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Post by df on Apr 21, 2021 21:54:13 GMT
Can't get my head around KUF's compounded interest. Where do monthly repayments go, back in the same loan increasing the original value of borrowing? Wouldn't re-investing monthly interest payments into new loans deliver the same returns? You're not alone. I've never quite got my head round it either. No, the funds aren't invested back in the same loan. They are held onto by kuflink. My suspicion is that they hold on to it to reduce the extra capital they need to keep up their 5% skin in the game across all loans (but this is pure speculation). Importantly, Kuflink state that the compound interest is not secured and not subject to the CASS 7 Client Money rules. Another advantage for Kuflink is that it allows them to quote higher rates. Yes, reinvesting monthly repayments has the same effect as compounding, and is a lot cleaner IMO. It also allows you to drawdown the interest if you wish, or allows further diversification. Thank you! I thought it's just me... And it seems to be very much encouraged - the most obvious one is the default position of "pay on maturity". I've invested in 5 loans today - on the last one I forgot to switch to "pay monthly" (I hope it will "compound" well  The same for me, receiving monthly interest and having a choice of what to do with it is much cleaner. It's fine for black box accounts, but not for self-select.
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liso
Member of DD Central
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Post by liso on Jan 30, 2022 15:05:52 GMT
Interesting update from 4th Way www.4thway.co.uk/candid-opinion/kuflinks-profitable-accounts/ KUF is now in profit for the first time, and expects to remain profitable. Good news. Less positively IMV, a) they will no longer be lending 5% (or taking first loss) in all loans. and b) all default interest is to be kept within the company, and not paid out to lenders. |
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sussexpeer
Member of DD Central
If you don't make a plan, you'll end up where you're headed.
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Post by sussexpeer on Jan 30, 2022 17:16:39 GMT
Interesting update from 4th Way www.4thway.co.uk/candid-opinion/kuflinks-profitable-accounts/ KUF is now in profit for the first time, and expects to remain profitable. Good news. Less positively IMV, a) they will no longer be lending 5% (or taking first loss) in all loans. and b) all default interest is to be kept within the company, and not paid out to lenders.Erm, does this mean if a loan is late repaying, that there is no interest paid to lenders beyond the original planned end date of the loan deal?
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tallsuk
Member of DD Central
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Post by tallsuk on Jan 30, 2022 18:24:29 GMT
Interesting update from 4th Way www.4thway.co.uk/candid-opinion/kuflinks-profitable-accounts/ KUF is now in profit for the first time, and expects to remain profitable. Good news. Less positively IMV, a) they will no longer be lending 5% (or taking first loss) in all loans. and b) all default interest is to be kept within the company, and not paid out to lenders. To be fair the whole paragraph from 4th way is: Kuflink earns the default interest itself, if a borrower is late in making payments. It doesn't pay it out to individual lenders. We keep an eye on it when P2P lending companies are keeping default interest for themselves, because it's important to know that it's not dragging out bad debts to earn fat default fees from borrowers. That would increases the risk the loan won't be repaid in full and it delays repayment to lenders. Looking at Kuflink's case, the default interest is a sufficiently small part of its overall income that I'm not concerned. At £600,00 of default interest, this is around 20% of Kuflink's overall real income.
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Post by Ace on Jan 30, 2022 18:51:02 GMT
Interesting update from 4th Way www.4thway.co.uk/candid-opinion/kuflinks-profitable-accounts/ KUF is now in profit for the first time, and expects to remain profitable. Good news. Less positively IMV, a) they will no longer be lending 5% (or taking first loss) in all loans. and b) all default interest is to be kept within the company, and not paid out to lenders.Erm, does this mean if a loan is late repaying, that there is no interest paid to lenders beyond the original planned end date of the loan deal? No, lenders continue to earn interest during the late period, but they don't benefit from any penalty interest.
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Post by df on Jan 30, 2022 20:09:06 GMT
Erm, does this mean if a loan is late repaying, that there is no interest paid to lenders beyond the original planned end date of the loan deal? No, lenders continue to earn interest during the late period, but they don't benefit from any penalty interest. In my overall cross-platform experience this penalty interest is hardly ever received. Those with increased interest are usually the sign of capital loss. I'm happy to be excluded from a symbolic interest top up
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Post by Ace on Jan 30, 2022 20:50:13 GMT
No, lenders continue to earn interest during the late period, but they don't benefit from any penalty interest. In my overall cross-platform experience this penalty interest is hardly ever received. Those with increased interest are usually the sign of capital loss. I'm happy to be excluded from a symbolic interest top up  I regularly receive penalty interest from late borrowers on Proplend and CrowdProperty. I believe it also happens on SoMo and Landlordinvest. I think it's important for platforms to charge default/penalty interest, to put pressure on delinquent borrowers. Though discretion is sometimes needed. I also think it's bad form for platforms to keep all penalties for themselves, as this creates a conflict of interest, where platforms benefit more from loans which default than they do from loans that run smoothly (where have we seen this cause issues?). IMO, for a platform to generate 20% of its real income from penalties is too high.
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Post by overthehill on Jan 30, 2022 21:24:45 GMT
In my overall cross-platform experience this penalty interest is hardly ever received. Those with increased interest are usually the sign of capital loss. I'm happy to be excluded from a symbolic interest top up I regularly receive penalty interest from late borrowers on Proplend and CrowdProperty. I believe it also happens on SoMo and Landlordinvest. I think it's important for platforms to charge default/penalty interest, to put pressure on delinquent borrowers. Though discretion is sometimes needed. I also think it's bad form for platforms to keep all penalties for themselves, as this creates a conflict of interest, where platforms benefit more from loans which default than they do from loans that run smoothly (where have we seen this cause issues?). IMO, for a platform to generate 20% of its real income from penalties is too high.
AC, come on down. Prizes, bonuses and enhanced monitoring fees. That's my exit letter, plagiarised, spell checked and ready to send.
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tallsuk
Member of DD Central
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Post by tallsuk on Jan 30, 2022 23:12:00 GMT
In my overall cross-platform experience this penalty interest is hardly ever received. Those with increased interest are usually the sign of capital loss. I'm happy to be excluded from a symbolic interest top up I regularly receive penalty interest from late borrowers on Proplend and CrowdProperty. I believe it also happens on SoMo and Landlordinvest. I think it's important for platforms to charge default/penalty interest, to put pressure on delinquent borrowers. Though discretion is sometimes needed. I also think it's bad form for platforms to keep all penalties for themselves, as this creates a conflict of interest, where platforms benefit more from loans which default than they do from loans that run smoothly (where have we seen this cause issues?). IMO, for a platform to generate 20% of its real income from penalties is too high. Purely playing the devils advocate here but is 20% of income not a reasonable figure as defaults are likely to create far more work for the platforms. If it was 20% of profit I would be far more concerned.
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Post by Ace on Jan 30, 2022 23:21:27 GMT
I regularly receive penalty interest from late borrowers on Proplend and CrowdProperty. I believe it also happens on SoMo and Landlordinvest. I think it's important for platforms to charge default/penalty interest, to put pressure on delinquent borrowers. Though discretion is sometimes needed. I also think it's bad form for platforms to keep all penalties for themselves, as this creates a conflict of interest, where platforms benefit more from loans which default than they do from loans that run smoothly (where have we seen this cause issues?). IMO, for a platform to generate 20% of its real income from penalties is too high. Purely playing the devils advocate here but is 20% of income not a reasonable figure as defaults are likely to create far more work for the platforms. If it was 20% of profit I would be far more concerned. It's 150% of profit!
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tallsuk
Member of DD Central
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Post by tallsuk on Jan 30, 2022 23:52:09 GMT
Purely playing the devils advocate here but is 20% of income not a reasonable figure as defaults are likely to create far more work for the platforms. If it was 20% of profit I would be far more concerned. It's 150% of profit! Sorry that was a terrible description on my part. I meant if defaults were making up 20% of the annual profits for the platform which I doubt it is as the costs of managing defauts must be far higher than managing a loan that is running smoothly which requires minimal work.
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Post by overthehill on Feb 7, 2022 15:37:55 GMT
One thing that really gets my goat and is totally shabby is not receiving your bonus or cashback as promised, having to keep track of it and then chase the company to find out why it hasn't been paid ?
It occurs to me that a significant percentage of bonuses and cashback must go unpaid across P2P in general because this is not an isolated incident.
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corto
Member of DD Central
one-syllabistic
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Post by corto on Feb 7, 2022 16:50:05 GMT
The house crowd had an interesting approach: "Bonus will be paid when the loan pays back"
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Post by df on Feb 7, 2022 20:59:29 GMT
One thing that really gets my goat and is totally shabby is not receiving your bonus or cashback as promised, having to keep track of it and then chase the company to find out why it hasn't been paid ?
It occurs to me that a significant percentage of bonuses and cashback must go unpaid across P2P in general because this is not an isolated incident. I've never participated in KUF bonus schemes, but across p2p I've always had my bonuses paid as promised and on time.
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dave4
Member of DD Central
Cynical is a hobby not a lifestyle
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Post by dave4 on Feb 9, 2022 17:15:06 GMT
Currently empty of investment opportunities.
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