shimself
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Post by shimself on Apr 27, 2021 12:44:56 GMT
Dead simple question posed to KL twice, no clear answer given If a loan goes wrong do investors in tier 1 receive both capital and interest before tier 2 investors receive anything? Your faq page kb.kuflink.com/knowledge/loan-tiers is not clear about tier 1 interest being paid before tier 2 capital. It just says Order of Priority, when capital is repaid.
Whilst the whole loan is secured by way of a 1st or 2nd legal Charge over the security property, the Tiers are ordered by priority. So, in the above example, Lenders who have lent funds in Tier 1 will be paid first on any capital repayment, then Tier 2, then Tier 3, and then Tier 4. When Lending in Tiered Loans, you and all lenders in all the Tiered Loans of the security charge are accepting the order of priority, linked to LTVs, when you invest.
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Post by Ace on Apr 27, 2021 13:32:16 GMT
Dead simple question posed to KL twice, no clear answer given If a loan goes wrong do investors in tier 1 receive both capital and interest before tier 2 investors receive anything? Your faq page kb.kuflink.com/knowledge/loan-tiers is not clear about tier 1 interest being paid before tier 2 capital. It just says Order of Priority, when capital is repaid.
Whilst the whole loan is secured by way of a 1st or 2nd legal Charge over the security property, the Tiers are ordered by priority. So, in the above example, Lenders who have lent funds in Tier 1 will be paid first on any capital repayment, then Tier 2, then Tier 3, and then Tier 4. When Lending in Tiered Loans, you and all lenders in all the Tiered Loans of the security charge are accepting the order of priority, linked to LTVs, when you invest.
Kuflink did answer this question on the forum before, the answer was that tier 1 capital and interest ranked ahead of tier 2. kuflink, please add this clarification to your Ts&Cs. The question is here: p2pindependentforum.com/post/332760/thread. The answer is here: p2pindependentforum.com/post/332779/thread.
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shimself
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Post by shimself on Apr 29, 2021 9:00:00 GMT
Dead simple question posed to KL twice, no clear answer given If a loan goes wrong do investors in tier 1 receive both capital and interest before tier 2 investors receive anything? Your faq page kb.kuflink.com/knowledge/loan-tiers is not clear about tier 1 interest being paid before tier 2 capital. It just says Order of Priority, when capital is repaid.
Whilst the whole loan is secured by way of a 1st or 2nd legal Charge over the security property, the Tiers are ordered by priority. So, in the above example, Lenders who have lent funds in Tier 1 will be paid first on any capital repayment, then Tier 2, then Tier 3, and then Tier 4. When Lending in Tiered Loans, you and all lenders in all the Tiered Loans of the security charge are accepting the order of priority, linked to LTVs, when you invest.
Kuflink did answer this question on the forum before, the answer was that tier 1 capital and interest ranked ahead of tier 2. kuflink , please add this clarification to your Ts&Cs. The question is here: p2pindependentforum.com/post/332760/thread. The answer is here: p2pindependentforum.com/post/332779/thread.
WELL. Actually the point is moot because K pay interest monthly in the main, so I feel silly for asking HOWEVER I did get a reply. Which said the exact contrary
Select-Invest: In the event of receivership we will only pay back capital to all tier 1 and the tier 2 and so on. Interest will only be added at the end if it might be compounded. If you have opted to be paid monthly you will already have received the interest due.
As you can appreciate this will be deemed as a case by cases basis as the variables can effect the process. Therefore, I cannot give you 100% clarity as it may change due to the individual circumstances.
Here is a snippet of our T&C’s around the subject:
In the event that there is a repayment shortfall from the borrower, the order of the payment priority is the following:
Firstly, capital will be repaid proportionally to all investors,
Secondly, any unpaid interest (simple or compounded) will be repaid proportionally to all investors.
Kuflink reserves the right to suspend and/or end compound interest.
Kuflink reserves the right to remove the compound interest feature from the platform
Full our full T&C’s please see the following link: www.kuflink.com/investor-terms-conditions/
KUFLINK you really really need to make your minds up.
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Post by Ace on Apr 29, 2021 9:06:17 GMT
Yes, Kuflink do seen to struggle to define and understand their own processes. I wonder why the auditor's resigned!🤔
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p2pfan
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Full-Time Investor
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Post by p2pfan on May 9, 2021 20:55:56 GMT
Yes, Kuflink seem to be unsure about this and quite a few other matters.
The higher tiers are not worth it on Kuflink for a microscopic 0.1% p.a. increase in potential returns.
With other platforms, the difference between tiers can be something in the order of 1 to 3% p.a., where the increased risk can be worth it for a substantially higher potential return, but for 0.1% the risk-reward ratio is not there.
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Post by overthehill on May 10, 2021 10:24:43 GMT
The tier system in Kuflink doesn't make sense, bound to be changed soon. I only see a huge benefit to tier 1 investors and the lure of higher interest rates for disproportionate amount of extra risk. It is so non-sensensical that Kuflink's idea of recovery for one of these loans may not concur with an investor's idea of recovery.
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Post by Ace on May 10, 2021 10:56:04 GMT
The tier system in Kuflink doesn't make sense, bound to be changed soon. I only see a huge benefit to tier 1 investors and the lure of higher interest rates for disproportionate amount of extra risk. It is so non-sensensical that Kuflink's idea of recovery for one of these loans may not concur with an investor's idea of recovery.
You're absolutely correct in that Kuflink's higher tiers don't make sense as the extra risk is far too poorly rewarded. However, I don't think it will change anytime soon. I've been banging on about it ever since their tiers were introduced. If clued up manual investors don't take the higher tiers they don't really care as they can simply offload them to their auto accounts. It's the main reason that I don't invest in their auto accounts. Actually, I did invest 1 small sum to try and understand them better from the inside. It didn't work.
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shimself
Member of DD Central
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Post by shimself on May 10, 2021 12:34:19 GMT
The tier system in Kuflink doesn't make sense, bound to be changed soon. I only see a huge benefit to tier 1 investors and the lure of higher interest rates for disproportionate amount of extra risk. It is so non-sensensical that Kuflink's idea of recovery for one of these loans may not concur with an investor's idea of recovery.
Well IF it was tier 1 capital then tier 2 capital then tier 1 interest then tier 2 interest, then actually the difference in risk is much narrower that one might think. And really it's still unclear, but as interest is paid monthly it doesn't much matter
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nyneil
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Post by nyneil on May 10, 2021 12:46:57 GMT
Something else which is unclear, to me, is, "interest will be retained throughout the term." There are several ways to interpret it. Does anyone know the kuflink interpretation? |
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Post by overthehill on May 10, 2021 13:03:13 GMT
If you select compounded interest then interest isn't paid monthly so I assume, rather than know, the accrued interest is ringfenced.
Even if you are paid interest monthly, circumstances change when a loan gets in trouble and then the tiers are more important.
Retained interest means kuflink is taking future borrower interest payments from the gross loan and using it to pay investors monthly interest. I don't know but I assume it is for the full length of the expected loan term. But again, same caveat as above if loan gets into trouble.
There are a number of grey areas that have been raised in the forum plus they have been ignoring my messages so I won't be increasing my investment anytime soon.
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Post by uksoul on May 10, 2021 21:36:54 GMT
Something else which is unclear, to me, is, "interest will be retained throughout the term." There are several ways to interpret it. Does anyone know the kuflink interpretation? The total interest due for the loan is retained by Kuflink from the start of the loan.
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Post by Ace on May 10, 2021 21:37:44 GMT
Kuflink Ts&Cs were updated on 28/4/2021. They now contain the following (my bold) :
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Post by uksoul on May 10, 2021 21:40:23 GMT
Kuflink Ts&Cs were updated on 28/4/2021. They now contain the following (my bold) : That clears things up.
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Post by Ace on May 10, 2021 21:46:32 GMT
Kuflink Ts&Cs were updated on 28/4/2021. They now contain the following (my bold) : Unfortunately, it contradicts the following in the compound interest section:
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Post by kuflink on May 12, 2021 10:58:20 GMT
Please see below an update to our T&Cs around capital and interest being paid.
8a. Compound Interest
In the event that there is a repayment shortfall from the borrower, the order of the payment priority is the following:
Firstly, capital will be repaid proportionally to all investors,
Secondly, any unpaid interest (simple or compounded) will be repaid proportionally to all investors. This is different to that of tiered loans as each tier of the loan will be paid capital and interest in order, i.e. Tier 1 capital and interest repaid followed by Tier 2 capital and interest and so on (for the tiered loans T&Cs please read Part 7)
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