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Post by Ace on Dec 18, 2020 15:14:34 GMT
I doubt you'll be disappointed: - No cash drag.
- Instant liquidity throughout the Covid19 crisis
- Better rates than I've managed to achieve on Z
- Loans secured by first charge on very low LTV properties
- Funds redistributed daily over all active loans on the platform
- Interest paid on all invested funds, even those which are not allocated to loans
- All loans managed by an experienced junior partners who will lose all of their capital before we lose a penny
A lot of the loans are development loans, so LTV isn't what it seems (and we've been there before!) but I agree only being in the less risky tranche is good. I'm actually getting a slightly better rate on Zopa. Since we are getting to expect the unexpected in P2P, what happens if a few projects fail and the junior partner goes bust? Does the whole thing fail? How deep are their pockets? Yes, most of the loans are development loans, but they don't use the LTGDV until a project is substantially complete. Yes, there's a risk of a junior partner going bust (particularly if the main one does), but the low LTVs should give a good chance of recovery. I see this as far better security than that of Zopa's consumer loans in the current environment, especially as some of those are unsecured. The middle of Zopa's range of projected returns going forward is lower than the current Loanpad rates. Neither platform is free or risk, you just have to assess which is offering the better package. Or try a bit of each.
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Greenwood2
Member of DD Central
Posts: 4,216
Likes: 2,669
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Post by Greenwood2 on Dec 18, 2020 16:09:33 GMT
A lot of the loans are development loans, so LTV isn't what it seems (and we've been there before!) but I agree only being in the less risky tranche is good. I'm actually getting a slightly better rate on Zopa. Since we are getting to expect the unexpected in P2P, what happens if a few projects fail and the junior partner goes bust? Does the whole thing fail? How deep are their pockets? Yes, most of the loans are development loans, but they don't use the LTGDV until a project is substantially complete. Yes, there's a risk of a junior partner going bust (particularly if the main one does), but the low LTVs should give a good chance of recovery. I see this as far better security than that of Zopa's consumer loans in the current environment, especially as some of those are unsecured. The middle of Zopa's range of projected returns going forward is lower than the current Loanpad rates. Neither platform is free or risk, you just have to assess which is offering the better package. Or try a bit of each. Done that! The problem with developments is that even when 75% complete the value could be very low if a new developer has to buy it out (it gets derelict, squatters, weather damaged, etc), as we've seen numerous times on some of the notorious failed platforms. With the Loanpad setup the junior partner is common to many loans, so if the partner got into trouble the knock on effects could be big, with lots of loans potentially losing their on going funding. I feel much more comfortable with the diversity on Zopa (each micro loan is independent) and the long term stability of the platform. I do have funds with Loanpad but I am fairly cautious about how much to put into it (once or twice bitten by development loans on other platforms) until it has a bit more history of successful developments and hopefully several more junior partners to spread the pain if some developments fail, as they inevitably will. Just putting a cautionary note to balance out some of the enthusiasm.
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Post by Ace on Dec 18, 2020 16:48:30 GMT
Yes, most of the loans are development loans, but they don't use the LTGDV until a project is substantially complete. Yes, there's a risk of a junior partner going bust (particularly if the main one does), but the low LTVs should give a good chance of recovery. I see this as far better security than that of Zopa's consumer loans in the current environment, especially as some of those are unsecured. The middle of Zopa's range of projected returns going forward is lower than the current Loanpad rates. Neither platform is free or risk, you just have to assess which is offering the better package. Or try a bit of each. Done that! The problem with developments is that even when 75% complete the value could be very low if a new developer has to buy it out (it gets derelict, squatters, weather damaged, etc), as we've seen numerous times on some of the notorious failed platforms. With the Loanpad setup the junior partner is common to many loans, so if the partner got into trouble the knock on effects could be big, with lots of loans potentially losing their on going funding. I feel much more comfortable with the diversity on Zopa (each micro loan is independent) and the long term stability of the platform. I do have funds with Loanpad but I am fairly cautious about how much to put into it (once or twice bitten by development loans on other platforms) until it has a bit more history of successful developments and hopefully several more junior partners to spread the pain if some developments fail, as they inevitably will. Just putting a cautionary note to balance out some of the enthusiasm. Fair points, though even where developments are 75% complete they are often/usually valued against their pre-development value, so should still be comfortably recoverable. Caution is definitely required in P2P. Much as I like Loanpad, I'm reducing my exposure there as its currently over my comfortable limit of 20% of my P2P pot.
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