposes' in brackets): A* 34% (20%) A1 13% ( 10%)A2 18% (14%) B 11% (11%) C1 7% (12%) D 13% (21%) E 5% (12%) So my 'Car' loans skew towards lower risk loans than my other loans, yet my 'Car' loans are defaulting far more than the rest of my loan book. Of the 'A' markets (comprising A*, A1, A2) 41% of my loan book is 'Car', but 100% of my defaults are 'Car'.
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