|
|
Post by Ace on Apr 19, 2022 11:09:56 GMT
I notice that CP have now added a Penalty Interest field to the loan details, which is set to 5% for those that I've checked. I was a bit surprised to see this as, until now they have led us to believe that the penalty rate was 2%, which was all passed on to lenders. The FAQs still say that 2% is generally passed to lenders.
|
|
|
|
Post by overthehill on Apr 19, 2022 11:28:16 GMT
I notice that CP have now added a Penalty Interest field to the loan details, which is set to 5% for those that I've checked. I was a bit surprised to see this as, until now they have led us to believe that the penalty rate was 2%, which was all passed on to lenders. The FAQs still say that 2% is generally passed to lenders.
Similar to Proplend but their penalty charge is variable, 50% of the lender loan interest rate.
CP investors get 40% of the penalty interest whereas Proplend investors get 90% of the penalty interest.
Warning: Proplend Salesman.
|
|
ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
Posts: 10,831 
Likes: 11,059
|
Post by ilmoro on Apr 19, 2022 12:05:16 GMT
I notice that CP have now added a Penalty Interest field to the loan details, which is set to 5% for those that I've checked. I was a bit surprised to see this as, until now they have led us to believe that the penalty rate was 2%, which was all passed on to lenders. The FAQs still say that 2% is generally passed to lenders. T&Cs imply that you get it all 11.5 'If your money is committed to a Development Loan for longer than the Maximum Term, you will continue to receive interest at an increased rate, as specified in the Lender Fact Sheet (typically an additional 2% interest per annum), after the expiry of the Maximum Term.'I cant see any other enhanced rate specified It then contradicts itself further down 15.3 by stating 'the development may take extra time and you will receive an additional 2% interest per annum for any additional time taken after the expiry of the Maximum Term to complete the Project'Looks like they got the intern on the drafting there Question of priority of payment vague - in the event of default Security Agent will take a fee of up to 10% of recovery plus costs but nothing states where any fees due to the Loan Servicer sit (CP has two hats) Does the Loan Agreement give any more clarity? - not a lender so can only see the fact sheet.
|
|
ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
Posts: 10,831
Likes: 11,059
|
Post by ilmoro on Apr 19, 2022 12:28:17 GMT
I notice that CP have now added a Penalty Interest field to the loan details, which is set to 5% for those that I've checked. I was a bit surprised to see this as, until now they have led us to believe that the penalty rate was 2%, which was all passed on to lenders. The FAQs still say that 2% is generally passed to lenders.
Similar to Proplend but their penalty charge is variable, 50% of the lender loan interest rate.
CP investors get 40% of the penalty interest whereas Proplend investors get 90% of the penalty interest.
Warning: Proplend Salesman.
Lot of other fees that Proplend charge on late loans - £350 per month, 1% of loan after 3 months late, 1.5% after 6m, 2% after 9m. Where do those fees rank in recoveries? somewhat opaque in terms
|
|
|
|
Post by Ace on Apr 19, 2022 14:06:37 GMT
I notice that CP have now added a Penalty Interest field to the loan details, which is set to 5% for those that I've checked. I was a bit surprised to see this as, until now they have led us to believe that the penalty rate was 2%, which was all passed on to lenders. The FAQs still say that 2% is generally passed to lenders. T&Cs imply that you get it all 11.5 'If your money is committed to a Development Loan for longer than the Maximum Term, you will continue to receive interest at an increased rate, as specified in the Lender Fact Sheet (typically an additional 2% interest per annum), after the expiry of the Maximum Term.'I cant see any other enhanced rate specified It then contradicts itself further down 15.3 by stating 'the development may take extra time and you will receive an additional 2% interest per annum for any additional time taken after the expiry of the Maximum Term to complete the Project'Looks like they got the intern on the drafting there Question of priority of payment vague - in the event of default Security Agent will take a fee of up to 10% of recovery plus costs but nothing states where any fees due to the Loan Servicer (CP has two hats) Does the Loan Agreement give any more clarity? - not a lender so can only see the fact sheet. The Lender Fact Sheet (which is supposed to be a summary of the terms) certainly doesn't clarify anything. It merely states that the penalty interest due to us will be shown in the Loan Portfolio section of our accounts. This doesn't seem to be factually correct. At least I can't see any penalty interest identified. I suppose they would argue that the penalty interest is included in the Interest Paid figure, which I believe it is, but it certainly doesn't distinguish between standard and penalty interest, and doesn't state what percentage penalty interest was paid, or how the penalty interest is to be divided between lenders and CP. Picking a loan at random that ran late, my back-of-fag-packet calcs show that I received about 2% penalty interest for the 9.75 months that it was late. The project details now state that the penalty interest rate is 5%. The Loan Factsheet is frankly a confusing mess. It states that the loan term is for "up to 12 months" commencing on a specific date. It then repeats that Maximum Term I.e. "The term for this project is a maximum 12 months. Should this project run for the maximum 12 months period, the end date will be" followed by a date that is 21.75 months after the stated start date. This is the date that the loan actually repaid. It also goes on to state "you will receive £xxx.xx capital and £yyy.yy interest at the end of the loan period should the project run to the expected end date. There are two problems with this: £yyy.yy is not the interest at the expected end date, it's the actual total interest that was paid including extended and penalty interest; the interest was not actually expected at the end anyway, as it was paid monthly from retained interest during the original loan term.
|
|
|
|
Post by overthehill on Apr 19, 2022 14:30:02 GMT
I know development loans are more complicated but this is Proplend's concise penalty interest policy that is very easy to verify on payment if you're inclined.
"If the loan has not been fully redeemed by seven business days after the maturity date, Penalty Interest will accrue at 150% of the original rate, which will be passed on to Lenders upon redemption, minus the Proplend Lender fee."
|
|
ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
Posts: 10,831
Likes: 11,059
|
Post by ilmoro on Apr 19, 2022 14:50:49 GMT
I know development loans are more complicated but this is Proplend's concise penalty interest policy that is very easy to verify if you're inclined.
"If the loan has not been fully redeemed by seven business days after the maturity date, Penalty Interest will accrue at 150% of the original rate, which will be passed on to Lenders upon redemption, minus the Proplend Lender fee."
Indeed very clear, but then you read a loan contract which applies default rate immediately any payment (interest or capital) is in arrears (defined as 5 business days overdue) or a default event occurs. (applied to the sum overdue) IS that 150% including the original rate or an extra 150%? I also note that payments will be used to settle Proplend fees & any arrears, before any principal & current interest. So what happens in the event of a default? Are recoveries use to clear outstanding fees & interest prior to capital?
|
|
|
|
Post by Ace on May 3, 2022 16:56:21 GMT
I notice that CP have changed the description of the penalty interest to "Protection Interest"; still 5%. I have no idea why, the old name seemed a better description to me.
|
|
|
|
Post by Ace on May 17, 2022 14:30:50 GMT
I notice that they still refer to it using the more informative "penalty interest" in the loan updates.
|
|
p2pfan
Member of DD Central
Full-Time Investor
Posts: 734 
Likes: 814
|
Post by p2pfan on May 17, 2022 14:54:42 GMT
The highest of respects to CP for paying lenders this small penalty interest. It's only fair. It's one of the reasons I prioritise lending via CP over many other platforms.
Most P2P platforms don't do so. Case in point is KF, who seem to extend - usually by considerable periods of time - c. 90% of the loans I'm invested into. It's an extraordinary rate of mickey-taking. Because lenders don't get any increased interest for defaulting loans, it's not in KF's interest to make sure that borrowers give lenders their money back when they stated they would.
|
|
|
|
Post by Ace on Oct 13, 2023 8:08:42 GMT
I note that CP have added a "Protection Fee" (typically 2% to 3.5%) to each project's details page. This Fee is charged if the loan is not repaid by the contracted end date in addition to the "Protection Interest".
Since they've added this to all project's, even completed ones, I assume that it was a charge that has always been there, but that they have not previously declared this to lenders. The fee is not specially mentioned in our T&Cs, but it's presumably covered by a catchall that says that they can charge up to 10% of the amount that they recover from the borrower plus disbursements. This ranks ahead of lenders. I think that the wording here has changed quite a bit since I last read the document.
I don't really have a problem with these fees, assuming that they were always declared to borrowers, particularly now that CP are running on such a narrow interest margin. Late project's do obviously cause a great deal of extra work for the platform, which needs to be paid for. However, I am annoyed that such changes are not openly and explicitly brought to lender's attention. Yet another example of CP clearly not adhering to their stated claims of being open and transparent.
|
|
ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
Posts: 10,831
Likes: 11,059
|
Post by ilmoro on Oct 13, 2023 9:49:53 GMT
I note that CP have added a "Protection Fee" (typically 2% to 3.5%) to each project's details page. This Fee is charged if the loan is not repaid by the contracted end date in addition to the "Protection Interest". Since they've added this to all project's, even completed ones, I assume that it was a charge that has always been there, but that they have not previously declared this to lenders. The fee is not specially mentioned in our T&Cs, but it's presumably covered by a catchall that says that they can charge up to 10% of the amount that they recover from the borrower plus disbursements. This ranks ahead of lenders. I think that the wording here has changed quite a bit since I last read the document. I don't really have a problem with these fees, assuming that they were always declared to borrowers, particularly now that CP are running on such a narrow interest margin. Late project's do obviously cause a great deal of extra work for the platform, which needs to be paid for. However, I am annoyed that such changes are not openly and explicitly brought to lender's attention. Yet another example of CP clearly not adhering to their stated claims of being open and transparent. I suspect the additional of the protection fee is to comply with FCA regulations - seems to have taken a while Not sure t&cs wording has changed, not least because it cant without notice (which I suspect would have led to you reading them) & as it doesnt apply retrospectively, would need to be clear which terms applied to which lending. As an aside, where are the loan agreements provided? And can you read the factsheets ... currently just code gobbledygook for me on android & ios?
|
|
|
|
Post by Ace on Oct 13, 2023 10:10:14 GMT
I note that CP have added a "Protection Fee" (typically 2% to 3.5%) to each project's details page. This Fee is charged if the loan is not repaid by the contracted end date in addition to the "Protection Interest". Since they've added this to all project's, even completed ones, I assume that it was a charge that has always been there, but that they have not previously declared this to lenders. The fee is not specially mentioned in our T&Cs, but it's presumably covered by a catchall that says that they can charge up to 10% of the amount that they recover from the borrower plus disbursements. This ranks ahead of lenders. I think that the wording here has changed quite a bit since I last read the document. I don't really have a problem with these fees, assuming that they were always declared to borrowers, particularly now that CP are running on such a narrow interest margin. Late project's do obviously cause a great deal of extra work for the platform, which needs to be paid for. However, I am annoyed that such changes are not openly and explicitly brought to lender's attention. Yet another example of CP clearly not adhering to their stated claims of being open and transparent. I suspect the additional of the protection fee is to comply with FCA regulations - seems to have taken a while Not sure t&cs wording has changed, not least because it cant without notice (which I suspect would have led to you reading them) & as it doesnt apply retrospectively, would need to be clear which terms applied to which lending. As an aside, where are the loan agreements provided? And can you read the factsheets ... currently just code gobbledygook for me on android & ios? My dashboard says that I accepted the terms on 29th Aug 2023. I don't recall doing so, but it's probably a deemed acceptance, or a tick in a box that not even I read when making an investment! I have the same problem with loan agreements on android. I have to fire up a windows PC to be able to read them.
|
|
