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Post by badger on Mar 14, 2014 16:01:05 GMT
There are two 'A' grade loans up for auction at present, both for 24 months.
One (Ph******* H*******) allows me to bid 14%, the second one (Hi********) has just gone on with a maximum of 10%.
If they are the same risk, and the same duration, then why different starting rates?
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oldgrumpy
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Post by oldgrumpy on Mar 14, 2014 16:37:02 GMT
Huh! I wonder what the real reason is that they have not gone for the 8% option!
I'm not in RBS...... aaaarrgh!!
or rebuildingsociety.... do folks think it's a credible or safe platform?
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bugs4me
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Post by bugs4me on Mar 14, 2014 16:47:30 GMT
There are two 'A' grade loans up for auction at present, both for 24 months.
One (Ph******* H*******) allows me to bid 14%, the second one (Hi********) has just gone on with a maximum of 10%.
If they are the same risk, and the same duration, then why different starting rates? I would assume that it's because Hi******t has stated that (paraphrasing) "they could easily get a bank loan for 8%, but instead, they are doing P2B lenders a favour by offering the proposal to them", so they are unwilling to accept a final rate that is anything above that... even though their balance sheet isn't that pretty, the PG's being offered are lacking in any real substance, and no alternate loan offers have been produced at 8% or any other rate. When borrowers try to dictate their own rate instead of letting the market decide, that in itself is enough reason for me to steer clear, personally. Total BS
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Post by badger on Mar 14, 2014 23:40:25 GMT
I stand corrected - the maximum on both these loans is actually 14%
What I didn't realise is that the 'rate' box defaults to the rate that the last person bid, but you can over-ride it up to some maximum - in this case 14% (which I assume depends only on the credit rating)
So if the last person bid 10%, you are being nudged to bid 10% even though the auction isn't yet full and you could bid 14%. Strange idea??
As I write, H********t now defaults to 13%, and if I sort the loan offers by date the most recent bid was 13%
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shimself
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Post by shimself on Mar 16, 2014 16:50:31 GMT
Extremely odd that the borrower (H********T) has posted the first three questions and answers 'to' and 'from' themselves, too. Actually no I thought it was smart. q1 turnover seems to have gone down - A no in fact its up (seasonal effect) q2 Net profit going down A for a reason q3 explains a big dividend distribution last year In other words they can read their own accounts and have actually thought about what they would ask if they were in our shoes - very laudable
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bugs4me
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Post by bugs4me on Mar 16, 2014 18:13:38 GMT
Actually no I thought it was smart. In other words they can read their own accounts and have actually thought about what they would ask if they were in our shoes - very laudable There is no doubt in my mind that the borrower is smart - too smart. There is also little doubt that he is capable of reading his own accounts, albeit it seemingly selectively. However, all he has succeeded in doing so far is to gloss over the fact that his company is technically insolvent and that his proposal has very little to offer in the way of security, yet he is expecting a final rate of 8% or better. Each to their own - I actually admire that he has put some thought into it ('some' being a huge understatement), and that he is responding to questions quickly; but to me, it's just part of his whole hard sell approach that I personally will not be sucked in by. These types of borrowers are all over a number of P2P/P2B platforms. They will go and try their luck elsewhere no doubt. What the platforms seem to fail to realise is that it brings them into disrepute and makes future loans more difficult - yes, I am a cynic.
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shimself
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Post by shimself on Mar 16, 2014 21:23:08 GMT
I was just making the narrow point that using the q&a to cover predictable questions is laudable and to be encouraged.
It wouldn't of itself turn a bad proposition into a good one, but anything borrowers can do to facilitate making a decision is alright by me.
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Post by Deleted on Aug 14, 2014 1:04:09 GMT
" do folks think it's a credible or safe platform?"
Emphatically yes.
The initial rate RANGE is sometimes limited by the borrower's preferences.
The actual rate is a market discovery: sometimes people will carry on bidding after a loan's been fully offered, thereby driving down the rate. Eventually that effect could be quite strong. Conversely the future upper limit will depend in part on risk assessments by REBS. It's unlikely to go above 20% but who knows. In any case the final rate may move upward similarly to how it currently moves downward, by super-low rates disappearing from individual lenders' demand schedules entirely.
It's a very beautiful thing, a price of money determined by the market. What a contrast to the centrally planned BoE rate which wreaks so much mayhem. With a market rate of interest, resources will be allocated correctly with lenders pulling out at the right time and borrowers being discouraged from unwise take-ups.
The role of the secondary market has the potential to further refine this discovery process: a post-launch correction in the first few months will make the rate MORE honest, at the very least for lenders.
Wow I see there's another poster called 'badger'!!! Hello there! We fellow vermin must stick together!
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