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Post by aroominyork on Jul 31, 2017 13:20:48 GMT
I am looking at P2P/Ratesetter for the first time. My understanding is that if I want to lend at a higher than market rate, I state that rate and, as and when the market rate increases, I am in the queue to lend at the higher rate. But rather than my money sitting idle while I wait for the rate to increase, is there anything to stop me lending at the current (lower) market rate and when the rate increases selling out my loan and re-lending at the higher rate? I realise I might be further back in the queue but there seem more upsides than down. Alternately, could I lend at the lower rate, put in a request also to lend at the higher rate (so long as I have double the cash available) and sell out the first when the market rate rises and the higher rate loan is activated?
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Post by p2plender on Jul 31, 2017 13:37:49 GMT
I think you're logic could yield pennies if that! Not sure it works as to liquidate means someone needs to fill your order.
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Post by aroominyork on Jul 31, 2017 13:43:47 GMT
Surely not pennies if I have a few £k at 2.5% when 3.5% is available? But I am new to this (only looked at it this weekend) so please educate me, eg if I buy rolling at say 3.5% is that rate guaranteed until I sell out, or might there be insufficient demand for loans resulting in my cash suddenly earning 0%?
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amphoria
Member of DD Central
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Post by amphoria on Jul 31, 2017 13:51:14 GMT
Surely not pennies if I have a few £k at 2.5% when 3.5% is available? But I am new to this (only looked at it this weekend) so please educate me, eg if I buy rolling at say 3.5% is that rate guaranteed until I sell out, or might there be insufficient demand for loans resulting in my cash suddenly earning 0%? You don't say what market you are asking about but given the rates quoted I will assume that it is the rolling market. In this case the maximum loan length (in normal market conditions) is 30 days. However you can be given a shorter loan length from the outset and the loans can be repaid early. After that you will need to submit again if you are using manual re-investments.
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Post by aroominyork on Jul 31, 2017 13:56:32 GMT
OK, lesson No 1. I thought 'rolling' meant my cash was not fixed term (it rolled along until I sold out), but what it really means is that I am rolling from one loan to another with the rates changing on each one - is that right?
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Post by p2plender on Jul 31, 2017 14:03:02 GMT
This won't work.
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Post by aroominyork on Jul 31, 2017 14:08:15 GMT
...as I'm starting to see, p2plender. I just called RS who explained loans are typically four weeks and then the cash rolls into a new loan at the current market rate, or goes back into my holding account. So perhaps what I should be asking is whether the best strategy is to let it roll and assume peaks and troughs in market rates will even out, or take it into the holding account on maturity and set a new target rate each month?
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ceejay
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Post by ceejay on Jul 31, 2017 14:08:33 GMT
OK, lesson No 1. I thought 'rolling' meant my cash was not fixed term (it rolled along until I sold out), but what it really means is that I am rolling from one loan to another with the rates changing on each one - is that right? Not quite. When you lend in the rolling market you are given an end date, usually one month but can be shorter. The name "rolling" is really only applicable if you have automatic reinvest turned on, in which case your money will roll from one loan to another. Back to your initial strategy - what I think you're missing is the extortionate fee you have to pay to get out of a loan early. It's ok if you're getting out of a 5yr loan after 3 yrs (say), but in the middle of any Rolling loan it will more than wipe out any interest you might have earned. General principle: if you think you've spotted a clever way to beat a market, you've probably missed something.
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Post by aroominyork on Jul 31, 2017 14:19:36 GMT
So back to my question: is the best strategy to let the cash re-invest automatically in new loans or to take a call after each loan about the rate to seek for the next one? Presumably part of the answer is, if I don't need the cash on call, to wait for a good rate on the one year market which presumably is fixed for the term?
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robski
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Post by robski on Jul 31, 2017 15:52:00 GMT
Either, set your on manual reinvestment rate (under instructions on left side) or return it to holding
Never EVER leave it set to auto-reinvest at market rate
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Post by stevepn on Jul 31, 2017 16:31:13 GMT
I agree with Robski Never EVER leave it set to auto-reinvest at market rate.
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spiral
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Post by spiral on Jul 31, 2017 16:42:40 GMT
Back to your initial strategy - what I think you're missing is the extortionate fee you have to pay to get out of a loan early. It's ok if you're getting out of a 5yr loan after 3 yrs (say), but in the middle of any Rolling loan it will more than wipe out any interest you might have earned. Not tried it myself but I thought the last time this happened, posters confirmed there were no fees of any kind in rolling so you could sell out your lower rate loans and buy back higher rate loans. The only issue I think was the sellout sometimes took several hours so there was no guarantee as to the market that you would be trying to buy back into.
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IFISAcava
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Post by IFISAcava on Jul 31, 2017 17:22:49 GMT
Back to your initial strategy - what I think you're missing is the extortionate fee you have to pay to get out of a loan early. It's ok if you're getting out of a 5yr loan after 3 yrs (say), but in the middle of any Rolling loan it will more than wipe out any interest you might have earned. Not tried it myself but I thought the last time this happened, posters confirmed there were no fees of any kind in rolling so you could sell out your lower rate loans and buy back higher rate loans. The only issue I think was the sellout sometimes took several hours so there was no guarantee as to the market that you would be trying to buy back into. Exactly - no fee to sell out rolling. However, you cant sell the same day so you have at least one day at the lower rate before selling and reinvesting.
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TheDriver
Member of DD Central
Slightly bonkers
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Post by TheDriver on Jul 31, 2017 19:36:18 GMT
If you are going to be active daily, follow robski 's advice and set a reasonable reinvestment rate - several points above the dumb-money's MarketRate - so that you will either get a good return or see the repayments in your holding account if rates are lower, so you can decide whether to reduce your target. To maximise the return set to Holding, but unless you're going to be very active that risks more dormant money, especially for unexpected early repayments. HtH |
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Post by newlender on Jul 31, 2017 19:45:50 GMT
I can second that! I had £1.5K returned today from a £2K loan and only noticed it by chance as I usually look at my account once a week and didn't spot the email among all the other rubbish. I stuck £1K in the 1yr. product and got a good rate. Of course 'the rate to lend at now' was a joke.
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