How bad could it get? (FC)

www.p2pfinancenews.co.uk/2020/06/09/alternative-lenders-offer-reduced-rates-to-cbils-borrowers/

www.gov.uk/government/collections/hm-treasury-coronavirus-covid-19-business-loan-scheme-statistics

Let's hope many of those CBILS loan application are FC borrowers.

Hi Beardedwonder,

Thanks for post always ingesting to see how other accounts are doing, not least to gain an insight on how this are/may go.

The problem with any prediction or estimation at the moment, is that with COVID lock down we dont know how bad the overall economy will be and there for predictions on past experience are not necessarily helpful.

That does not mean I cant add a few things that may be helpful.

1) Processing loans, do normally (90% or so) of the time go back to being live, in the sort term at least. 

2) Risk band removed but still live, can continue paying as normal, all be it with a higher than normal chance of default. I have one that has been paying on time, in full, every month for almost 3 years.

3) Some late loans, will stay late but keep making payments 1 or 2 months late for a long time, 2 years on one of my loans.

4) A defaulted loan, will/may often make recovery payments but over a long time, FC has only been around for 9 years, but it seems that about 40% after 7 years as a rule of thum seems to hold out. Every defaulted loan will be different, but a significant number will make vertically no payment for the first 6 months (presumable while the borrower deals with the direct result of the company going under) and then start to make small regular payments. that might go on for a very long time.

5) you will still be earning interest at a resealable % on the good loans.

Non of this is meant to say FC is good or even adequate, its not its a rubbish company and has been a big mistake to inverts though it!!! 

a) because it takes so long to access you money, b) because the risks are high and c) so difficult to preduct final results. 

IMO, most of us would have been better going to a bank and so a 90 day notice account, and getting both better reterns and quicker accesses to money

But if I was going to guess and that's all it is, then in the long run 7 years or more since starting your last lone, then:

Chance of getting better returns than Bank (90 day notice account): Negligible
Chance of getting all money back and small profit:                          Small
Chance of getting most of money back 90%-100%:                        Most lickly outcome
Chance of losing a 10-50% of original investment:                          Small
Chance of losing more than 50% of original investment:                  Negligible

Note: I agonised about should that have been 95% or 90% and it depending on if we are talking about your initall 10000 investment or the £5,000 ish left.

By my estimate you have had £774.36 in interest (slightly less because of recoverys) so I'm guessing with a 10,000 investment that means that you started investing about a year ago? difficult to know how 'good' the loans at that time where, (2016 and earlier loans are generally better than 2017-2018, 2019 still hard to say) which adds another level of the unknown to your investment.

Would be interesting to hear others estimates.

to the original poster, without knowing the vintage of your loans, it is hard to say.  From the looks of them I am not sure when you made your initial investments?

Also, note that when a loan is classified as a default your legal relationship with it changes, it is transferred from you to a trust of which you are a trustee.