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Post by aroominyork on Jul 9, 2019 8:35:08 GMT
I have investments with Ratesetter, rolling and one year, and with Assetz, 30 day notice. Am I right in thinking that if there was an economic downturn, a rise in interest rates or the mood turned against investing in p2p, my one year Ratesetter is the best option for confidence I can access my funds (albeit when the year ends)? I think this because the rolling and 30 day markets are dependent on someone else wanting to buy my loans at the rate I took them out, whereas the one year market automatically releases my funds (assuming there are no defaults not covered by a provision fund).
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Post by Deleted on Jul 9, 2019 8:43:27 GMT
Yes, but the 5 year and (most of) Rolling pay back an element each month.
For me at least, my Rolling loans have a shorter term than my 5 year loans.
If the average loan term is 30 months, the effective term is shorter as you'll get some money back in month 1, 2, 3, etc.
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Post by aroominyork on Jul 9, 2019 9:07:03 GMT
Yes, I see that - some loans have shorter lengths to maturity and some repay early. But putting that aside, fixed terms loans - rather than rolling or 30 day - take out the risk of waiting for someone else to pick them up, yes? I want to mitigate that risk because I am slowly and painfully extracting myself from Funding Circle and while I think other platforms are better run than FC, it provides an insight into what can happen if you need to sell your loans to other people.
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Post by Deleted on Jul 9, 2019 9:12:09 GMT
Yes, absolutely. All I was adding was that the whole of your money isn't tied up for the whole term in Rolling and 5 year.
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mary
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Post by mary on Jul 9, 2019 10:59:02 GMT
I have investments with Ratesetter, rolling and one year, and with Assetz, 30 day notice. Am I right in thinking that if there was an economic downturn, a rise in interest rates or the mood turned against investing in p2p, my one year Ratesetter is the best option for confidence I can access my funds (albeit when the year ends)? I think this because the rolling and 30 day markets are dependent on someone else wanting to buy my loans at the rate I took them out, whereas the one year market automatically releases my funds (assuming there are no defaults not covered by a provision fund). In a downturn all bets are off. Currently you can get 100% of your RS investments back into your bank account in a day or two using the sell out feature. And worst case you may have to wait for the loans to mature. I’ve been trying to withdraw 100% of my investment in Assetz GBBA2 for nearly 5 months. I got back 80% inside 2 weeks, 90% within the month, but still have ~5% stuck awaiting sale in loans that still have 40+ months to run and no one wanting to buy. Less than 1% is in non-performing loans. Do not be fooled by the title of the “account”. If there’s no cash to pay you, you are stuck until there is a counter-party to buy your loans, or they mature.
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Post by aroominyork on Jul 9, 2019 11:17:57 GMT
mary, are you saying that in a downturn RS would say that although the fixed one year was up, they cannot release my funds because there are no new lenders to take them over?
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Stonk
Stonking
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Post by Stonk on Jul 9, 2019 11:30:12 GMT
mary, are you saying that in a downturn RS would say that although the fixed one year was up, they cannot release my funds because there are no new lenders to take them over?
On the 1 Year market, loans are for at most 1 year and are matched to an actual borrower who will pay back at the end of the term, or if they fail to then the Provision Fund will do so on their behalf.
As such, after 1 year has passed, you have the cash back in your holding account and can withdraw it. There is no longer a loan (as far as you are concerned), so it does not depend on any other lenders to take it over. The only thing that can go wrong and prevent you from having your money back after 1 year is if the Provision Fund fails to cover defaults.
All in all, I would say your initial post was spot on.
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Post by propman on Jul 9, 2019 12:10:37 GMT
Even if the PF has insufficient funds, AIUI RS would top it up by providing a haircut to interest (and, if necessary, capital) to make up the shortfall. So you should only be at risk for the amount deducted from all market investors. In practice I am not sure whether there would be a delay while the necessary deduction is determined and i do not see how they could perform as required if they need more than the interest received, but they expected that the shortfall on the PF was less than the interest expected to receive on their entire loanbook (where they stated that they would not take a portion of capital).
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Post by aroominyork on Jul 10, 2019 15:11:55 GMT
So I exchanged emails with Ratesetter who said in the 1 year market you are only matched to contracts for 12 months or less. Contract that are 12 months exactly will be brand new borrower loans, whereas anything less than 12 months in the 1 year market will be previously sold out of loans. They will point out to management that this is not in their Ts & Cs.
In the meantime, they said their email will stand as a guarantee that I will not be matched to a loan for more than 12 months in the 1 year market and I can expect to receive both the capital and interest repayment, if not repaid early, at the end of the 365 day term. That’s not perfect, but is good enough for me.
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benaj
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Post by benaj on Jul 10, 2019 18:53:25 GMT
To be honest, nobody knows. Assuming if you have turned off reinvestment, the PF will buyout first and you have your capital back from Ratesetter.
Average loan term on RS is less than 27 months.. So better to go with RS
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ceejay
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Post by ceejay on Jul 10, 2019 19:58:12 GMT
So I exchanged emails with Ratesetter who said in the 1 year market you are only matched to contracts for 12 months or less. Contract that are 12 months exactly will be brand new borrower loans, whereas anything less than 12 months in the 1 year market will be previously sold out of loans. They will point out to management that this is not in their Ts & Cs. In the meantime, they said their email will stand as a guarantee that I will not be matched to a loan for more than 12 months in the 1 year market and I can expect to receive both the capital and interest repayment, if not repaid early, at the end of the 365 day term. That’s not perfect, but is good enough for me. If that's true then there has been a change. I asked that question a year or so (?) ago and was explicitly told that a 1 year market investment could be matched to a longer term loan, and that repayment at the end of the 12 months would be subject to normal liquidity (i.e., what it says in the Ts and Cs). I'd be cautious about believing what one CS rep says in an email - my experience with P2P customer service operatives generally is that they tend to be, shall we say, happy to wing it when they don't know the answer.
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Post by aroominyork on Jul 11, 2019 8:22:55 GMT
Thanks ceejay, I'll ask for a manager to endorse the email.
It raises a question of whether you can rely on an undertaking given by someone who did not have the authority to give it? Perhaps the answer is a 'reasonableness' test - was it reasonable for the customer to believe the CS rep had the authority to give the undertaking which s/he gave.
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mary
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Post by mary on Jul 11, 2019 8:40:11 GMT
Thanks ceejay, I'll ask for a manager to endorse the email. It raises a question of whether you can rely on an undertaking given by someone who did not have the authority to give it? Perhaps the answer is a 'reasonableness' test - was it reasonable for the customer to believe the CS rep had the authority to give the undertaking which s/he gave. I’ve had many, many 1 year contracts, and 95% have been set up for exactly 1 year, a few for shorter and Zero for longer than 1 year. 100% have paid back on time, or early. It is not possible to see if any were bailed out by the PF, but as I got my Capital and Interest I’m not too concerned.
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Post by df on Jul 11, 2019 17:54:17 GMT
I have investments with Ratesetter, rolling and one year, and with Assetz, 30 day notice. Am I right in thinking that if there was an economic downturn, a rise in interest rates or the mood turned against investing in p2p, my one year Ratesetter is the best option for confidence I can access my funds (albeit when the year ends)? I think this because the rolling and 30 day markets are dependent on someone else wanting to buy my loans at the rate I took them out, whereas the one year market automatically releases my funds (assuming there are no defaults not covered by a provision fund). Any secondary market depends on demand and supply, but in case of RS and AC's access accounts withdrawal from loans has never been a problem. On RS you can withdraw at any time from any of three markets, the only difference is a fee that you pay if withdrawing from 1-year and 5-years. I'm not entirely sure of technicalities, but I don't think RS' secondary market is a direct trading between investors. Although your formal loan agreement is with borrower, it is RS who lends and buys the funds you withdraw. I might be wrong, but this is my current understanding of how it works.
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ceejay
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Post by ceejay on Jul 12, 2019 9:05:30 GMT
I’ve had many, many 1 year contracts, and 95% have been set up for exactly 1 year, a few for shorter and Zero for longer than 1 year. ... That tells you precisely nothing. All it means is that YOUR "loan" with RS has been set up to end in exactly a year. When the borrower's loan ends is an entirely different question.
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