rscal
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Post by rscal on Nov 11, 2020 14:26:30 GMT
It's occurred to me I have been gradually increasing my holding in a particular loan which includes monthly principal repayments. So the question is: how is the principal component calculated if the interest component was time dependent [intra month]? For instance if I purchase 'mid-month' 2 weeks interest only is payable in the first month - thereafter 30 days worth. So with the principal there is no direct equivalent. I think though (now I do think about it) I would receive a full month's principal payments based on my holding balance at month end b/c the seller no longer has any principal to be returned [not so with interest for part of the month]
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Post by overthehill on Nov 11, 2020 16:12:10 GMT
yes, it has to work that way for the principal. For interest, I don't know how AC works but normally when you buy part of an existing loan , you also purchase the seller's accrued interest. Gets messy otherwise as the system need to remember the seller.
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Post by Ace on Nov 11, 2020 16:40:36 GMT
yes, it has to work that way for the principal. For interest, I don't know how AC works but normally when you buy part of an existing loan , you also purchase the seller's accrued interest. Gets messy otherwise as the system need to remember the seller.
You don't purchase accrued interest on AC. The seller of a loan is entitled to the accrued interest up to the day the loan was sold.
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dead-money
Rocket to the Moon
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Post by dead-money on Nov 11, 2020 17:49:55 GMT
chris has previously stated that ownership and entitlement to accured interest is calculated down to the second. AC do like their decimal places.
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sl75
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Post by sl75 on Nov 11, 2020 23:07:14 GMT
chris has previously stated that ownership and entitlement to accured interest is calculated down to the second. AC do like their decimal places. As I recall, that's only for the Access Accounts...
For individually held loan parts, I understand that interest accrues daily at midnight.
I'm sure AC's unusual approach of not selling accrued interest with the loan part causes many headaches for those wanting to exit completely, as even several years after you thought you closed your account, further recoveries could still be made on some loans, at least part of which may be allocated to interest that accrued before you sold the loan...
... and similarly, the chance of actually being able to withdraw the entire account balance even after all loans have fully repaid seems infinitessimally small - the artificial "fraction of a penny" payments are a further complicating factor, meaning that unless you have extraordinarily good luck or unusually good timing together with very careful calculations, it will never be possible to get your account balance to a precise multiple of a penny and allow your account to be fully closed. Effectively, AC have a fee they can collect from every closed account, presumably expected to average at half a penny (don't spend it all at once!).
I'd personally consider that other P2P platforms that keep ALL transactions as whole multiples of a penny (even if they break as to a fraction of a penny of interest and a fraction of a penny of principal that together add to a whole penny) have the correct approach - that way, during an audit or a wind-down scenario, every penny of the client account can be allocated to a specific customer. I've no idea how AC even plan to deal with pennies that have shared ownership in the client account if it were to need to be closed, for example in a wind-down scenario.
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dead-money
Rocket to the Moon
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Post by dead-money on Nov 12, 2020 8:50:24 GMT
chris has previously stated that ownership and entitlement to accured interest is calculated down to the second. AC do like their decimal places. As I recall, that's only for the Access Accounts...
For individually held loan parts, I understand that interest accrues daily at midnight.
I'm sure AC's unusual approach of not selling accrued interest with the loan part causes many headaches for those wanting to exit completely, as even several years after you thought you closed your account, further recoveries could still be made on some loans, at least part of which may be allocated to interest that accrued before you sold the loan...
... and similarly, the chance of actually being able to withdraw the entire account balance even after all loans have fully repaid seems infinitessimally small - the artificial "fraction of a penny" payments are a further complicating factor, meaning that unless you have extraordinarily good luck or unusually good timing together with very careful calculations, it will never be possible to get your account balance to a precise multiple of a penny and allow your account to be fully closed. Effectively, AC have a fee they can collect from every closed account, presumably expected to average at half a penny (don't spend it all at once!).
I'd personally consider that other P2P platforms that keep ALL transactions as whole multiples of a penny (even if they break as to a fraction of a penny of interest and a fraction of a penny of principal that together add to a whole penny) have the correct approach - that way, during an audit or a wind-down scenario, every penny of the client account can be allocated to a specific customer. I've no idea how AC even plan to deal with pennies that have shared ownership in the client account if it were to need to be closed, for example in a wind-down scenario.
"I'm sure AC's unusual approach of not selling accrued interest with the loan part causes many headaches for those wanting to exit completely"
Yep, my GBBA and PSA zombie loans, you can cash out, but never totally leave...
"I'd personally consider that other P2P platforms that keep ALL transactions as whole multiples of a penny"
Brings back memories of when I was responsible for developing a PEP platform. There's no correct answer.
At that time computers couldn't do a zillion decimal places, so we used 'bankers rounding' as precise enough!
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sl75
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Post by sl75 on Nov 12, 2020 18:15:10 GMT
Brings back memories of when I was responsible for developing a PEP platform. There's no correct answer.
At that time computers couldn't do a zillion decimal places, so we used 'bankers rounding' as precise enough!
Something a bit different to "bankers rounding" is needed when you have a fixed amount (a borrower repayment) that needs to be divided pro-rata between people holding various different arbitrary sizes of loan.
AC essentially did a cop-out of figuring out a good rounding system, moving the rounding to the 40th decimal place where "nobody cares"... and thus instead creating the very real problem of the fractional pennies that I can't see how they can ever be properly accounted for in an audit.
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warn
Member of DD Central
Curmudgeon
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Post by warn on Nov 12, 2020 20:57:31 GMT
Well yes, but -- I've thought about this for quite a few milliseconds, and I'm blowed if I can come up with a "good rounding system" either. Unless they rounded everything to whole pennies, the dreaded "<£0.01" would still haunt. It could be shrunk to 30, or 20, or possibly fewer decimal places, but the more it's shrunk the greater the shortfall (or longfall) would be, and how could it be handled? If it's deducted from a lender's balance, cue the familiar cries of "it's our hard-earned money not theres (sic :-)" - and setting up some sort of Metalender to hold the plus or minus pencelets would earn at least a stern look from the compliance officer.
Way down there in "nobody cares" territory is the only reasonable solution, IMO, to the "fixed amount...divided pro-rata" problem. I think it's a bit unfair to call it a cop-out.
As for not being able to fully exit, to the avowed despair of some, I'm missing the big deal. However many sub-penny loans one might have left lying around, can't one just pretend they're zero? They don't mount up to a hamburger and change. Write them off in one's (morally-equivalent) Quicken account, change one's AC email address to bitbucket@hotmail.com, and get on with drinking roses and smelling coffee. So much angst, so little time...
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dave2
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Post by dave2 on Nov 13, 2020 21:01:20 GMT
Well yes, but -- I've thought about this for quite a few milliseconds, and I'm blowed if I can come up with a "good rounding system" either. Unless they rounded everything to whole pennies, the dreaded "<£0.01" would still haunt. It could be shrunk to 30, or 20, or possibly fewer decimal places, but the more it's shrunk the greater the shortfall (or longfall) would be, and how could it be handled? If it's deducted from a lender's balance, cue the familiar cries of "it's our hard-earned money not theres (sic :-)" - and setting up some sort of Metalender to hold the plus or minus pencelets would earn at least a stern look from the compliance officer. The easiest solution would be to round the milli-pennies into the staff Christmas party account, or the Programmer's beer fund  . Unfortunately the auditors might object.
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rscal
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Post by rscal on Nov 24, 2020 12:28:33 GMT
About interest:
I have another loan part (#797) and I note that I have more accrued interest than in my MLA holding alone. But the accounts in which I have those holdings are all AAs. I find this reporting strange since accrued interest is always 'at nominal' and the AAs pay at lower fixed rates which means the 'accrued' figure does not truly represent what I could receive and furthermore I am compensated via the AAs each month - so does the accrued figure just keep on diverging* in that case?
*does it ever reduce when AA interest is paid out? I don't seen how that's possible due to the algorithmic complexity of disinterring two streams of interest.
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rscal
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Post by rscal on Dec 2, 2020 11:29:30 GMT
Update on interest:
Loan #779 has paid a second of two tranches of interest today, bringing it up to date (there had been arrears dating from 19/11/19 and the first tranche was paid on 19/10/20 but I didn't spot it at the time)
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dead-money
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Post by dead-money on Dec 2, 2020 13:15:40 GMT
About interest:
I have another loan part (#797) and I note that I have more accrued interest than in my MLA holding alone. But the accounts in which I have those holdings are all AAs. I find this reporting strange since accrued interest is always 'at nominal' and the AAs pay at lower fixed rates which means the 'accrued' figure does not truly represent what I could receive and furthermore I am compensated via the AAs each month - so does the accrued figure just keep on diverging* in that case?
*does it ever reduce when AA interest is paid out? I don't seen how that's possible due to the algorithmic complexity of disinterring two streams of interest.
I believe the accrued interest figure displayed no longer includes AA accounts, only MLA and Closed Black Box accounts.
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