sydb
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Post by sydb on Oct 3, 2019 14:12:46 GMT
You only have access to 5yr if you are already invested in 5yr. You only have access to 1yr if you are already invested in 1yr. If you don't have access, you won't see them.
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sydb
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Post by sydb on Oct 3, 2019 14:17:45 GMT
Is it just me, or is it unfair that the release fee is dependent on the Going Rate at the time of release? At the time when you commit to invest, you will not know the cost of releasing.
It's a double-whammy if you bought in during a period of low rates and then rates in the economy increase in general. You are stuck in underperforming loans, but the cost to exit them has shot up comapared to your original expectation.
The exit 'fee' (penalty) may be interpreted how you want but it is common for it to be linked to the interest rate. It means that it will always have significance. Imagine hyper inflation and the interest rate rockets. An entry fee under such conditions would be worthless and certainly not dissuade anybody from releasing, which is the whole point of the fee from RS's perspective. You might consider it unfair if rates went down to 1% but your exit fee relates to when it was 5%. It's all part of the product. It is what it is. There is no aspect of fairness.
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Stonk
Stonking
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Post by Stonk on Oct 3, 2019 14:35:14 GMT
Is it just me, or is it unfair that the release fee is dependent on the Going Rate at the time of release? At the time when you commit to invest, you will not know the cost of releasing.
It's a double-whammy if you bought in during a period of low rates and then rates in the economy increase in general. You are stuck in underperforming loans, but the cost to exit them has shot up comapared to your original expectation.
The 'fee' (penalty) may be interpreted how you want but it is commonly 'inflation' adjusted i.e. linked to the interest rate. Imagine hyper inflation and the interest rate rockets. An entry fee under such conditions would be worthless and certainly not dissuade anybody from releasing, which is the whole point of the fee from RS's perspective. You might consider it unfair if rates went down to 1% but your exit fee relates to when it was 5%. It's all part of the product. It is what it is. There is no aspect of fairness.
"Fair" enough! I'll just have to accept that if I invest then I will not know the cost of getting my money back until the day I want it back. And, as such, I will not invest, because that's not the kind of contract I enter into.
In my experience, exit fees are charged for early exit from a fixed-term fixed-rate product. That is fine, because the interest rate is fixed at the outset, so I know what the cost will be. With RS, though, I might enter into a contract when the Going Rate is 5%, judging that I will be happy to pay 90 days' worth of interest when I wish to exit, but then I find later that the GR has increased to 10% and I have to pay 180 day's worth of (my rate of) interest. I kind of feel at the mercy of RS, since they are choosing the GR.
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sydb
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Post by sydb on Oct 3, 2019 14:41:41 GMT
The 'fee' (penalty) may be interpreted how you want but it is commonly 'inflation' adjusted i.e. linked to the interest rate. Imagine hyper inflation and the interest rate rockets. An entry fee under such conditions would be worthless and certainly not dissuade anybody from releasing, which is the whole point of the fee from RS's perspective. You might consider it unfair if rates went down to 1% but your exit fee relates to when it was 5%. It's all part of the product. It is what it is. There is no aspect of fairness. "Fair" enough! I'll just have to accept that if I invest then I will not know the cost of getting my money back until the day I want it back. And, as such, I will not invest, because that's not the kind of contract I enter into. Sounds very sensible. Everyone has to assess the level of risk along with their personal circumstances. However, it could be worse; unless rates shift dramatically and suddenly, it's always related to how well your investment has done up to that date. But, yes, it is another aspect of the risk. Personally, unless you are an insider or have a way of staying ahead of the crowd, I now consider P2P a mug's game. I've seen what happens when defaults occur or the platform fails, and it is in no way reassuring. Utterly.
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benaj
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Post by benaj on Oct 3, 2019 15:38:41 GMT
Whatever the product, i see the same risk on RS. Most loans share the same pool of loans, with no guarantee getting all the money quickly. It was the same on where Z offered Access for lower return but there was a time investors waited a long time getting money out on the Access product.
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sl75
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Post by sl75 on Oct 3, 2019 15:51:09 GMT
You only have access to 5yr if you are already invested in 5yr. You only have access to 1yr if you are already invested in 1yr. If you don't have access, you won't see them. Not just that, but even if you have bookmarked (or otherwise know) the URL for pages pertaining to these markets, the site will actively deny they exist.
e.g. for me:
I'm pretty sure the "missing page" would have been the 1 year market... I don't think I've ever had a single loan matched there.
One other annoyance - the system obliges me to keep "Access", "Plus" and "Max" re-investment settings within the same market - I can't for example ask to re-invest my returned "Access" money in "Plus" or "Max" (where it's rather more likely that my selected re-investment rate will be matched).
I can understand they wouldn't want to transfer existing investments across (giving a "free" 1% or 2% extra in exchange for poorer access on the existing portfolio), but not clear on the rationale for making it harder to re-invest repayments in the new products...
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sl75
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Post by sl75 on Oct 3, 2019 15:55:20 GMT
"Fair" enough! I'll just have to accept that if I invest then I will not know the cost of getting my money back until the day I want it back. And, as such, I will not invest, because that's not the kind of contract I enter into.
In my experience, exit fees are charged for early exit from a fixed-term fixed-rate product. That is fine, because the interest rate is fixed at the outset, so I know what the cost will be. With RS, though, I might enter into a contract when the Going Rate is 5%, judging that I will be happy to pay 90 days' worth of interest when I wish to exit, but then I find later that the GR has increased to 10% and I have to pay 180 day's worth of (my rate of) interest. I kind of feel at the mercy of RS, since they are choosing the GR.
If they change the going rate, they give notice of this.
You can then respond by adjusting your investment settings, or by paying the "old" exit fee before the rate goes up.
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Post by Deleted on Oct 3, 2019 16:39:43 GMT
The other contentious point here is, will you still be charged tax on the interest you have received and are now 'paying' to RateSetter for the exit fee?
If so, it isn't really a 90-day notice account. For a top-rate taxpayer, it is much worse than that.
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Post by jono75 on Oct 3, 2019 17:02:38 GMT
The other contentious point here is, will you still be charged tax on the interest you have received and are now 'paying' to RateSetter for the exit fee? If so, it isn't really a 90-day notice account. For a top-rate taxpayer, it is much worse than that. That's a good question, I hope that is clarified. From my own point of view, I'm not sold on the new products mainly because RS are controlling the variable fee and that could be detrimental. I'd prefer if it was the same rate as the loan when withdrawing. I know it can go either way but I don't think I'll be using them as they stand.
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Post by propman on Oct 3, 2019 17:10:59 GMT
The other contentious point here is, will you still be charged tax on the interest you have received and are now 'paying' to RateSetter for the exit fee? If so, it isn't really a 90-day notice account. For a top-rate taxpayer, it is much worse than that. That's a good question, I hope that is clarified. From my own point of view, I'm not sold on the new products mainly because RS are controlling the variable fee and that could be detrimental. I'd prefer if it was the same rate as the loan when withdrawing. I know it can go either way but I don't think I'll be using them as they stand. This is no 90 day notice account, it is a 90 day penalty for early access or wait until repayment, that is in addition to any tax impact.
As for them controlling the rate, it is not arbitrary but linked to a key variable that they will wish to keep as low as possible (or lose lending and so fees).
On the upside, they are nolonger pushing "lend it now", but "going rate", so they have removed the push for ever lower rates albeit at the cost of lower basic rate.
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Post by Deleted on Oct 3, 2019 17:22:59 GMT
Yes, I should not have used the term 'notice account', I was just being lazy.
So to be clearer, *IF* the penalty is not tax-deductible, then for a top-rate taxpayer, the exit fee for 'Max' is closer to 180 days of *NET* interest, not 90 days.
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johni
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Post by johni on Oct 3, 2019 17:24:05 GMT
Ratesetter new information for investors needs to be clear that if you lend your money in plus or max you are immediately charged to lend in this product. You don't know how much but if you withdraw in the first 3 months you will not get your capital back. I have never known a company charge lenders to use your money. This is to make Ratesetter rich at your expense.
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Stonk
Stonking
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Post by Stonk on Oct 3, 2019 18:13:41 GMT
I don't know if this is a silly question:
Considering the Max product. If you set your reinvestment options to be as unlikely as possible (choose "Your rate" and set 10%), which bit of your monthly repayments will you be able to extract fee-free? The full repayment? Or just the interest?
If it works like the "old" Rolling (and it looks like it will, because Access is just Rolling renamed, and Plus and Max are just the same thing with 1% bonuses on top), then isn't it the case that the capital part of the repayment will be forcibly re-invested and you can only extract the interest? If so, then your invested capital will never decrease, and the oft-cited idea of exiting fee-free by waiting for the loans to repay is not going to work.
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jlend
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Post by jlend on Oct 3, 2019 18:46:23 GMT
I don't know if this is a silly question:
Considering the Max product. If you set your reinvestment options to be as unlikely as possible (choose "Your rate" and set 10%), which bit of your monthly repayments will you be able to extract fee-free? The full repayment? Or just the interest?
If it works like the "old" Rolling (and it looks like it will, because Access is just Rolling renamed, and Plus and Max are just the same thing with 1% bonuses on top), then isn't it the case that the capital part of the repayment will be forcibly re-invested and you can only extract the interest? If so, then your invested capital will never decrease, and the oft-cited idea of exiting fee-free by waiting for the loans to repay is not going to work.
You can set your rate at a maximum of 5% above the Going Rates on the new products You can cancel any unmatched orders fee free at any time on the new and old products.
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Stonk
Stonking
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Post by Stonk on Oct 3, 2019 19:41:44 GMT
I don't know if this is a silly question:
Considering the Max product. If you set your reinvestment options to be as unlikely as possible (choose "Your rate" and set 10%), which bit of your monthly repayments will you be able to extract fee-free? The full repayment? Or just the interest?
If it works like the "old" Rolling (and it looks like it will, because Access is just Rolling renamed, and Plus and Max are just the same thing with 1% bonuses on top), then isn't it the case that the capital part of the repayment will be forcibly re-invested and you can only extract the interest? If so, then your invested capital will never decrease, and the oft-cited idea of exiting fee-free by waiting for the loans to repay is not going to work.
You can set your rate at a maximum of 5% above the Going Rates on the new products You can cancel any unmatched orders fee free at any time on the new and old products.
I may be out of date with how the Rolling market worked at the end. I barely used it for the last 18 months, and it underwent several major changes.
To clarify, suppose I have a loan on Max for £1,000 and it makes a standard monthly repayment of £50 consisting of £20 capital and £30 interest. I will still have the same loan to the same borrower, now with £980 outstanding. On Old Rolling, you could extract the £30 interest component, but wasn't it the case that the £20 capital was also forcibly reinvested somehow? I see mention of un-cancellable orders -- or did RS backtrack on that? Essentially, what I'm asking is, in this scenario, if I've set "reinvest at my rate of 10%", what loans and orders will I end up with?
Another thing. On Old Rolling, each month the loan was re-lent to the same borrower by means of a hacky mess of transactions and a brand new contract number. I wonder whether the 3 new products will behave like that? Has anyone seen a Plus or Max repayment schedule yet? Does it show a single full repayment in a month's time, or a full schedule of monthly payments? The tester loan I bought on Access today has a single full repayment in a month's time, so it's going to behave like the Old Rolling mess.
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