rscal
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Post by rscal on Jun 26, 2019 13:25:31 GMT
It is inept of Ratesetter to have no process for allowing investors to exit 'cleanly' due to the prevelance of sub £10 loan (part)s. Would this addressable with a secondary market for other investors? Perhaps the volume just isn't there - and the impact of the PF would need to be considered.
Thus I suggest a secondary market whereby an investor's sub £10 loan total can be listed and other investors could bid for these at some discount. In return the loans would be removed from the PF in some way. The seller pays the discount and there is nothnig to prevent resale.
A much simpler option is for RS to buy the loan parts itself at discount (say a further 1-2%)
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Post by propman on Jun 26, 2019 16:57:31 GMT
It is inept of Ratesetter to have no process for allowing investors to exit 'cleanly' due to the prevelance of sub £10 loan (part)s. Would this addressable with a secondary market for other investors? Perhaps the volume just isn't there - and the impact of the PF would need to be considered.
Thus I suggest a secondary market whereby an investor's sub £10 loan total can be listed and other investors could bid for these at some discount. In return the loans would be removed from the PF in some way. The seller pays the discount and there is nothnig to prevent resale.
A much simpler option is for RS to buy the loan parts itself at discount (say a further 1-2%)
RS may want this to discourage lending in small parts and the extra admin this produces. If you lend £100+ these are unlikely to be prevalent and they contest that diversification comes through PF NOT multiple contracts.
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st182
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Post by st182 on Jun 26, 2019 17:18:40 GMT
Interesting idea.
Whilst on the subject, if you do end up with a sub £10 on rolling like I have, what can I actually do with it?
I'm sure I've had them before but they disappeared before the amount of months was up? I'm not sure if they repaid early or got swallowed up being put back onto the market somehow. I'll be the first to admit, I don't fully understand the rolling market, which is why I tend to avoid it.
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aju
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Post by aju on Jun 27, 2019 8:34:06 GMT
The <£10 is also making it annoying when one wants to move money from ED to ISA as well. I wondered if I could move £10 from ISA to ED and then back to make it work but I couldn't see a way to do that either.
Edit: should have checked it may be possible as it seems to work in ISA back to ED now. I was sure it didn;t work the other day but I guess I was on a muddled day!.
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star dust
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Post by star dust on Jun 27, 2019 8:51:52 GMT
If you are talking about moving cash between accounts or withdrawing, I don't see why there should be an issue whatever the amount, although I don't have an ISA to try. However, trying to sell or buy a sub £10 loan part is the impossibility. It seems RS do it, I got allocated several sub £10 loan parts in Rolling recently one was for 80 pence with an underlying 12 months term which will yield zero interest. I'm hoping it'll repay early  |
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rscal
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Post by rscal on Jun 27, 2019 10:22:17 GMT
If you are talking about moving cash between accounts or withdrawing, I don't see why there should be an issue whatever the amount, although I don't have an ISA to try. However, trying to sell or buy a sub £10 loan part is the impossibility. It seems RS do it, I got allocated several sub £10 loan parts in Rolling recently one was for 80 pence with an underlying 12 months term which will yield zero interest. I'm hoping it'll repay early Jeepers, what IS going on in there now? (I exited the Rolling Market before the latest 'rolling average' scheme came along.) It does seem that RS struggles with each and every change it introduces and so these irks accumulate. Zero pence interest indeed! That's an easy fix: all interest payments could be rounded up to nearest penny - that way, £10 loans would be 'all the rage!' [Wouldn't cost much either!]
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benaj
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Post by benaj on Jun 27, 2019 10:31:42 GMT
I have a few sub £10 5 year market loan parts @ 6%+. One loan part has outstanding capital of £1.72, with 5 repayments remaining. Next 4 months interest repayment is 1p per month.
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Post by imperial on Jun 27, 2019 13:08:13 GMT
If you are talking about moving cash between accounts or withdrawing, I don't see why there should be an issue whatever the amount, although I don't have an ISA to try. However, trying to sell or buy a sub £10 loan part is the impossibility. It seems RS do it, I got allocated several sub £10 loan parts in Rolling recently one was for 80 pence with an underlying 12 months term which will yield zero interest. I'm hoping it'll repay early Jeepers, what IS going on in there now? (I exited the Rolling Market before the latest 'rolling average' scheme came along.) It does seem that RS struggles with each and every change it introduces and so these irks accumulate. Zero pence interest indeed! That's an easy fix: all interest payments could be rounded up to nearest penny - that way, £10 loans would be 'all the rage!' [Wouldn't cost much either!] Although they can restrict ORDERS to be £10 or more, the issue is that when funds are matched from lenders to borrowers in strict order and assuming that more than one lender is needed to fill the borrower's loan then you cannot guarantee that the final match for a borrower won't be less than £10 without having to subvert the queue order or some other from of adjustment. Theoretically this can result in a match of just 1p. It is a lot more likely than might be imagined, mainly due to the reinvestment of repayments which are typically for smaller, non-whole pound amounts.
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Post by propman on Jun 27, 2019 13:27:48 GMT
If you are talking about moving cash between accounts or withdrawing, I don't see why there should be an issue whatever the amount, although I don't have an ISA to try. However, trying to sell or buy a sub £10 loan part is the impossibility. It seems RS do it, I got allocated several sub £10 loan parts in Rolling recently one was for 80 pence with an underlying 12 months term which will yield zero interest. I'm hoping it'll repay early Jeepers, what IS going on in there now? (I exited the Rolling Market before the latest 'rolling average' scheme came along.) It does seem that RS struggles with each and every change it introduces and so these irks accumulate. Zero pence interest indeed! That's an easy fix: all interest payments could be rounded up to nearest penny - that way, £10 loans would be 'all the rage!' [Wouldn't cost much either!] that has always been the case. They used to round up and I took advantage by working out likely impact and for small amounts could increase APR significantly, they then lowered this so no longer possible. 2 Solution adopted elsewhere
1) a track is kept of the fractions that should have been allocated and 1p given when interest due plus cumulative unallocated total is rounded rather than that payment in isolation (fair to lenders on contract by contract basis) or
2) calculated to >2dp, total rounded and charged to borrower then this is allocated to the lenders with some method to allocate odd pennies depending on previous allocations (fairest to borrowers)
The trouble is that other solutions are win/lose between lenders and borrowers or could detract from RS's share (or conceivably PF).
- PM
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aju
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Post by aju on Jun 27, 2019 13:33:15 GMT
Jeepers, what IS going on in there now? (I exited the Rolling Market before the latest 'rolling average' scheme came along.) It does seem that RS struggles with each and every change it introduces and so these irks accumulate. Zero pence interest indeed! That's an easy fix: all interest payments could be rounded up to nearest penny - that way, £10 loans would be 'all the rage!' [Wouldn't cost much either!] that has always been the case. They used to round up and I took advantage by working out likely impact and for small amounts could increase APR significantly, they then lowered this so no longer possible. 2 Solution adopted elsewhere
1) a track is kept of the fractions that should have been allocated and 1p given when interest due plus cumulative unallocated total is rounded rather than that payment in isolation (fair to lenders on contract by contract basis) or
2) calculated to >2dp, total rounded and charged to borrower then this is allocated to the lenders with some method to allocate odd pennies depending on previous allocations (fairest to borrowers)
The trouble is that other solutions are win/lose between lenders and borrowers or could detract from RS's share (or conceivably PF).
- PM
They do similar in Zopa, its more obvious there as they have the statement pairs capital and interest and in some cases the interest is zero. Zopa explained that each month they keep a rolling tally of who got money last month then forgoes whilst the whole book is evened out. Sometimes when the values get so looooow one can go 2/3 months or more without interest payment then next month they will get one and the cycle repeats until the loan ends. Its very noticable on my lending in Zopa as I increase the lending diversification by forcing £10 loans rather than lending at £100 loans. with the lack of a PF, statistically it means the default rate is nearer the centre of the notified rates. Mind you does mean very large statements data especially for over 10 years worth of low level loans, nearly have a million records in investment files.
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sl75
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Post by sl75 on Jun 28, 2019 9:11:41 GMT
Although they can restrict ORDERS to be £10 or more, the issue is that when funds are matched from lenders to borrowers in strict order and assuming that more than one lender is needed to fill the borrower's loan then you cannot guarantee that the final match for a borrower won't be less than £10 without having to subvert the queue order or some other from of adjustment. Theoretically this can result in a match of just 1p. It is a lot more likely than might be imagined, mainly due to the reinvestment of repayments which are typically for smaller, non-whole pound amounts. Receiving such sub-£10 loans becomes a lot more likely when someone is using the sell-out...
In particular, when I switched my re-investment money from 5 year to rolling during last weekend's rate spike (I'd probably have added fresh funds too if I'd seen how high that spike went!), a single order for less than £120 got matched against 6 different loans, 2 of which were less than £10, due to the previous lender's loans being sliced into multiple pieces.
One of them is for £0.46, and claims to be due to pay £0.00 in interest. Hopefully it'll decide to give me a penny for at least one of the next 27 months...
As I understand it the main "problem" with sub-£10 parts is that interest with £0.01 granularity won't necessarily be able to ensure the specified rate to an adequate precision. One way to fix it could be to introduce a "small loan part selling fee" of £0.01 per loan part. This would be credited to the buyer by adding a penny to the next scheduled interest payment, thereby guaranteeing that the buyer receives at least the rate they were expecting if they hold to term. The selling function would then have an option to include small loan parts in the sale on payment of this extra fee.
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sd2
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Post by sd2 on Jun 28, 2019 9:41:20 GMT
I have or had £500 of £10 or less loans out of £4500 investment in the 5 year market. Some will be due to me actually putting a few £10 on market at various interest rates so I know when the market has picked up. Some do say zero interest on the very small amounts. So who is getting the interest? I see no reason why you can't get parts of penny adding them up you would soon be getting lots of pennys. It's important to remember pennies make pounds, pounds buy beer. My £10 or less seem to be paid of quickly any way.
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Post by propman on Jun 28, 2019 9:48:22 GMT
I have or had £500 of £10 or less loans out of £4500 investment in the 5 year market. Some will be due to me actually putting a few £10 on market at various interest rates so I know when the market has picked up. Some do say zero interest on the very small amounts. So who is getting the interest? I see no reason why you can't get parts of penny adding them up you would soon be getting lots of pennys. It's important to remember pennies make pounds, pounds buy beer. My £10 or less seem to be paid of quickly any way. In alot of cases RS agree the rate with the borrower before sourcing the funds, so the answer is that RS take the difference. I have had 5 year loans that never paid a penny of interest. When they rounded up this was compensated by an AER above requested rate for some small loan parts, but I think these are rounded down now so lender always loses.
- PM
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sd2
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Post by sd2 on Jun 28, 2019 9:52:45 GMT
PS just checked no loans in the 5 year with zero interest due anymore. Lowest (7.86) has 61p due. Adding them up the 4 lowest sub £10 loans will buy me a pint in my local. I will have to wait 18 months though.
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sd2
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Post by sd2 on Jun 28, 2019 10:00:13 GMT
PS just checked no loans in the 5 year with zero interest due anymore. Lowest (7.86) has 61p due. Adding them up the 4 lowest sub £10 loans will buy me a pint in my local. I will have to wait 18 months though. What's the rate for the £7.86 loan part? I would imagine interest repayment showing on the repayment schedule is > 0p per month for the rest of 17 months at least. 17/01/2019 18 £7. 86 6.4% 22/07/2019 £0. 61 Am I reading it wrong? Interest 61p?
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