kaya
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Post by kaya on Jul 29, 2016 10:52:02 GMT
Hi Ablrate lenders, I'm trying to get a feel for this site, just a couple of basic questions...
Seems to be plenty on the secondary market. Is that normal? Are they all generally reckoned to be good loans? Why is some secondary market stuff offered at a discount?
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SteveT
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Post by SteveT on Jul 29, 2016 11:24:51 GMT
Hi Ablrate lenders, I'm trying to get a feel for this site, just a couple of basic questions... Seems to be plenty on the secondary market. Is that normal? Are they all generally reckoned to be good loans? Why is some secondary market stuff offered at a discount? There is often more available when new loans are filling, as lenders look to diversify. Rates offered then are generally keener too (I bought some bits at 100% earlier that are rarely available without a premium). Where lenders are keen to sell down, say, a 10% loan to invest in a 12% loan or to retrieve some cash quickly, offering a discount to get to the head of the SM queue may be worthwhile for them. The real plus with the Ablrate SM is that it's a true market, with supply and demand self-balancing via the pricing mechanism, so you don't get the feast / famine scenario of other "only sell at par" platforms.
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james
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Post by james on Jul 29, 2016 12:55:15 GMT
Seems to be plenty on the secondary market. Is that normal? Are they all generally reckoned to be good loans? Why is some secondary market stuff offered at a discount? As well as the position as the first to be sold in the lowest price first setup there have been some loans where there was a premium paid to lenders and it's possible to sell those at break even plus interest by selling below 100%, down to approximately 99%. The loans on the secondary market are all ones I'd regard as good loans. Be sure to check the yield as the key determinant in whether a loan that you like for other reasons is at a price you're comfortable with. The premium or discount adjusts the yield and because loan terms vary, whether they are repayment or interest only and the time remaining on the loan varies and these things mean that say a 1% premium has very different effects for each loan. For a six month loan with a couple of months remaining it's a high effect, for a five year loan it's a low effect. One other effect of the pricing flexibility at Ablrate is that even if you're not particularly keen on selling you can offer a price you'd be willing to sell at. This often won't be a particularly attractive price but since you're not particularly keen to sell this doesn't matter either and it's just an option for any buyers who are interested. Similarly a would-be buyer can enter a bid to buy at a certain yield/markup/discount and prospective sellers can choose to accept those rather than making their own offer to sell. This can have the advantage of an instant sale instead of waiting for buyers to come along.
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jimc99
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Post by jimc99 on Jul 31, 2016 7:59:53 GMT
Could I ask a quick question here to save me having to register to find out the answer.....
I'm mainly interested in lending for short terms, maybe 2 to 12 months. Would Ablrate be suitable for me?
Thanks
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blender
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Post by blender on Jul 31, 2016 8:35:02 GMT
Yes, a good secondary market with no charges.
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pom
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Post by pom on Jul 31, 2016 9:55:19 GMT
Could I ask a quick question here to save me having to register to find out the answer..... I'm mainly interested in lending for short terms, maybe 2 to 12 months. Would Ablrate be suitable for me? Thanks I'd have to disagree slightly with blender and say maybe not, all the loans we're getting now are longer than that, and whilst the SM is good, if you're unlucky on timings and HAD to get the money out you might need to sell at a loss...and at the same time if you're only in it for the short term you'll want to get invested quickly and to do so will likely end up having to pay a premium for some loans on the SM (not too much of a problem if you intend to hold them long term, but will quickly eat into your returns if you only want to hold them a few months). And depending on your tax circumstances it could get quite complicated (if you're not already subject to CGT reporting you should be OK, so long as you don't somehow end up churning 44k+ of ABL loans and/or other assets). So if you really really only want short term loans because you'll need the money in that time (rather than simply preferring not to tie up your money too long) it may not be worth it.
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kaya
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Post by kaya on Jul 31, 2016 10:17:43 GMT
Couple more questions... What does 'IS paused' mean exactly, presumably its a suspension of the secondary market? Are these problem loans? (I've read here about the aircraft one, what about the others?).
How can a loan sold at par have a yield greater than the base rate for that loan?
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SteveT
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Post by SteveT on Jul 31, 2016 10:24:10 GMT
Couple more questions... What does 'IS paused' mean exactly, presumably its a suspension of the secondary market? Are these problem loans? (I've read here about the aircraft one, what about the others?). How can a loan sold at par have a yield greater than the base rate for that loan? A) They are paused within 30 days of repayment too, or simply if there is a website calculation glitch B) The effect of monthly compounding of interest in the yield calculation
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blender
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Post by blender on Jul 31, 2016 16:00:23 GMT
Could I ask a quick question here to save me having to register to find out the answer..... I'm mainly interested in lending for short terms, maybe 2 to 12 months. Would Ablrate be suitable for me? Thanks I'd have to disagree slightly with blender and say maybe not, all the loans we're getting now are longer than that, and whilst the SM is good, if you're unlucky on timings and HAD to get the money out you might need to sell at a loss...and at the same time if you're only in it for the short term you'll want to get invested quickly and to do so will likely end up having to pay a premium for some loans on the SM (not too much of a problem if you intend to hold them long term, but will quickly eat into your returns if you only want to hold them a few months). And depending on your tax circumstances it could get quite complicated (if you're not already subject to CGT reporting you should be OK, so long as you don't somehow end up churning 44k+ of ABL loans and/or other assets). So if you really really only want short term loans because you'll need the money in that time (rather than simply preferring not to tie up your money too long) it may not be worth it. Valid points of course, but I was looking at two new Ablrate loans available at present with instant returns offering 12% and running longer than 12 months. I do not know how much cash is involved and what the diversity requirements are, but would think of putting a sum today over those two loans and selling on the SM when the time comes. Assume a loss of no more than 1% on selling (I would hope to break even) and you have 6% return over two months and 11% over 12 months. Not sure what the CGT issue is. Of course if you need to diversify within Ablrate the scope is limited, but it is cost-free to buy now and diversify later (though not risk free of course). I have managed to do that without taking a loss - quite the opposite with 3% gain on some occasions.
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jnm21
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Post by jnm21 on Aug 7, 2016 17:48:01 GMT
Could I ask a quick question here to save me having to register to find out the answer..... I'm mainly interested in lending for short terms, maybe 2 to 12 months. Would Ablrate be suitable for me? Thanks I'd have to disagree slightly with blender and say maybe not, all the loans we're getting now are longer than that, and whilst the SM is good, if you're unlucky on timings and HAD to get the money out you might need to sell at a loss...and at the same time if you're only in it for the short term you'll want to get invested quickly and to do so will likely end up having to pay a premium for some loans on the SM (not too much of a problem if you intend to hold them long term, but will quickly eat into your returns if you only want to hold them a few months). And depending on your tax circumstances it could get quite complicated (if you're not already subject to CGT reporting you should be OK, so long as you don't somehow end up churning 44k+ of ABL loans and/or other assets). So if you really really only want short term loans because you'll need the money in that time (rather than simply preferring not to tie up your money too long) it may not be worth it. As much for my own knowledge as to help jimc99, would it be better to look for loans on the SM with the relevant time left to run? Like the aircraft thread, what is the overall likelihood of a loan running over?
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pom
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Post by pom on Aug 8, 2016 8:02:55 GMT
I'd have to disagree slightly with blender and say maybe not, all the loans we're getting now are longer than that, and whilst the SM is good, if you're unlucky on timings and HAD to get the money out you might need to sell at a loss...and at the same time if you're only in it for the short term you'll want to get invested quickly and to do so will likely end up having to pay a premium for some loans on the SM (not too much of a problem if you intend to hold them long term, but will quickly eat into your returns if you only want to hold them a few months). And depending on your tax circumstances it could get quite complicated (if you're not already subject to CGT reporting you should be OK, so long as you don't somehow end up churning 44k+ of ABL loans and/or other assets). So if you really really only want short term loans because you'll need the money in that time (rather than simply preferring not to tie up your money too long) it may not be worth it. As much for my own knowledge as to help jimc99, would it be better to look for loans on the SM with the relevant time left to run? Like the aircraft thread, what is the overall likelihood of a loan running over? Well you could - but I think everything on the SM has at least a couple of years to run now...so if you're only wanting to hold for a short time you'd still be taking the risk as to how easily you could sell. As for loan overruns, who can really tell? Statistically there haven't been anywhere near enough loans yet to really know, but generally I think that anything that involves selling an asset as an exit plan runs a risk of not happening exactly when you expect it, as even assuming a buyer turns up at just the right time, lawyers do love to draw things out! There's also been at least one loan repaid early, and now a default. It all really depends I think on why you want shorter terms if it's because you're toe dipping and want to see how it goes, and it won't be the end of the world if it's invested a little longer then fine, if you really need the money back sooner then there are probably better platforms for you. One of the reasons ablrate is one of my favourite platforms even though they don't have many loans on offer is because I CAN invest my money for longer - most of my other platforms with secured lending have much shorter terms which takes a lot more work.
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kaya
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Post by kaya on Aug 8, 2016 8:04:24 GMT
I'm looking at secondary market loans. Why do the 'repayments' figures, eg for the SME loan basket loan, all sit at zero? Should not an interest repayment be marked up?
What does an orangy-pink circle signify on the repayments tab?
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SteveT
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Post by SteveT on Aug 8, 2016 8:13:49 GMT
I'm looking at secondary market loans. Why do the 'repayments' figures, eg for the SME loan basket loan, all sit at zero? Should not an interest repayment be marked up? What does an orangy-pink circle signify on the repayments tab? That tab shows the repayments due to you against your own holding, so will always be zero until you own some. Orange circle denotes "Paid late" but, other than the defaulted containers loans, this has pretty much always been due to Ablrate missing their button-pressing schedule by a few hours, so the payment appears against the following day. Green circle = paid on time Blue circle = not yet due
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kaya
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Post by kaya on Aug 8, 2016 8:43:23 GMT
Well thank you Steve, though this seems an unsatisfactory way to go about things. Late payments freak me out now, something to do with that 'other place' I think...
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SteveT
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Post by SteveT on Aug 8, 2016 9:12:32 GMT
Well thank you Steve, though this seems an unsatisfactory way to go about things. Late payments freak me out now, something to do with that 'other place' I think... Ablrate is a relatively small platform and their past web developers let them down badly, hence there are still some manual workarounds (eg. someone has to press a button late at night to trigger each interest payment). However we're told that the web side is being moved to a dedicated (in house?) team shortly. I wouldn't discount Ablrate just for that; it's one of my favoured platforms in terms of the loans they bring forward and their professional approach to lending.
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