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Post by Deleted on Aug 22, 2014 16:22:04 GMT
Would you be a mug to buy a micro loan at a seller's premium of 3, 4 or 5%? Why should people get paid a premium to offload their loan parts? You buy micro loans and pay the seller a premium for relieving them of their debt and you've lost money before you've even started? Or am I missing something here? I know sellers are charged a 0.5% fee for selling so I'd not be suprised to see a 0.5% fee - and if the nex monthly interest payment is due shortly perhaps 1 or 2% but there are loads of micro loans up for sale with 5% premiums on them. I bought one before I really understood how it worked but I won't be buying anymore with premiums above 2.5%. Whats your policy on paying seller premiums?
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ianb
Posts: 161
Likes: 54
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Post by ianb on Aug 22, 2014 16:52:36 GMT
When I started with ReBS I made a .xls which took in the premium, rate, remaining payments and factored the risk to determine the profitability of different micro-loans. I wanted to kick-start my portfolio and so bought 3 which looked the best bet. Sadly, 1 repaid early within 2 months of purchase which made me have a big sulk as I lost on it. Since then, I've found the normal flow of loans coming in is sufficient for my goals, so I haven't bothered with the secondary market. To me, it depends on what you're objectives are for investing and how quick you want to get money in. The premiums will take a month or two to pay off before you are making, but they can be profitable. Just the way it is ! Some other p2p's allow premiums to be charged, like FC, and some don't, like AC. To me I prefer the take the platform gets from this as opposed to creaming off from the monthly repayments. It would be a bit worrying though if you wanted to exit the platform, and how quickly you could liquidate the loans you have.
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Post by Deleted on Aug 25, 2014 11:55:43 GMT
Thanks for the replies and information. Interesting and helpful.
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