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Post by wiseclerk on Sept 17, 2014 7:28:58 GMT
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james
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Post by james on Sept 17, 2014 9:59:17 GMT
A variation in discount does not surprise me because I mainly do not price based on discount. I price based on expected return for the buyer and competing offers in the market at the time I offer a price. Because the effect of possible future payments changes over time the discount or premium used also changes over time for the loans that I am selling.
For me, the interest received by the buyer isn't a windfall. It is included in the price I decide to offer when selling. I do things like make notes to remind me to change the price at a certain time when I expect the return for the buyer to change due to accrued interest.
For me as a buyer the secondary market is extremely inefficient to use. It has country and credit-related filters but not the filters beyond those that I use to decide whether a loan will interest me, particularly not the expected return. This makes it very time-consuming to look through loans to find those that might be interesting.
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Post by wiseclerk on Sept 17, 2014 15:02:37 GMT
I price based on expected return for the buyer and competing offers in the market at the time I offer a price. I often do that too. My point is, that as a seller with this method you may miss out on even higher markups that are still probable to sell based on data (but which you do not have at your fingertip as guidance in the website interface). And pricing based on competing offers is very time consuming, because this way you can not sell dozens of loans at at time but instead of too look up the market for each one (or do you automate that?). For me as a buyer the secondary market is extremely inefficient to use. It has country and credit-related filters but not the filters beyond those that I use to decide whether a loan will interest me, particularly not the expected return. This makes it very time-consuming to look through loans to find those that might be interesting. Yes, it is.
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james
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Post by james on Sept 17, 2014 16:47:48 GMT
And pricing based on competing offers is very time consuming, because this way you can not sell dozens of loans at at time but instead of too look up the market for each one (or do you automate that?). I do not try to sell more than one loan in one sell operation. The 1.5% formula I use is sometimes not the same as the result of the Bondora calculation and I want to know if there is a one cent difference. The extra work is not great because I also track the history of the price offers that I make and some loan properties and notes. I always open the resale market and my own loan list for each borrower when I am considering what price to ask for a loan. Same when buying loans but there I also open my sold loan list to help to protect myself against buying a loan from a borrower I do not want to lend to. I use browser script to open these windows.
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vycka
New Member
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Post by vycka on Sept 19, 2014 8:54:53 GMT
Sorry for a stupid question, but how exactly does Bondora calculate "Expected return" on Secondary market? For example this loan:  How did they exactly came up with 13.11% ? |
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Post by wiseclerk on Sept 19, 2014 9:19:48 GMT
Did you see the mouseover tooltip (the 'i')?
Anyway:
The buyer would pay the principal (here 18.07€) plus markup (here 0%) plus the transaction fee
Bondora calculates in expected return
- interest rate (here 28%)
- remaining term
- transaction fee (1.5%)
- markup/discount
Bondora disregards for expected return
- overdue principal (here 1.65€)
- overdue interest (here 0.93€)
- overdue late charges (here 0.13€)
- any secondary debt (here 0)
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vycka
New Member
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Post by vycka on Sept 19, 2014 11:04:29 GMT
Hey, thanks for you response. Yes I did see it but it still is a bit unclear to me (I'm a total newbie here) So if we take this loan as example (it does not have any overdue payments):  Purchase price+markup+fee=9.14+1.5%=9.28E Outstanding payments: 9.41E Total profit from this loan: 9.41-9.28=0.13; Which is only 0.13/9.41*100=1.4% . Or am I doing wrong calculations? |
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Post by wiseclerk on Sept 19, 2014 13:41:33 GMT
You can't calculate it that way
a) expected return is per year; on this loan there is less than 3 months left until you get the last repayment (see loan schedule)
b) more important you have to look on the cashflow to correctly calculate returns as each month part of the principal and interest is paid back
Both factors are not Bondora specfic but are fundamental to how p2p loans on most platforms work
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Post by josc66 on Oct 13, 2014 12:38:03 GMT
Hi all,
I think the question "Is there one "right" discount/markup to buy/sell on resale? " is incredibly intriguing. However, I feel it has not been answered in the posts. Since I am rather new to Bondora but already have overdue loans I would like a rule of thumb to sell by.
Why do you think the investors are offering such a wide variety of discounts?
Do you consider buying many due loans on the secondary market to rapidly get money invested a good alternative to broad investment profiles?
When loans go 60 days+ overdue and get resolved is it mostly with a haircut of reduced rate/extended term or do many go into bankruptcy?
Thanks for sharing your experience. J
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JamesFrance
Member of DD Central
Port Grimaud 1974
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Post by JamesFrance on Oct 13, 2014 14:13:09 GMT
This is an entirely personal view and I am sure others will disagree.
When I first joined the site over 12 months ago most current loans were offered at the maximum premium of 5%. I decided to buy many recent A1000 loans to use up my funds quickly, as you could reach break even after 2 or 3 months of repayments. The default rate of those has been about 7% so far. Since then there have been several changes to the auto bidding system and also freedom to set large premiums and discounts for resale.
Now I am unable to value most of the loans offered for resale at hugely varied premiums and discounts, so have decided to avoid the secondary market completely.
The difficulty I have is how to decide if a loan is likely to be repaid. The expected returns they show are only possible if all repayments and interest are actually received, otherwise the investment is lost.
Historical data shows a good recovery rate for defaulted loans but only after 2 or three years. The unknown is whether that will continue, especially as they expand into different parts of the EU. I have defaults from 12 months ago but no meaningful recovery as yet.
I decided not to try to sell overdue loans but to hang on hoping for a successful outcome, although I am getting nervous as the proportion of defaulted loans seems to be increasing considerably in recent months.
Beware the rescheduled loans showing as current on the secondary market when they have previously defaulted, you need to examine any loan which appears to be a bargain very carefully before you hit the purchase button.
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Post by josc66 on Oct 13, 2014 14:37:09 GMT
Hi James,
thanks for your thoughts.
Your point about it being very hard to evaluate if a investment will go bad strikes home. This seems to be the case all over this bondora experience. The investment profiles I have are also not very specific and I think some of the loans that I get as e.g. FI 1000 are much better than others.
Equally it sometimes seems to make very little sense why one loan is 29% another 31% both being the same income and borrower history groups.
Is there any data about how likely say an FI 1000 loan is to go bust at the outset when its first financed vs. after it has missed its first payment, its 2nd payment...in partial payment?
The rescheduled loans look really fascinating in the length of debt notification/bailiff correspondence...
Where do some of the people here get these huge data pools from? I cannot find an export to excel for anything but my own loans.
thanks again for sharing experiences. j
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JamesFrance
Member of DD Central
Port Grimaud 1974
Posts: 1,323
Likes: 897
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Post by JamesFrance on Oct 13, 2014 15:19:31 GMT
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Post by bengilbert on Oct 14, 2014 12:08:07 GMT
Beware the rescheduled loans showing as current on the secondary market when they have previously defaulted, you need to examine any loan which appears to be a bargain very carefully before you hit the purchase button. I've seen that they now have a filter ('Has new loan schedule') which makes it possible to filter out rescheduled loans.
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Post by analitikas on Oct 15, 2014 18:50:08 GMT
From my own trading experience, I have noticed that current Estonian loans are usually being bought at 5-10% premium, and only rarely at more than 15% premium. When the discount/premium limits were lifted, I managed to sell quite a few loans at 40% premium, but not more...
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shimself
Member of DD Central
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Post by shimself on Mar 7, 2015 20:00:56 GMT
I've been wanting to reprice some loans I have on the SM.
Has anyone found a reasonably efficient way of doing this, according to the instructions I have either to type in the number of each loan, one by one, or go through the entire SM spotting my loans because there is a tiny X in the RH column, which I can press to remove from sale (and then sell again)
This is something like a day's work maybe more. Anyone got any suggestions please?
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