Investboy
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Trying to recover from P2P revolution
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Post by Investboy on Mar 23, 2016 21:12:35 GMT
Did you know you can borrow from Fantastic Creditgivers at 6% only? Unsecured! No need for assets! Personal guarantee is all you need! No obligation! No fees! I'm lending as ltd company and FC considers me a prime borrower so I got the letter to borrow from them too. How can I borrow at 6% if this is the lowest rate (A+, 12m) and FC makes money? I know - they charge the lender 1pp fee, but is that enough? Quite thin margin.  |
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am
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Post by am on Mar 23, 2016 21:27:12 GMT
They also charge the borrowers various fees, so the APR is higher than the headline rate. I believe that the charges can be found on the web site somewhere.
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blender
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Post by blender on Mar 23, 2016 21:33:21 GMT
No assessment fee - true there is no fee for making an application. But there are up front FC borrower fees in addition to the loan rate, which the letter forgets to mention. The 1% of outstanding principal per annum, which FC takes from the repayments, is no longer presented as a lender fee, so that it's not taxable. Overall about 3% APR goes to FC.
That 6% is not all the borrower pays, because of the fees, and in any case that rate only applies to A+ loans over one year. It's a special rate to dangle in front of potential borrowers in marketing material, but we see few 6% loans. It's rather like these ads you see from second hand car dealers which advertise the car you are looking for at a good price, but when you call them you find that the car has been sold but they do have another similar but ...
Edit: Did not see am's post.
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nick
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Post by nick on Mar 23, 2016 21:57:10 GMT
I believe the arrangement fee is 3-5% (depending on size) of loan value payable day 1.
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Post by bracknellboy on Mar 23, 2016 22:01:08 GMT
Did you know you can borrow from Fantastic Creditgivers at 6% only? Unsecured! No need for assets! Personal guarantee is all you need! No obligation! No fees! I'm lending as ltd company and FC considers me a prime borrower so I got the letter to borrow from them too. How can I borrow at 6% if this is the lowest rate (A+, 12m) and FC makes money? I know - they charge the lender 1pp fee, but is that enough? Quite thin margin. Now this is the interesting question: if a clone of your company was presented on FC, would you lend to it at that rate ? b) Have you considered taking up their offer and using the proceeds to lend to E rated at 18.x% c) could you perhaps put in a circular guarantee or 'risk share' clause - namely that should the effective rate on loans you make on FC fall below FCs advertised expected net rate, then it is FC that will be liable for any default from your company which so arises ? It seems only fair.
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blender
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Post by blender on Mar 24, 2016 0:06:39 GMT
I believe the arrangement fee is 3-5% (depending on size) of loan value payable day 1. Yes except 'property finance' is always 2% and the bargain 6% A+ 6-12 months is also 2%, which takes the 6% up to about 8% APR for 12 months, or 10% for six months. (The borrower does not pay fees up front, I should have said, the lenders do and it increases the sum borrowed and the APR on the funds actually received). static.fundingcircle.com/files/uk/information-packs/business-information-7bd782b1.pdf for all the info
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sl75
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Post by sl75 on Mar 24, 2016 10:13:45 GMT
I believe the arrangement fee is 3-5% (depending on size) of loan value payable day 1. Yes except 'property finance' is always 2% and the bargain 6% A+ 6-12 months is also 2%, which takes the 6% up to about 8% APR for 12 months, or 10% for six months. These approximate APR figures would be for an interest-only loan. For an amortising loan the increase to the APR would be about double what you're suggesting. As I recall, FC are not required to quote an APR, as they're not lending to consumers, so it's up to the business (or their accountant) to figure out their true APR. Edit: Regarding the letter in the OP, on first glance, it seems similar to the standard junk mail that you get all the time, merely indicating that you're "pre-qualified to apply for [whatever]". However, I see that FC are taking it a step further and pre-qualifying targeted businesses for the actual loan (before they even know what it's for) rather than merely the application process. ... or are they going to claim that it was obvious that wasn't what they really meant if you make financial commitments on the basis of this firm promise of a loan?
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Post by profunder on Mar 24, 2016 19:58:08 GMT
Yes except 'property finance' is always 2% and the bargain 6% A+ 6-12 months is also 2%, which takes the 6% up to about 8% APR for 12 months, or 10% for six months. These approximate APR figures would be for an interest-only loan. For an amortising loan the increase to the APR would be about double what you're suggesting. As I recall, FC are not required to quote an APR, as they're not lending to consumers, so it's up to the business (or their accountant) to figure out their true APR. Edit: Regarding the letter in the OP, on first glance, it seems similar to the standard junk mail that you get all the time, merely indicating that you're "pre-qualified to apply for [whatever]". However, I see that FC are taking it a step further and pre-qualifying targeted businesses for the actual loan (before they even know what it's for) rather than merely the application process. ... or are they going to claim that it was obvious that wasn't what they really meant if you make financial commitments on the basis of this firm promise of a loan? They have not prequalified at 6% (so not risk banded) nor prequalified any amount from the letter. He could apply and be offered a £10000 loan on E band
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ben
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Post by ben on Mar 24, 2016 20:14:43 GMT
also says from 6% so probably will not get offered anywhere near that like when you see a good holiday from x amount and its at a time and airport nobody wants to go from and the actual price for the times you want is half as much again
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blender
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Post by blender on Mar 24, 2016 22:43:47 GMT
Yes except 'property finance' is always 2% and the bargain 6% A+ 6-12 months is also 2%, which takes the 6% up to about 8% APR for 12 months, or 10% for six months. These approximate APR figures would be for an interest-only loan. For an amortising loan the increase to the APR would be about double what you're suggesting. ... You are quite right. I do not have many amortising loans and when thinking A+ and 12 months I have property in my head. The 6% loan would probably be an amortising unsecured SME loan and the APR paid by the borrower would be higher then I said. As you say, the 6% interest rate would be misleading to consumers. For a 12 month amortising loan at 6% interest rate we might say about 10% APR, of which the lenders and FC account for about 5% each. They are doing well enough.
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