benaj
Member of DD Central
Posts: 4,857 
Likes: 1,591
|
Post by benaj on Jan 23, 2020 18:23:15 GMT
|
|
|
|
Post by jono75 on Jan 23, 2020 18:46:12 GMT
I'm a new investor of just over a month 100% in growth at 5.4%.
After reading this and other posts I decided to see what my fee with for withdrawal is.
There an £11.78 shortfall fee on £1787.70 plus the .5% making it £20.71.
I can't sell them all as I have loans already in arrears that were like that when they assigned them to begin with.
So, as the rate is still 5.4% how can there possibly be shortfall?
|
|
|
|
Post by Ace on Jan 23, 2020 19:07:17 GMT
Could it be that the £11.78 fee was paid to you when you bought the loans?
I know that the system used to work this way, I.e. That when I bought (was assigned) lower rate loans I was paid a bonus to make the lower rate up to the current rate. If I later sold those loans I would have paid the new lender a portion of that bonus to compensate them for picking up a lower rate loan; but only a portion as they would have the lower rate loan for a shorter term.
I have no idea how the new system works, so this could well be wide of the mark.
|
|
|
|
Post by befuddled on Jan 24, 2020 0:05:51 GMT
I'm a new investor of just over a month 100% in growth at 5.4%. After reading this and other posts I decided to see what my fee with for withdrawal is. There an £11.78 shortfall fee on £1787.70 plus the .5% making it £20.71. I can't sell them all as I have loans already in arrears that were like that when they assigned them to begin with. So, as the rate is still 5.4% how can there possibly be shortfall? My understanding is because right now you are not in fact earning 5.4%, you are earning somewhat less, maybe 5.2%, so if you sell now you have to compensate whoever takes on the loan by the missing .2%. Over the 5 year course of your investment, at some stage you will be earning maybe 5.6%, so at 5 years you will have earned the stated 5.4% as the average LW are using this .2% to prop up the Shield as they have misjudged bad debt and it is depleted. In theory if LW had real problems, and Shield runs dry, they could take 10% to rebuild the Shield (all your interest and some capital), meaning you'd get back less than you put in if you quit early, but sometime in the future you'd get maybe 20% interest to rebuild your capital and interest average back to 5.4% at the 5 year anniversary No one ever said P2P wasn't risky. This is how the risk bites with a provision fund with LW's implementation. This could all be wrong - but I would suggest making sure you really understand what is going on before increasing investment, especially if you don't think you will stay the full 5 years. The .5% exit fee is marketing boloney and the minimum you will pay
|
|
|
|
Post by jono75 on Jan 24, 2020 13:39:12 GMT
Thanks both, I've downloaded my transactions and I only got 14p of shortfall payments, so it's probably the latter. It seems a bit confusing to be honest and you're right about not increasing investments until I have a total grasp on it.
I might start putting repayments in flex for now as it seems there is LW pay the mysterious shortfall fee then. If so many people on the this forum can't work it out then it must be too complex, seems to be a bit of smoke and mirrors. Matthew mentioned somethings about the big shortfalls investors are having is to do with the change from 6.5 to 5.4, it seems that wasn't really explained at all well though and that worries me now. He did say that rate changes will be small amounts only but it does seem a bit of a kick in the teeth to loyal investors.
I understand there is risk and to only put in what I can afford to lose, the biggest problem seems to be moving goal posts. I looked at my loan book and there is a loan classed as repaying where the borrower has paid back £3.46 of a £14,335 loan, the shield has already stumped up over 7k, that loan is from 2018, how on earth is that one repaying, loan id 15588.
|
|
benaj
Member of DD Central
Posts: 4,857
Likes: 1,591
|
Post by benaj on Jan 24, 2020 16:13:39 GMT
Checking my partner's account on the Growth product. XIRR is 4.15% since 17th Nov 2019 (2 months and 7 days). A little bit off from the projected return of 5.4% According On Loan's page, annualised return is 4.9% for 2018 cohort and 5.3% for 2019 cohort. Now I wonder what the XIRR is for the Flexible product as well. Is it really 4.0%  Update: The amount of interest received in January is significantly lower than December, looks like XIRR starting from Jan 2020 will be much lower than 4.15% |
|
