j
Member of DD Central
Penguins are very misunderstood!
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Post by j on Aug 22, 2014 14:27:59 GMT
As requested by one fellow member, here's a poll to gauge how much cash back would tempt investors to put money or add more to a current investment on an individual loan? We'll work on the assumption that a common base rate of 10% is already being paid on each loan. The poll is probably not comprehensive of all views so, feel free to add your opinion/thoughts as required. I've also added the poll on AC's board as the question was initiated here, but feel free to generalise to all p2p platforms if so wished EDIT:Main title should read 'How' not 'ho'  [elljay: fixed it  ] |
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mikes1531
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Post by mikes1531 on Aug 26, 2014 10:50:30 GMT
As requested by one fellow member, here's a poll to gauge how much cash back would tempt investors to put money or add more to a current investment on an individual loan? We'll work on the assumption that a common base rate of 10% is already being paid on each loan. Doesn't the answer depend an awful lot on the term of the loan? If it's a 6-month bridging loan then a 1% cashback would increase the return to 12% if the investor holds the loan to maturity. At the other extreme, if it's a 60-month loan it would take a 10% cashback to increase the return to 12% for the investor who holds the loan to maturity.
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j
Member of DD Central
Penguins are very misunderstood!
Posts: 2,188
Likes: 540
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Post by j on Aug 26, 2014 11:26:39 GMT
As requested by one fellow member, here's a poll to gauge how much cash back would tempt investors to put money or add more to a current investment on an individual loan? We'll work on the assumption that a common base rate of 10% is already being paid on each loan. Doesn't the answer depend an awful lot on the term of the loan? If it's a 6-month bridging loan then a 1% cashback would increase the return to 12% if the investor holds the loan to maturity. At the other extreme, if it's a 60-month loan it would take a 10% cashback to increase the return to 12% for the investor who holds the loan to maturity. As per original post:''The poll is probably not comprehensive of all views so, feel free to add your opinion/thoughts as required.''
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oldgrumpy
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Post by oldgrumpy on Aug 26, 2014 13:23:18 GMT
Not that I think it to be AC's style, but would platforms be tempted to adopt the supermarket strategy? Example: don't list a loan at 12%, list it at 9% and offer 2% cashback. (Yes, I know the totals are different  ) |
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Post by Ton ⓉⓞⓃ on Aug 26, 2014 14:32:30 GMT
Not that I think it to be AC's style, but would platforms be tempted to adopt the supermarket strategy? Example: don't list a loan at 12%, list it at 9% and offer 2% cashback. (Yes, I know the totals are different ) So we can get better interest rates or cashback but not both. AC must have taken note of the recent cashback on NWBL and York phones, the shorter term of the two seemed to get all attention as mikes1531 implies. To me cashback seemed to direct the flow of cash but not really increase it, as York Phones is a much smaller loan but stayed almost empty/low. Now it's catching up a little, recently the most common level of fill for a loan by lenders is 100k but at the moment York is still below this (70k) despite an extension of fours days(?), whereas NWBL is heading for 400k (383k).
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Post by jackpease on Aug 27, 2014 9:20:13 GMT
Interesting that it has only taken 0.5% cashback to unlock a feeding frenzy on the SS 008 bridging loan which is now overtaking the 005 bridging loan which has been stalled for weeks.
The SS 0.5% does not have a minimum size - i think Assetz missed a trick with its current stalled loan and needs either 0.5% with no minimum or 1% plus if it imposes a four figure minimum
Jack P
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Mike
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Post by Mike on Aug 27, 2014 9:50:44 GMT
I don't think cashback is the right way to go. It has a different value to different people (in its tax treatment), and makes the secondary market more complicated - as seen on FC.
If 0.5% is enough to get bigger lenders bidding then I think that's fine (it's small enough I don't care that I don't qualify) but surely there are other ways to promote a loan than selling loan parts with equal face value at different prices on day 0.
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mikes1531
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Post by mikes1531 on Aug 27, 2014 11:20:25 GMT
Not that I think it to be AC's style, but would platforms be tempted to adopt the supermarket strategy? Example: don't list a loan at 12%, list it at 9% and offer 2% cashback. If the objective is to confuse lenders, then cashback probably is a success. In the early days, AC offered a 5-year BtL loan at 6.5% p.a. plus 3.5% cashback. I can't help wondering how many lenders looked at that and thought it meant they'd be earning the equivalent of 10% p.a. The cashback might have been helpful in getting the loan funded in the first place, but it hasn't helped these units in the Aftermarket. Normally, units in a small loan disappear quickly when offered on the AM. Some weeks ago, a number of units in a very small (£54k) BtL loan appeared on the AM. Some of the units did get snapped up, but some are still available.
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mikes1531
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Post by mikes1531 on Aug 27, 2014 11:23:59 GMT
It has a different value to different people (in its tax treatment)... Isn't there a question about the tax treatment? Don't different P2P/P2B platforms treat cashback in different ways? Have AC indicated how they will be treating cashback when it comes to year-end reporting?
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Post by Ton ⓉⓞⓃ on Aug 27, 2014 11:40:48 GMT
It has a different value to different people (in its tax treatment)... Isn't there a question about the tax treatment? Don't different P2P/P2B platforms treat cashback in different ways? Have AC indicated how they will be treating cashback when it comes to year-end reporting? I've got a bag of old chest-nut somewhere There's a whole thread, I think, somewhere
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ramblin rose
Member of DD Central
“Some people grumble that roses have thorns; I am grateful that thorns have roses.” — Alphonse Karr
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Post by ramblin rose on Aug 27, 2014 15:00:22 GMT
Interesting that it has only taken 0.5% cashback to unlock a feeding frenzy on the SS 008 bridging loan which is now overtaking the 005 bridging loan which has been stalled for weeks. Not quite correct - the SS PBL 005 is underwriter money - the loan itself filled and went live a long time ago. Normal lender amounts get added in there and sold on a fairly regular basis too.
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[elljay: fixed it 
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