criston
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Post by criston on May 6, 2019 8:45:49 GMT
Reading many experiences here I make the following assessment.
FC current projected rate for balanced portfolio 4.5% to 6.5%. Say 5.5% average.
Current projected bad debt 2.1% to 4.0%. Say 3.05% average
Bad debt recovery 45%.
Now here’s the rub. The bad debt figure above, is after recovery, so could be 5.5% (less 45% recovery) to give the 3.05% recovery figure. The recoveries could take up to 5 years.
So you start with say £100,000 portfolio at say 9.5%, less 1% fees, leaves 8.5%.
After a year you have £108,500 less £5500 bad debt = £103,000, but you will gradually get back £2500 recoveries over 5 years.
Now click on sell & you will find you can only sell a total of about 92.5% or £95000 because of late payments, bad debts & processing. This is the hidden bit I don’t like.
This is why I decided to move elsewhere. This of course makes your account look very bad as you sell out, but of course you need to take account of what you gain in interest with that money in another account.
You never really know with this type of model, how your account is really faring.
We have 4 accounts opened over the last 2 years or so showing between 4.5% & 7.7% (when rates were higher than now, starting at up to 11.3%) but will never know how they would have ended up, had we retained them in full. They will look horrendous when emptied & how much will be sitting there, undergoing the recovery process, is anyone’s guess.
This is not knocking Funding Circle, just the model.
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Post by Deleted on May 6, 2019 11:09:09 GMT
I've got a recovery that will take 126 years...
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corto
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Post by corto on May 6, 2019 13:10:32 GMT
Now here’s the rub. The bad debt figure above, is after recovery, so could be 5.5% (less 45% recovery) to give the 3.05% recovery figure. The recoveries could take up to 5 years. They have some graphs on their web pages that claim to show bad depth before recovery. www.fundingcircle.com/uk/statistics/Largely consistent with your estimate, though data 2016 onwards is non-conclusive and may well turn out worse.
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Stonk
Stonking
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Post by Stonk on May 6, 2019 15:11:01 GMT
I've got a recovery that will take 126 years...
I have a defaulted loan that is making recovery payments more slowly than interest used to accrue on it. I guess this means full recovery will take literally forever.
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Post by kcrane on May 7, 2019 16:56:57 GMT
Reading many experiences here I make the following assessment. FC current projected rate for balanced portfolio 4.5% to 6.5%. Say 5.5% average. Current projected bad debt 2.1% to 4.0%. Say 3.05% average Bad debt recovery 45%. Now here’s the rub. The bad debt figure above, is after recovery, so could be 5.5% (less 45% recovery) to give the 3.05% recovery figure. The recoveries could take up to 5 years. So you start with say £100,000 portfolio at say 9.5%, less 1% fees, leaves 8.5%. After a year you have £108,500 less £5500 bad debt = £103,000, but you will gradually get back £2500 recoveries over 5 years. Now click on sell & you will find you can only sell a total of about 92.5% or £95000 because of late payments, bad debts & processing. This is the hidden bit I don’t like. This is why I decided to move elsewhere. This of course makes your account look very bad as you sell out, but of course you need to take account of what you gain in interest with that money in another account. You never really know with this type of model, how your account is really faring. We have 4 accounts opened over the last 2 years or so showing between 4.5% & 7.7% (when rates were higher than now, starting at up to 11.3%) but will never know how they would have ended up, had we retained them in full. They will look horrendous when emptied & how much will be sitting there, undergoing the recovery process, is anyone’s guess. This is not knocking Funding Circle, just the model. Nicely put. I started writing a similar analysis and it turned into my recent "8 years with FC" post. What I didn't highlight, which you have done, is the sinking feeling I got as I started to unwind my FC accounts and discovered that what I thought was a poor return (enough to exit) was actual worse than I thought and that I would be tied into an FC account for many years. There was an emotional knock to finding out I am not the savvy investor I thought I was, amplified by a background niggle that perhaps FC management have had my trousers down.
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benaj
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Post by benaj on May 7, 2019 18:10:21 GMT
Reading many experiences here I make the following assessment. .... After a year you have £108,500 less £5500 bad debt = £103,000, but you will gradually get back £2500 recoveries over 5 years. Now click on sell & you will find you can only sell a total of about 92.5% or £95000 because of late payments, bad debts & processing. This is the hidden bit I don’t like. .... From the FC investor guide: " How much can I access early?Typically, you can get early access to approximately 85-95% of your funds. A loan can only be sold if it is active with no material credit issues, the business is still trading and not in the last month of its term. Often the remaining businesses will continue to make repayments, and their loans may become sellable again in the future." Sometimes, I can access more money if I sell the loans on a different date. Accessing 95%+ is possible if you have less arrears and defaults.
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criston
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Post by criston on Jun 3, 2019 21:50:40 GMT
When I started this thread about a month ago, I could not have guessed it could take up to a year to get all my money out.
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Post by Ace on Jun 3, 2019 23:03:55 GMT
When I started this thread about a month ago, I could not have guessed it could take up to a year to get all my money out. "Up to a year" sounds very optimistic to me. Unless there are significant changes, either platform or sentiment towards FC/P2P, I don't see any chance of breaking even within a year if starting to sell now.
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bigfoot12
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Post by bigfoot12 on Jun 3, 2019 23:25:55 GMT
...FC current projected rate for balanced portfolio 4.5% to 6.5%. Say 5.5% average. ...You never really know with this type of model, how your account is really faring. ...This is not knocking Funding Circle, just the model. I exited FC 1 year ago this month. They stopped providing the loan book as a download and I was worried that they were hiding something. There are other alternatives.
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Post by beepbeepimajeep on Jun 7, 2019 16:14:27 GMT
We have 4 accounts opened over the last 2 years or so showing between 4.5% & 7.7% When I look at my Funding Circle lifetime return 
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criston
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Post by criston on Jun 8, 2019 9:28:32 GMT
Our own are between 4.3% & 6.7% now, as we are gradually selling out.
The lower the 'on loan' figure gets, means less interest, means less to cover defaults.
When fully sold out (which appears impossible to do in less than 10 years) it could go to a minus percentage.
However, we must take account that the withdrawn money is earning elsewhere.
Edit. 10 years comprises of 4.6 years to clear the longest outstanding loan & a further 5 years for recovery of some of the defaults. This will only reduce if sell out times, (currently over 55 days) improve & processing loans are not dropped out of the 'for sale' loan parts.
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Post by Ace on Jun 8, 2019 9:41:32 GMT
Our own are between 4.3% & 6.7% now, as we are gradually selling out. The lower the 'on loan' figure gets, means less interest, means less to cover defaults. When fully sold out (which appears impossible to do in less than 10 years) it could go to a minus percentage. However, we must take account that the withdrawn money is earning elsewhere. If you calculate the XIRR it takes account of all you mentioned.
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Post by Deleted on Jun 10, 2019 17:37:51 GMT
When FC default a loan they use the phrase.
"We are defaulting this loan in order to protect your position by crystallising the liability of the guarantor."
Does anyone know what it actually means? FC can default after 17 days without contact from a non paying borrower but generally don't. Is my position as lender 'safer' after default? Is this just positive spin with no substance?
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Stonk
Stonking
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Post by Stonk on Jun 10, 2019 17:44:03 GMT
When FC default a loan they use the phrase. "We are defaulting this loan in order to protect your position by crystallising the liability of the guarantor." Does anyone know what it actually means? FC can default after 17 days without contact from a non paying borrower but generally don't. Is my position as lender 'safer' after default? Is this just positive spin with no substance? Flimsy Circumvolution.
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SteveT
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Post by SteveT on Jun 10, 2019 17:53:46 GMT
When FC default a loan they use the phrase. "We are defaulting this loan in order to protect your position by crystallising the liability of the guarantor." Does anyone know what it actually means? FC can default after 17 days without contact from a non paying borrower but generally don't. Is my position as lender 'safer' after default? Is this just positive spin with no substance? It means they’ve formally notified the loan’s guarantor (who may be someone other than the borrower themself) that the loan is legally defaulted and demanding they pay up. Of course, the guarantor is rarely in a position to do so.
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