arbster
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Post by arbster on Oct 15, 2015 15:25:50 GMT
For loans originated since April 2013 (when 60-month loans got properly established), 36-month loans represent 29% of the non-property loan book, but over 44% of defaults, with 36-month Cs appearing to be particular shockers. 36-month loans are generally comparatively bad performers, but they were the vast majority of loans originated prior to FY 2013/14.
Anyway, "lies, damned lies and statistics" aside, I'm slowly trying to build some kind of model to enable me to stay with FC, but "beat" their default rates. Time will tell.
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Post by accumul8 on Oct 15, 2015 16:32:07 GMT
For loans originated since April 2013 (when 60-month loans got properly established), 36-month loans represent 29% of the non-property loan book, but over 44% of defaults, with 36-month Cs appearing to be particular shockers. 36-month loans are generally comparatively bad performers, but they were the vast majority of loans originated prior to FY 2013/14. Anyway, "lies, damned lies and statistics" aside, I'm slowly trying to build some kind of model to enable me to stay with FC, but "beat" their default rates. Time will tell. Interesting - I had not appreciated that 60 month loans only started in April 2013. I had done some analysis that showed 60 months were better than 36 months which does seem counter-intuitive somehow. Maybe businesses which plan for 60 month loans demonstrate better long term planning??? I also did some analysis which showed that smaller loans had higher default rates than larger loans - again somewhat counter-intuitive. Don't know if anyone else can support that analysis.
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mikeb
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Post by mikeb on Oct 15, 2015 17:36:52 GMT
... is that because a struggling business may see a "small" loan as something that they can let slip, as it's not worth chasing?
Whereas a larger loan will definitely bring interested parties, courts, bailiffs looking for the cash?
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Post by accumul8 on Oct 15, 2015 17:42:51 GMT
... is that because a struggling business may see a "small" loan as something that they can let slip, as it's not worth chasing? Whereas a larger loan will definitely bring interested parties, courts, bailiffs looking for the cash? Well that would be up to Failing Chasers as to whether they pursue (or are perceived as pursuing) small loans as vigorously as large loans. Maybe, larger loans are borrowed by larger businesses that have greater resilience or something. However, I'm still not sure that my analysis is statistically sound in the first place.
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ton27
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Post by ton27 on Oct 16, 2015 8:51:50 GMT
After an initial not too successful foray (based mostly on using FC ratings and a wide diversification), about 18 months ago I started again and invested mostly based on the "Financials".
I used only 4 criteria - the business had to be profitable, Current assets > Current Liabilities and the Loan value less than Shareholder Funds. In addition the Credit score had to show no deterioration.
I continued a wide diversification policy but managed to invest more than £35k and in the period I applied this methodology my defaults have been less than 20% of interest earned (which is 10.4%). I was lucky I think as it coincided with a period of relatively high interest rates.
It is now totally irrelevant to me as I am in drawdown - too many WLs, no bidding, too few loans, fixed rates etc.
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markr
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Post by markr on Oct 16, 2015 11:27:39 GMT
Interesting - I had not appreciated that 60 month loans only started in April 2013. My oldest 60 month loan is 1211 which was accepted at the end of May 2012. I own parts in about 50 60-month loans older than April 2013, and given these will be parts I've not sold because I got a good rate, there would have been many more than this. To be fair to arbster, he said "get properly established", so was probably allowing some time after the first one for them to bed in.
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arbster
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Post by arbster on Oct 16, 2015 11:58:09 GMT
Yep, the first 60-month loan was accepted on 03/03/2012, but it wasn't until the 2013/14 FY that they became as common as 36-month loans, and that was the FY when 24- and 48-month loans also became common.
Analysing the loan book performance will always be an imperfect business, because FC are constantly changing their risk assessment processes and refining their model. As such, it's of questionable value. However, by doing so I feel I can develop hypotheses that I can apply to new loans and in automating the active management of my existing loan parts. In short, I like to have a method, even if it's mad...
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