scooter
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Post by scooter on Jun 27, 2020 17:25:48 GMT
"1% fee is taken from each monthly repayment made by the borrower."
If I take all of the Principle repayments £29,744 and all of the interest repayments £9,156 = £38,901 @1% =£389 in fees, but my actual fees are £973 (2.5%)
For just one loan, interest & Repayments = £41.47 @1% = £0.41 but actual associated fees =£1.36 (3.27%)
For the same loan using the data from the Loan Holdings report: Total Principle £80 + Total Interest expected £21.49 = £101.49 @1% £1.01 however total expected fees are £2.29 (2.25%)
I haven't sold anything. What am I missing! Can anyone help point out the obvious to me?
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scooter
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Post by scooter on Jul 1, 2020 9:52:18 GMT
See the response from LC below. It's too early in the morning for me, but I'm not sure that the actual calculation they use matches the explanation of fees on their website "1% fee is taken from each monthly repayment made by the borrower."
"The repayment fee is 1% of the principal outstanding, charged monthly. As the principal is getting paid over time, the fees and the interest amounts change each month.
To calculate repayment fee, you take 1% of principal outstanding prior to any given month – then divide it by 12 for a monthly amount.
In the example of below, the repayment fee for repayment number would be:
Principal outstanding prior to payment = £148.50
1% of 148.50 = £1.485
Divided by 12 = 0.12375 (the sub-penny remainder means this figure is rounded to £0.12p)"
What do other investors think about this?
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r00lish67
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Post by r00lish67 on Jul 1, 2020 10:33:41 GMT
See the response from LC below. It's too early in the morning for me, but I'm not sure that the actual calculation they use matches the explanation of fees on their website "1% fee is taken from each monthly repayment made by the borrower." " The repayment fee is 1% of the principal outstanding, charged monthly. As the principal is getting paid over time, the fees and the interest amounts change each month.
To calculate repayment fee, you take 1% of principal outstanding prior to any given month – then divide it by 12 for a monthly amount.
In the example of below, the repayment fee for repayment number would be:
Principal outstanding prior to payment = £148.50
1% of 148.50 = £1.485
Divided by 12 = 0.12375 (the sub-penny remainder means this figure is rounded to £0.12p)"What do other investors think about this? I've just always understood it as LC take off 1 percentage point off any loan I buy. e.g. If I buy into a loan to company X at a gross rate of 10% p.a. , then I will actually receive 9% p.a. after their fee (but before defaults, tax etc). It's covered here too. Admittedly I haven't checked individual loan repayments, but I do check that my totals have increased by the rough % I'm expecting once a month. Never seen anything to cause concern. They do have a few days lag in interest repayments though. So anyway, yes, seems to match to me. Just another way of saying it.
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scooter
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Post by scooter on Jul 1, 2020 11:50:28 GMT
See the response from LC below. It's too early in the morning for me, but I'm not sure that the actual calculation they use matches the explanation of fees on their website "1% fee is taken from each monthly repayment made by the borrower." " The repayment fee is 1% of the principal outstanding, charged monthly. As the principal is getting paid over time, the fees and the interest amounts change each month.
To calculate repayment fee, you take 1% of principal outstanding prior to any given month – then divide it by 12 for a monthly amount.
In the example of below, the repayment fee for repayment number would be:
Principal outstanding prior to payment = £148.50
1% of 148.50 = £1.485
Divided by 12 = 0.12375 (the sub-penny remainder means this figure is rounded to £0.12p)"What do other investors think about this? I've just always understood it as LC take off 1 percentage point off any loan I buy. e.g. If I buy into a loan to company X at a gross rate of 10% p.a. , then I will actually receive 9% p.a. after their fee (but before defaults, tax etc). It's covered here too. Admittedly I haven't checked individual loan repayments, but I do check that my totals have increased by the rough % I'm expecting once a month. Never seen anything to cause concern. They do have a few days lag in interest repayments though. So anyway, yes, seems to match to me. Just another way of saying it. The link says " Ongoing repayment fee
An ongoing repayment fee, which is the difference between the rate you lend to a borrower and the interest you receive, is charged on a monthly basis. This fee is taken from each monthly repayment made by the borrower. For example, if you lend at a rate of 9%, you’ll receive 8% after this repayment fee."
So you understand the fee to be 1% of interest payments?
That's what I thought, but then thought it must include capital repayments too as it says "repayment".
But their explanation via email says 1% of "principle outstanding" which seems entirely different to me.
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r00lish67
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Post by r00lish67 on Jul 1, 2020 12:05:51 GMT
I've just always understood it as LC take off 1 percentage point off any loan I buy. e.g. If I buy into a loan to company X at a gross rate of 10% p.a. , then I will actually receive 9% p.a. after their fee (but before defaults, tax etc). It's covered here too. Admittedly I haven't checked individual loan repayments, but I do check that my totals have increased by the rough % I'm expecting once a month. Never seen anything to cause concern. They do have a few days lag in interest repayments though. So anyway, yes, seems to match to me. Just another way of saying it. The link says " Ongoing repayment fee
An ongoing repayment fee, which is the difference between the rate you lend to a borrower and the interest you receive, is charged on a monthly basis. This fee is taken from each monthly repayment made by the borrower. For example, if you lend at a rate of 9%, you’ll receive 8% after this repayment fee."
So you understand the fee to be 1% of interest payments?
That's what I thought, but then thought it must include capital repayments too as it says "repayment".
But their explanation via email says 1% of "principle outstanding" which seems entirely different to me.
I understand it as a 1% of the principal. If a loan is advertised at 10% interest p.a. on the platform, we get 9% and LC get 1%. That's 9% of the principal and 1% of the principal too. It is/was the same over at FC too. Think about what the alternative would suggest. If LC only took 1% of our interest, then for every £1m of loans made at say 9% p.a. average then they'd only make £1m X 0.09 x 0.01 = £900 a year. The loanbook is only £35m, so if this was true, then their entire ongoing annual income would be just £31k p.a. (and falling with amortisation every month!)
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scooter
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Post by scooter on Jul 1, 2020 14:40:32 GMT
The link says " Ongoing repayment fee
An ongoing repayment fee, which is the difference between the rate you lend to a borrower and the interest you receive, is charged on a monthly basis. This fee is taken from each monthly repayment made by the borrower. For example, if you lend at a rate of 9%, you’ll receive 8% after this repayment fee."
So you understand the fee to be 1% of interest payments?
That's what I thought, but then thought it must include capital repayments too as it says "repayment".
But their explanation via email says 1% of "principle outstanding" which seems entirely different to me.
I understand it as a 1% of the principal. If a loan is advertised at 10% interest p.a. on the platform, we get 9% and LC get 1%. That's 9% of the principal and 1% of the principal too. It is/was the same over at FC too. Think about what the alternative would suggest. If LC only took 1% of our interest, then for every £1m of loans made at say 9% p.a. average then they'd only make £1m X 0.09 x 0.01 = £900 a year. The loanbook is only £35m, so if this was true, then their entire ongoing annual income would be just £31k p.a. (and falling with amortisation every month!) Hi, did you mean to say 9% of Principle?
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r00lish67
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Post by r00lish67 on Jul 1, 2020 15:03:16 GMT
I understand it as a 1% of the principal. If a loan is advertised at 10% interest p.a. on the platform, we get 9% and LC get 1%. That's 9% of the principal and 1% of the principal too. It is/was the same over at FC too. Think about what the alternative would suggest. If LC only took 1% of our interest, then for every £1m of loans made at say 9% p.a. average then they'd only make £1m X 0.09 x 0.01 = £900 a year. The loanbook is only £35m, so if this was true, then their entire ongoing annual income would be just £31k p.a. (and falling with amortisation every month!) Hi, did you mean to say 9% of Principle? Not quite sure what you're questioning, that 10 minus 1 equals 9 or that principal is the correct financial term rather than principle? In any case, I stand by both  (or maybe I'm just missing your point entirely? I feel like I am!)
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scooter
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Post by scooter on Jul 1, 2020 15:25:16 GMT
Hi, did you mean to say 9% of Principle? Not quite sure what you're questioning, that 10 minus 1 equals 9 or that principal is the correct financial term rather than principle? In any case, I stand by both (or maybe I'm just missing your point entirely? I feel like I am!) Sorry, no I thought you may have meant 1% of principal.
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scooter
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Post by scooter on Jul 1, 2020 15:47:16 GMT
I have worked it out and I am not altogether happy with the result.
Based on the email they sent me today, they are charging 1% of the previous months outstanding balance on a loan.
So, in this example £380 less £1.66 paid in May 17 = £378.34 outstanding. £378.37 @1% = £0.31/2 in fees the following month. There is no fee on Interest as far as I can see and they do not mention any in their explanation.
I have paid £8.27 to date on this loan
Month Date Descripti Paid in (GBP) Paid out (GBP) outstanding bal Method
May-17 04/05/2017 Loan Exch - purchase 380.00 -380.00
May-17 16/05/2017 Investor Fee 0.10 -0.10
May-17 16/05/2017 Principal 1.66 -378.34
Jun-17 14/06/2017 Investor Fee 0.31 -0.32
Jun-17 14/06/2017 Principal 5.27 -373.07
Jul-17 14/07/2017 Investor Fee 0.31 -0.31
Jul-17 14/07/2017 Principal 5.33 -367.74
I can't see how this Outstanding Principal balance method in anyway ties up with the following two explanations of fees on the Website.
"1% fee is taken from each monthly repayment made by the borrower."
To me this means 1% of Principal and Interest paid each month which to date would be £3.03
"Ongoing repayment fee
- An ongoing repayment fee, which is the difference between the rate you lend to a borrower and the interest you receive, is charged on a monthly basis. This fee is taken from each monthly repayment made by the borrower. For example, if you lend at a rate of 9%, you’ll receive 8% after this repayment fee."
To me this suggests fees only based on Interest which would be even less.
Now that I understand how they are calculating fees I feel that I am about £600 down on what i expected from the explanation of fees on the website.
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