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Post by nickthefool on Jul 20, 2015 16:31:20 GMT
Cashing in from the monthly market...? Umm... I didn't actually want to do it, just wanted to see how accessible my money was in case of some unforseen circumstance, and was surprised that the fees were high enough that I would have got less than my initial capital back.
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spiral
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Post by spiral on Jul 20, 2015 16:58:40 GMT
was surprised that the fees were high enough that I would have got less than my initial capital back. B/S used to do this with notice accounts i.e. the ones you had to give x months notice or lose the equivalent amount in interest. If you closed the account before that time had lapsed, you got back less than you put in.
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c88dnf
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Post by c88dnf on Jul 20, 2015 17:02:36 GMT
Forty six and a half years and counting. ::smug:: You only serve 20 for murder these days. Just saying....
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Post by ravado on Jul 22, 2015 17:27:23 GMT
As I started this thread I thought I'd come back and comment. I do accept that Ratesetter varies its rates on different terms for a reason and that 5 years means 5 years or a penalty. I also agree that this model was quite clear when I invested. I still have more money in Ratesetter than other platforms and this provides a relatively secure place for my cash. Fortunately, as well as reinvesting some returned capital and interest from Ratesetter and Funding Circle into higher interest platforms, I have the option of selling on the secondary market on Funding Circle, often at a three percent premium. Clearly, Funding Circle is riskier than Ratesetter (ie unknown number of future defaults).
My conclusion is therefore 'horses for courses'. Both platforms have their strengths (and weaknesses) and form a useful part of any PtPL portfolio alongside more risky, secured-loan platforms such as Saving Stream.
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sl75
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Post by sl75 on Jul 22, 2015 18:21:57 GMT
Assuming they've not fixed it since the long discussions last year, the key problem for "repayment" loans is that RateSetter claw back the interest on all of the repayments for the entire loan, rather than merely the interest on the amount you're selling out. The system they have works adequately for fixed term "bond-style" loans, although even then it claws back a bit more than necessary as no intermediate durations exist against which to compare it, but I still feel they have completely misinterpreted the intent of the simple description of the intended functionality when implementing it for the "income-style" loans. All my 3-year loans have now come to a natural end, and I have other priorities. It's someone else's battle to fight now, however, you may find interesting material in my previous thread on the subject: p2pindependentforum.com/thread/1232/ratesetter-sellout-excessive-income-productsEdit: I would acknowledge that westonkevRS mentions "consistent rules that lenders know and understand", however, I would strongly suggest that many lenders would NOT understand until it is too late that RateSetter claw back interest not only on the amount sold out, but also on amounts that have already been repaid under the relevant contracts. This additional interest clawback does nothing further to disincentivise "playing the system" (which is already uneconomical with the more obvious [to me] interpretation), and IMHO serves only to line RateSetter's own back pocket at the expense of naive investors who use the sellout without realising how much of the charge could have been avoided by reducing the amount sold out. For a system broadly similar to RateSetter, but with the loans broken down to (up to) 60 separate "bond-style" loans, the system would work perfectly. Sell out a 60 month "bond-style" loan after 57 months, and you'd be reduced to the 57 month bond rate as it was at the time of the match. The clawing back of the interest from the capital that was already paid in months 1-56 is what seems grossly unfair - a point that RateSetter have failed to take on board as far as I can see... but again, I really feel it is for someone who has ACTUALLY been disadvantaged by this to make the relevant complaints, rather than someone like me (or by the look of things the OP on this thread) who merely supposes that they WOULD be disadvantaged on the basis of a quote that they don't proceed with.
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locutus
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Post by locutus on Jul 23, 2015 7:21:45 GMT
The excessive fees are one thing but what happens to the difference in interest rate that the borrower is paying?
e.g. If someone funds a 5 year loan at 6.5% and decides to sell out at year 2, then the new lender is only financing a 3 year loan but at 5 year rates. At rates today, the 3 year is around 5%. What happens to the remaining 1.5% or is it placed back on the 3 year market at 6.5%?
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spiral
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Post by spiral on Jul 23, 2015 9:21:08 GMT
Sell out a 60 month "bond-style" loan after 57 months, and you'd be reduced to the 57 month bond rate as it was at the time of the match. The clawing back of the interest from the capital that was already paid in months 1-56 is what seems grossly unfair Are you saying that they claw back more interest than the difference in the interest you've been paid? E.g (All made up numbers for simplicity not based on any true repayment schedules) Month 1 Interest £2.90 Capital £0.10 Month 2 Interest £2.80 Capital £0.20 Month 3 Interest £2.70 Capital £0.30 You then sell out and the considered rate for your sellout is such that the repayments should have been Month 1 Interest £2.80 Capital £0.20 Month 2 Interest £2.70 Capital £0.30 Month 3 Interest £2.60 Capital £0.40 Instead of clawing back 30p (10p extra paid per month as I've understood it) they claw back 60p because they are always comparing to the £2.90 interest from month 1 so you get a cummulative effect of 10p+20p+30p or are you saying something different to either of these.
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jo
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Post by jo on Jul 26, 2015 10:13:27 GMT
The excessive fees are one thing but what happens to the difference in interest rate that the borrower is paying? e.g. If someone funds a 5 year loan at 6.5% and decides to sell out at year 2, then the new lender is only financing a 3 year loan but at 5 year rates. At rates today, the 3 year is around 5%. What happens to the remaining 1.5% or is it placed back on the 3 year market at 6.5%? I've wondered about this also.
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spiral
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Post by spiral on Jul 26, 2015 18:37:37 GMT
The excessive fees are one thing but what happens to the difference in interest rate that the borrower is paying? e.g. If someone funds a 5 year loan at 6.5% and decides to sell out at year 2, then the new lender is only financing a 3 year loan but at 5 year rates. At rates today, the 3 year is around 5%. What happens to the remaining 1.5% or is it placed back on the 3 year market at 6.5%? I've wondered about this also. AIUI it still gets sold to a 5 yr lender at the rate of the original contract. RS will pocket the difference if the new lender rate is below the original (I assume but I suppose it might just be passed over as a bonus to the new lender). What I'm unsure of is how RS compensate the new lender if the original rate is below the current rate because that wouldn't be able to be passed over. I've never seen anyone post that they've picked up a "sold out" loan so the details of this have never been discussed here.
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Post by moneyball on Jul 26, 2015 20:21:51 GMT
I've wondered about this also. AIUI it still gets sold to a 5 yr lender at the rate of the original contract. RS will pocket the difference if the new lender rate is below the original (I assume but I suppose it might just be passed over as a bonus to the new lender). What I'm unsure of is how RS compensate the new lender if the original rate is below the current rate because that wouldn't be able to be passed over. I've never seen anyone post that they've picked up a "sold out" loan so the details of this have never been discussed here. Far from certain but it might explain why I have 3yr loans that were only 21 months long and 5yr loans that were 57 months long. All these "shortened" loans were all matched at the same time as well (implying they are matching soldout loans.)
If this is correct, then me as the new lender, as far as Im concerned, am getting the current rate I asked for and is being paid the difference from the fees that RS are collecting from the sell out procedure.
Of course, assuming Im correct.
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spiral
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Post by spiral on Jul 27, 2015 7:42:33 GMT
If this is correct, then me as the new lender, as far as Im concerned, am getting the current rate I asked for and is being paid the difference from the fees that RS are collecting from the sell out procedure.
Of course, assuming Im correct.
If you are correct (and I'm guessing you are due to the length of loans and the fact that 2 different markets matched at the same time) what would be interesting to view the contract document and note the date and interest rate. I'm assuming the date will be the date of your new contract as opposed to the original date the borrower took the money but the interest rate should be what the borrower is paying which may or may not be different to what you're getting. Contract definitions state ""Interest Rate" means x.xx% which is the annual interest rate calculated in arrears and applied to the outstanding balance at the beginning of the period which shall be paid by the Borrower to the Lender;" So unless RS become the owner of sold out loans and create new contracts to sell these on at current rates, such that RS are the "borrower" of your money, the contract should state (and therefore you receive) the rate of the original loan. This is where I see it not being an issue with picking up a 5yr contract at 7% if you're after 6% but more difficult to compensate for if you pick up a 5% loan when you're after 6%.
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jo
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Post by jo on Jul 27, 2015 20:41:44 GMT
Slightly OT westonkevRS but why is it possible to transfer (sell) ownership of a loan yet not possible to transfer title to a lender's account? I am am thinking particularly in the context of death of a lender: say I wanted to purchase a deceased relative's account in order to speed-up the winding up of the estate and reduce legal costs, it's not allowed. Legal cost of winding up a small RS account over run-off period might wipe out its value.
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Post by westonkevRS on Jul 27, 2015 21:26:59 GMT
Slightly OT westonkevRS but why is it possible to transfer (sell) ownership of a loan yet not possible to transfer title to a lender's account? I am am thinking particularly in the context of death of a lender: say I wanted to purchase a deceased relative's account in order to speed-up the winding up of the estate and reduce legal costs, it's not allowed. Legal cost of winding up a small RS account over run-off period might wipe out its value. joIt's fair to say that the T&Cs for deceased lender accounts tends to be on the strict side. When the reality is that we act with a huge level of care and fairness, to date always above the beyond. Therefore in the past there hasn't been a requirement for a deceased relative to take-over a loan, so we haven't had to think about the solution you mention. In truth it sounds easy, it would just be a very manual process so not something we want to do everyday, or guarantee as a service.
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jo
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Post by jo on Jul 28, 2015 7:46:57 GMT
Slightly OT westonkevRS but why is it possible to transfer (sell) ownership of a loan yet not possible to transfer title to a lender's account? I am am thinking particularly in the context of death of a lender: say I wanted to purchase a deceased relative's account in order to speed-up the winding up of the estate and reduce legal costs, it's not allowed. Legal cost of winding up a small RS account over run-off period might wipe out its value. joIt's fair to say that the T&Cs for deceased lender accounts tends to be on the strict side. When the reality is that we act with a huge level of care and fairness, to date always above the beyond. Therefore in the past there hasn't been a requirement for a deceased relative to take-over a loan, so we haven't had to think about the solution you mention. In truth it sounds easy, it would just be a very manual process so not something we want to do everyday, or guarantee as a service. Cheers Kev. Given the (relatively) young age of P2P businesses, I see this as being a potentially important issue in the medium future. Will be to the credit of the platforms which recognise and get in front of it.
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Post by moneyball on Aug 2, 2015 20:15:08 GMT
If this is correct, then me as the new lender, as far as Im concerned, am getting the current rate I asked for and is being paid the difference from the fees that RS are collecting from the sell out procedure.
Of course, assuming Im correct.
If you are correct (and I'm guessing you are due to the length of loans and the fact that 2 different markets matched at the same time) what would be interesting to view the contract document and note the date and interest rate. I'm assuming the date will be the date of your new contract as opposed to the original date the borrower took the money but the interest rate should be what the borrower is paying which may or may not be different to what you're getting. Contract definitions state ""Interest Rate" means x.xx% which is the annual interest rate calculated in arrears and applied to the outstanding balance at the beginning of the period which shall be paid by the Borrower to the Lender;" So unless RS become the owner of sold out loans and create new contracts to sell these on at current rates, such that RS are the "borrower" of your money, the contract should state (and therefore you receive) the rate of the original loan. This is where I see it not being an issue with picking up a 5yr contract at 7% if you're after 6% but more difficult to compensate for if you pick up a 5% loan when you're after 6%. Around mid January 2015, I put £500 in the 3yr market at 5.2%.
This got matched with eight borrowers.
IIRC, this was late afternoon/early evening when the rates had spiked a little bit and there was little liquidity.
All 8 contracts were matched at 5.2% AER (contract rate 5.09%) as expected.
These were the amounts that got matched and how long each of these "3 year/36 month deals" were:
£39.69 - 25 months £14.71 - 24 months £138.14 - 24 months £55.17 - 23 months £10.01 - 23 months £130.76 - 23 months £56.87 - 22 months £54.65 - 21 months
Ive listed them in contract order, meaning the first and last loans are likely to be split with other lenders.
Assuming that's correct.... who on Earth borrows £10.01 over 23 months in a 3 year market?... unless of course the loans are being sold out?
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