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Post by djia977 on Feb 28, 2014 11:24:22 GMT
Just a quick addition to the post above:
Of those 38 defaults of year 2013 Estonian A1000 loans, of which only 5 were with interest rates of below 28%, if we look at those 5 defaults we find 2 were to males aged 22, 2 were to males aged 26 with the other one to a male aged 42.
Avoiding younger males and 28% loans in 2013 would have resulted in just 1 default so far out of 312 loans, or around 0.3%!
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JamesFrance
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Port Grimaud 1974
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Post by JamesFrance on Feb 28, 2014 11:29:18 GMT
I suppose it will all depend on the recovery level of the defaulted loans which will probably take a long time for us to know the answer. If Partel's figure of 86% continues to apply then the higher rates will produce the best returns.
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james
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Post by james on Feb 28, 2014 22:15:16 GMT
duck, someone on the isePankur message board posted a bookmarklet that will find your loans on the resale market. However, what I do is just scan the list of my own investments and combine that with a spreadsheet. The spreadsheet is used in part to track loans that may be removed from sale automatically by isePankur after a month. djjia977, interesting, though I'm concerned that 28% and above 28% are very different in principle because 28% is the default interest rate for A1000. Whether above default interest rate and default interest rate perform differently would be interesting. My experience on loans above default interest rate is not good. 13 loans in A1000 at 29%+, 2 60+ days overdue. I sold both of the defaulted ones before default, one at 0% markup, one at 5% markup. A group with an average interest rate of 16.85% would cause me not to lend via isePankur. Not far enough above the rate I can obtain elsewhere to cover the currency and default risks. I typically look to sell any loan with an interest rate up to 17% and plan to increase that over time. What I try to do with regard to defaults is sell before default, taking a capital loss at that time if I must. When a loan is late by more than a short time I decide what to do, based in part on patterns of which borrower groups are most likely to default. Young men living at with parents, buying a car, having only vocational education and working in transport or manufacturing, say, would be good candidates for an early sale. I'll add interest rate to the mix, thanks.  At the moment the amount I have in defaulted loans is about 2% of the amount in outstanding loans I had on 1 November 2013 or about 1.6% of the amount on 1 December. My current loan book is about twice the 1 November size. |
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duck
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Post by duck on Mar 1, 2014 6:35:52 GMT
Thanks for that, I do similar at present and before I 'automate' the process I wanted to check that there wasn't a simple 'button' that I hadn't found - it is after all so easy to see the loans you have sold.
I'm yet to get my head round the 'classes' of loans best sold early but I log every actual payment against 'expected' in an attempt to spot patterns. I currently have 6 loans that have from day 1 paid a few cents of capital on the due date and then make full payment later in the month - regular as clockwork. I suspect the pay date was chosen wrongly when the loan was set up and it is a simple cash flow issue. I'm holding onto these loans. I have other loans that pay a few cents on the due date and then the rest comes in at sometime later in the month - usually following a chasing letter. If this happens twice I try to sell.
On the above 28% rates I am wary of any A1000s - I don't get a comfortable feeling. If you have an A1000 rating I feel you should be able to do better. I also hold a number of lower rated loans at rates above 28%. Bs have an unblemished record so far with A900s performing the worst. Since my overall defaults are currently a 'low' 1.35% (influenced heavily by start up Finnish loans) I can't draw meaningful figures for these non A1000 loans ..... time will tell.
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Post by wiseclerk on Mar 1, 2014 9:22:35 GMT
On the above 28% rates I am wary of any A1000s - I don't get a comfortable feeling. If you have an A1000 rating I feel you should be able to do better.
In my view this is a misconception. The A1000 means only that there are no known (registered) payment problems in the past 3 years. What if this loan is the first loan the borrower ever took (especially those young borrowers). Then of course he would get an A1000 rating. So A1000 is not an outright "positive" rating but a non-negative rating.
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duck
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Post by duck on Mar 1, 2014 10:09:36 GMT
Fair point.
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Post by djia977 on Mar 1, 2014 12:50:31 GMT
On the above 28% rates I am wary of any A1000s - I don't get a comfortable feeling. If you have an A1000 rating I feel you should be able to do better.
In my view this is a misconception. The A1000 means only that there are no known (registered) payment problems in the past 3 years. What if this loan is the first loan the borrower ever took (especially those young borrowers). Then of course he would get an A1000 rating. So A1000 is not an outright "positive" rating but a non-negative rating. I've taken a look at the issue of people with no other existing loans being treated as A1000 borrowers: Again, i'll use the sample of year 2013 Estonian A1000 loans past the point of possible default. These total 947 loans, of which 38 have defaulted so far. Then I have created a new column showing where the monthly debt figure used in the DTI is very close (within 1%) of the proposed IP loan repayment. There have been 153 of these of which 9 have defaulted so far, giving a default rate on these loans of 5.8%, meaning that the default rate on the other 794 loans with 29 defaults is 3.6%. Quite some difference. By looking closer at those 153 loans with no existing loan history, we see that 34 were to males up to the age of 26 of which 6 defaulted, giving a default rate on these of 17.6%. Pretty awful given that these loans are on average not even a year old. Merely by excluding these 34 loans would have left 913 with a default rate of 3.5%
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At the moment the amount I have in defaulted loans is about 2% of the amount in outstanding loans I had on 1 November 2013 or about 1.6% of the amount on 1 December. My current loan book is about twice the 1 November size.
