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Post by jamesbond on Aug 13, 2014 14:06:27 GMT
I see some loan parts listed on the secondary market with up to 60% - 100% expected net return rate. This is the last column in the list. When I look at the loans though, I see that many of them have defaulted and their payments are rescheduled with significant late charges. The expected net return tooltip mentions that even if a payment is one day overdue, that has a negative effect on the net return calculation. This seems to suggest that being overdue is factored into the calculation by pushing the expected net return rate down. However, many of the defaulted loan with very high expected net return rate have a green light, which means they are not overdue. How can this be if they have defaulted? In addition, does the expected net return factor in the chance that the borrower may not be able to pay back the loan with the new repayment schedule? Overall, how realistic are these 60% net return figures quoted on Bondora? Should you trust them?
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Post by wiseclerk on Aug 13, 2014 15:02:55 GMT
The reason for this is how Bondora treats the rescheduled loans when they are put on the secondary market.
The buyer pays only the prinicpal (and of course the 1.5% fee) not the "secondary debt".
Therefore should the borrower repay the loan under the new schedule the shown expected return is calculated mathematically correct, I believe.
Once they are rescheduled, Bondora considers the status to be current.
The big question is whether the borrower is able to repay under the new schedule when he failed to to so properly under the old schedule?
I think I saw someone posting how many of his older rescheduled loans are paying, but I don't remember which thread he did post in.
No
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james
Posts: 2,205
Likes: 955
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Post by james on Aug 14, 2014 1:17:14 GMT
As wiseclerk explained, the reason for this is the secondary debts, like overdue charges. I have had one loan that defaulted, had bailiffs visit, made an arrangement, increased the arrangement amount to shorten the time then repaid the remaining amount earlier than the new arrangement. I sold about half of the amount I had lent on this loan when it was rescheduled. The buyer god a good deal that time.
When an arrangement is made the loan is set to on time.
The possible high profit on these loans could make them a good buy. But you must be willing to take the risk that the borrower will default again.
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