j
Member of DD Central
Penguins are very misunderstood!
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Post by j on Mar 17, 2014 21:42:04 GMT
Whilst I'm sure factors like loan size, loan duration, security & guarantees are all calculated factors, I have always wondered if there's a special formula to calculate how much interest to charge on any given loan. Sometimes I'm confused with loans that I personally feel are more secure & will provide better return in the long term are classed as higher risk (going by the higher interest rate charged) compared to others that have worse ltv but are still advertised at say 10% vs for example 12% or more. I appreciate AC probably cannot give some trade secrets away & may not interact as normal on his one, maybe some of our more learned friends here can shed a light on this issue & educate us in the process  |
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Post by Ton ⓉⓞⓃ on Mar 18, 2014 11:33:06 GMT
Whilst I'm sure factors like loan size, loan duration, security & guarantees are all calculated factors, I have always wondered if there's a special formula to calculate how much interest to charge on any given loan. Sometimes I'm confused with loans that I personally feel are more secure & will provide better return in the long term are classed as higher risk (going by the higher interest rate charged) compared to others that have worse ltv but are still advertised at say 10% vs for example 12% or more. I appreciate AC probably cannot give some trade secrets away & may not interact as normal on his one, maybe some of our more learned friends here can shed a light on this issue & educate us in the process I don't think there's a formula at all. It's more what's the going rate, what can be afforded by the borrower (what can be got away with, only a little of this), what have they been previously offered, how desperate are they (bridging loans). I think the man in the field, the local RM, will suggest the rate and then someone else not so close to it, say someone in the office has to agree with that figure.
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j
Member of DD Central
Penguins are very misunderstood!
Posts: 2,188
Likes: 540
|
Post by j on Mar 18, 2014 17:14:34 GMT
Whilst I'm sure factors like loan size, loan duration, security & guarantees are all calculated factors, I have always wondered if there's a special formula to calculate how much interest to charge on any given loan. Sometimes I'm confused with loans that I personally feel are more secure & will provide better return in the long term are classed as higher risk (going by the higher interest rate charged) compared to others that have worse ltv but are still advertised at say 10% vs for example 12% or more. I appreciate AC probably cannot give some trade secrets away & may not interact as normal on his one, maybe some of our more learned friends here can shed a light on this issue & educate us in the process I don't think there's a formula at all. It's more what's the going rate, what can be afforded by the borrower (what can be got away with, only a little of this), what have they been previously offered, how desperate are they (bridging loans). I think the man in the field, the local RM, will suggest the rate and then someone else not so close to it, say someone in the office has to agree with that figure. I probably used the wrong term in 'formula' to describe my thoughts. I appreciate there's no mathematical formula to calculate a rate. What I was trying to work out is if you take 2 specific loans, say L***s & boiler man, the former had a better ltv & is longer in length than the latter so, to me at least, seems a better bet to earn more on its units, yet boiler man pays 3% less! So, how do AC decide what to charge when & why? Would be very useful to know, without giving away any secrets obviously.
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Post by chris on Mar 18, 2014 17:53:25 GMT
So, how do AC decide what to charge when & why? Would be very useful to know, without giving away any secrets obviously. There is a credit model and pricing matrix that, based on a huge number of factors, determines the rates at which we will offer loans on our platform. As you have guessed, these are highly proprietary and can't be detailed too much at this stage although never say never. If you look on our "The Team" page in the about us section of the site you'll see Robert Dellner listed as our Senior Credit Risk Officer. He is massively experienced within the financial industry and is tasked with building and evolving our credit risk models and pricing structures in co-ordination with the other directors.
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j
Member of DD Central
Penguins are very misunderstood!
Posts: 2,188
Likes: 540
|
Post by j on Mar 18, 2014 22:06:51 GMT
So, how do AC decide what to charge when & why? Would be very useful to know, without giving away any secrets obviously. There is a credit model and pricing matrix that, based on a huge number of factors, determines the rates at which we will offer loans on our platform. As you have guessed, these are highly proprietary and can't be detailed too much at this stage although never say never. If you look on our "The Team" page in the about us section of the site you'll see Robert Dellner listed as our Senior Credit Risk Officer. He is massively experienced within the financial industry and is tasked with building and evolving our credit risk models and pricing structures in co-ordination with the other directors. Thanks for the info
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