Post by bgreenwood2000 on Sept 27, 2019 8:59:52 GMT
I’ve been on GS 6 weeks now but have several different loans because I added money in stages. I’ve noticed that a few of my loans have made interim interest payments during the course of the month, sometimes the amount accrued so far, sometimes less.
i’m puzzled as to why they are doing this as it won’t actually save them any money to pay it before the contract date? Whereas if they paid off some of the capital as well, obviously they would save some interest.
It means I have small sums of money accumulating in my holding account, but below the threshold to reinvest.
GS lender and borrower contracts are not aligned date wise. Lender contracts are always 30 days in the classic account; borrower contracts are effectively much longer, on a rolling credit facility.
So the interest payments that you receive will usually be the borrower's regular monthly payments, actually taken by direct debit from the borrower's business account on the agreed date.
Also the borrower is free to make any capital repayments at any time, so you may also see larger capital repayments before the end of your 30 day contact, possibly for the whole loan
The small interest payments aren't really a problem, especially if you have multiple loans, as they will be combined with the next repayment of any type and relent. They have a very very small effect the overall return.
Early capital repayments can have a detrimental effect when the relending time is high as it means your funds can suffer from more cash drag. I've had whole loans repay after a single day. This isn't a problem at present for me as my funds are currently being relent on the same day.
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