Secondary Market Now Available

Erm ....  all the parts I've listed at par have sold with an hour of listing, and I suspect any parts listed at a discount to correctly reflect that the buyer has to pay tax on the accrued interest you are selling will be snapped up in minutes.

Any part listed at a premium that hasn't sold within a fortnight is very unlikely to sell at that premium ever. Every night at midnight or shortly thereafter the effective rate of every listed part decreases slightly to reflect one less day to maturity. A secondary market should be a place that lenders can get access to their money early in an emergency, and given the tax implications of the FS setup, lenders should expect to have to list at upto 3% discount to attract buyers who are 40/45% taxpayers.  I simply can not see parts listed at a 3% discount still being unsold after a fortnight.

Somone reported on the first day seeing a -3% but I suspect that was finger trouble by the seller (listing at -3% not +3% ).

Whilst there are mugs prepared to pay a premium (unbelievably yesterday someone paid me a 1% premium for a loan with around 40 days left, and a clearly displayed effective rate of around 3% )  those lenders who understand the risk profile of FS loans will adopt a policy of selling and not buying on the SM.

Disagree. Why should your view of a secondary market be the only one? A secondary market is a tool and each lender has a choice of how they want to use it. Yes, some might use it to exit quickly, others might be happy to exit, but only at a certain price and happy to wait for seller to find buyer and supply and demand. Cash flow can vary hugely in P2P.

I have had loans on Ablrate listed for over a month or so and then out of the blue comes along a buyer. This has happened numerous times. Granted Ablrate are generally longer term loans, but 14 days is far too short a period.

One thought that has occurred to me that makes me less enthusiastic about selling loan parts in order to save tax is that an awful lot of FS loans are renewed.  Those renewals help me keep my FS investment at the level I want.  If I sell parts just to save the tax -- as opposed to because I need/want to make a withdrawal -- then I have to be in a position to be poised on the website whenever a new loan is released in the hope of reinvesting my capital. 

I have enough trouble staying fully invested as loans mature that I don't really want to aggravate the situation by selling loan parts.

Good point, but on the other hand I am always a bit nervous about a loan that renews. Paying c18%pa for 6 months is one thing but if renewing it I wonder what the repayment strategy is.

I also wonder about renewals.  I'm perhaps (over?)-optimistic that it means the borrower really doesn't want to give up on the security.  And to the extent that the value of the security is the same as it was at the beginning, the risk of default shouldn't be a lot different on the renewal compared to the original loan.  The ones that worry me are the not-very-old vehicles which probably aren't worth as much as they were six months earlier, and will be worth even less after another six months.  Art is another area where extreme caution isn't a bad idea, as fashions come and go, and what's in demand today might not be in demand in a few months' time, so selling loans secured on artwork before maturity could be a very smart policy, even if it reduces one's FS investment to a level below an investor's target.

fundingsecure :  Will you be capturing SM data that you'd be willing to share with your investors?  It would be useful to know, for instance, what is the average time required to find a buyer for a part depending on, say, the premium/discount offered or the return offered to the borrower.  That info would help investors choose appropriate settings when selling and make the SM more effective and useful for both buyers and sellers.

ISTM that if the borrower realises he can't repay, he ought to renew only if he thought he'd be in a position to repay in six months' time.  If not, he's just throwing good money after bad.

If the borrower received 70% of the value of the item in the beginning, then by the time they've paid a full year's interest and other fees it will have cost them something close to 100% of the value to get their item back.  It would make sense if the item is unique or has sentimental value.  Or if the value assigned by the pawnbroker is considered to be an underestimate of the value by the borrower.  Otherwise, they might be better off to abandon the item and replace it with something equivalent at some point in the future when they can afford it.

Of course, borrowers' emotions play a part as well and what they feel is best for them might not be what's best from an objective financial point of view.