jnm21
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Post by jnm21 on Aug 9, 2016 18:51:16 GMT
I have just started with Zopa, investing via the platform for the first time this week. I have a list of loans with all the data; market, percentage, reason, length, etc. (still only 1/3 lent after 2 days which is disappointing considering the rate of 3.2% - currently I much prefer RateSetter, but giving Zopa time). What I cannot fathom is the spread of rates, e.g. 2 loans, identical in all but rate (same market, reason, date, length, etc.); one rate 5.03% (good to great IMHO), the other 1.36% (a complete **** take IMHO) - am I missing something? The reason is home improvements, which to me suggests both home owners, both are 60 months & both are A2 market. On RateSetter I would be getting more than the higher rate, but admittedly with no idea of the equivalent 'market' of the borrower(s). Also why in all that is wholesome would anyone think that a rate of 1.3% is acceptable for a capital at risk investment - I don't care if the user is called Elizabeth, has an A***** rating & has the username ma'am, I don't want to know! The number of sub 2% loans (approx 30% of mine) is bringing my average down, currently 3.2% where I was estimated 3.5%. There are things I like about Zopa, but currently the exit door is looking like my preferred option.  Oh yes, that is right, I can't sell them & only after much looking, I find out I have to wait about 10 days until the direct debit is set up. |
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Post by propman on Aug 10, 2016 7:58:55 GMT
Looks like you are in Access, so paying an additional 0.8% to Zopa to avoid a 1% fee on any capital sold before term, so that reduces your rate. Basically Zopa compete to offer rates at around the best available. The difference is almost certainly the size of the loan. £7,500 to £14,950 are available cheaply from the high street lenders to there best 50% of borrowers, dragging down Zopa's rate. This may mainly be around the £7,500 and £10,000 as the most common amounts (rates can rocket for borrowing an additional or reducing borrowing by a single £1 to look good in best buy tables). The mainstream lenders don't want the small loans due to the admin costs and a premium is charged on the >£15,000 loans as they are a greater fraud risk.
Basically Zopa charge what they can get away with without reducing loan volume too much. That is subsidising cheap rates for better publicity with much higher rates to the remainder. As an investor you are asked to look at the composite rate, with the marketing benefits being shared with lenders by their access to loans in a reasonable time.
Their algorithm will prioritise you for higher rates if you have been getting less than the published rate, so worth sticking with it if 3.5% is adequate. Unfortunately this can slow lending a bit at times.
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jnm21
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Post by jnm21 on Aug 10, 2016 8:15:41 GMT
Thank you very much propman you have explained what looked insane. I still don't like it, but at least I understand.
You are correct in saying that I am in access (didn't want to commit on my first try).
Now fearing how wise that was as at a guess trying to sell out will sell my better rate loans and leave me with an even lower rate!
I take it that I am not missing any methods of selecting rates, reasons or markets - Zopa is like a box a chocolates...
Thanks again.
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Post by propman on Aug 10, 2016 17:15:23 GMT
Thank you very much propman you have explained what looked insane. I still don't like it, but at least I understand. You are correct in saying that I am in access (didn't want to commit on my first try). Now fearing how wise that was as at a guess trying to sell out will sell my better rate loans and leave me with an even lower rate! I take it that I am not missing any methods of selecting rates, reasons or markets - Zopa is like a box a chocolates... Thanks again. My pleasure.
sales are on a last in first out basis IIRC although any that areat rates below the current ranges for those markets are ignored until all others are sold first, while any loans with missed or late payments (excl. single late payments >6 months ago) or which are yet to set up DD are excluded. So relatively few ignored, but a slight reduction in rates may occur.
- PM
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Neil_P2PBlog
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Post by Neil_P2PBlog on Aug 10, 2016 18:46:44 GMT
I also have zopa access. It took about 10 days to invest £2k. When I went to sell, it stopped me from selling those loans which were currently repaying. Not the end of the world, just had to wait a few days until I could request the sale again. However one positive was that with £2k invested my rate was 3.3%. By the time I managed to sell about 80% of the loans my average rate had gone up to 3.8%... So I've just left it like that. jnm21 - I'm not sure if it's worth emailing their customer support to see at this stage if they'd allow you to claim for the new customer cashback offer. If they're being nice and you add another £1k to your £1k invested they'd give you £50 extra. |
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Post by blanik on Aug 11, 2016 6:01:36 GMT
My pleasure.
sales are on a last in first out basis IIRC although any that areat rates below the current ranges for those markets are ignored until all others are sold first, while any loans with missed or late payments (excl. single late payments >6 months ago) or which are yet to set up DD are excluded. So relatively few ignored, but a slight reduction in rates may occur.
- PM
propman, Is the 6 month rule a new thing? Although it sounds sensible to cover the failed 1st DD situation. From previous e-mails from Zopa The impression I got was that Safeguard loans ( SG ) could be sold if they had gone late at any point, but were currently up to date [ I was sold one of these!]. And that pre-SG loans could not be sold if they had gone late at any time. Zopa list it here - help.zopa.com/customer/en/portal/articles/1684618-why-can-t-i-sell-all-my-loans- linked from help.zopa.com/customer/portal/articles/1097445BUT - Zopa do not appear to have updated this page for Access/Classic/Plus as non-SG loans are defined as those before 2013, so it may be out of date. EDIT - just ticked the unhelpful box for this page on Zopa's website, expecting a comments box. But just got a 'Thank you' message - so they are missing the opportunity to get feedback to improve the page.
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jnm21
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Post by jnm21 on Aug 11, 2016 7:42:04 GMT
I need more advice folks I'm afraid! Before I start, I am not terrified by a 1p loss, I know that P2P is capital at risk (which is why I demand that a platform I deal with appears to work correctly & give me accurate returns & information).
I am waiting for my initial investment to be invested in Access & I have to say I am disappointed at the rates/progress/etc. That said I am giving Zopa time to win me over. Having 1 loan seemingly closed on day 1 with no notification is not a good start (it is showing as repaid, but the stats is just Closed; surely Repaid would be better).
What annoys me is the fact that I am getting conflicting information. On My Lending my earnings show as "-£0.01" - now surely with no defaults in 3 days, I can't make a loss (some of the rates are stupid, but they are not negative). My Balance now shows 1p short i.e. ending 9.99. When I move to Statements, the situation looks much better - here my Earnings show as £0.01 & balance ends 0.01. A 1p interest on the closed loan would seem fine, but a 1p loss is not & not knowing which it is is unforgivable. The idea that Zopa can't add up with only 35% of my money invested makes me wonder whether to pull the plug now - I won't be able to spot the mistakes later on when I have micro loans and super-micro repayments flying in & out daily.
Are there any Zopa representatives on here by the way?
Thanks to all who have advised & thanks in advance for your continued advice.
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Post by propman on Aug 11, 2016 11:02:08 GMT
I need more advice folks I'm afraid! Before I start, I am not terrified by a 1p loss, I know that P2P is capital at risk (which is why I demand that a platform I deal with appears to work correctly & give me accurate returns & information). I am waiting for my initial investment to be invested in Access & I have to say I am disappointed at the rates/progress/etc. That said I am giving Zopa time to win me over. Having 1 loan seemingly closed on day 1 with no notification is not a good start (it is showing as repaid, but the stats is just Closed; surely Repaid would be better). What annoys me is the fact that I am getting conflicting information. On My Lending my earnings show as "-£0.01" - now surely with no defaults in 3 days, I can't make a loss (some of the rates are stupid, but they are not negative). My Balance now shows 1p short i.e. ending 9.99. When I move to Statements, the situation looks much better - here my Earnings show as £0.01 & balance ends 0.01. A 1p interest on the closed loan would seem fine, but a 1p loss is not & not knowing which it is is unforgivable. The idea that Zopa can't add up with only 35% of my money invested makes me wonder whether to pull the plug now - I won't be able to spot the mistakes later on when I have micro loans and super-micro repayments flying in & out daily. Are there any Zopa representatives on here by the way? Thanks to all who have advised & thanks in advance for your continued advice. I think this will be rounding errors. Only had it a few times in thousands of loans, but it is basically a mismatch in the allocations. Total rounding errors for me are still much less than 1 part in 10,000 of my overall return. That said, Zopa have had a number of reporting and processing errors over the years and don't always appear as professional as you might wish, although things get amended eventually. Personally I see this as a small failing when compared with their great credit performance record and experience to date.
- PM
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Neil_P2PBlog
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Post by Neil_P2PBlog on Aug 11, 2016 15:03:48 GMT
£0.01 loss could be you bought a loan part that had accrued interest?
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Greenwood2
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Post by Greenwood2 on Aug 11, 2016 16:15:16 GMT
You might want to ring Zopa to discuss any problems. When Zopa had their own forum the calculations were dissected by (some extremely vigilant and savvy) lenders (who are probably still checking every penny), so I think any significant errors would have been found and fixed, rounding errors are quite possible though.
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Post by dualinvestor on Aug 11, 2016 18:59:07 GMT
Zopa used to use the terminology "micro-loans to describe the many lenders that made up a loan to a borrower, they might still use that today. I suspect, as others do, that your shortfall might be made up of the rounding of the many many "micro-loans" that make up those in which you are invested.
Because we are now becoming used to information being available instantly and the Zopa crediting basis being a sequential series of processes it is sometimes possible that figures do not match up from page to page e.g. your "Zopa total" on the home page might not be the same as your statement. This can particulatly be the case at the beginning of a month when there is a disproportionate number of repayments compared to later in the month. This does sort itself out generally within hours if not a couple of days. If you are not satisfied with what your figures show it can usually be sorted out with a email or telephone call to customer services.
It is not ideal and I sometimes think that I have not been crdited with enough interest in a month (by comapring my balance at the beginning of the month to 1/12th of my average interest) but frankly I am too olazy to go through my literally thousands of loan to check. I am sure others do and they would be making a fuss here if they were not.
Whatever the return it has always been better, so far, than the alternative, but as they say "past performance is not necessarily an indicator of future performance" so you have to make your own mind up whether you are comfortable with it.
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jnm21
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Post by jnm21 on Aug 11, 2016 19:43:08 GMT
Thanks folks - yes some of my micro loans were not even in whole pence.
I had asked for an estimate to see how sell out would work & seemingly I stupidly did not realise that clicking 'get estimate' would pause my investments (not that they were going anywhere - new low was a 1.29% rate - WOW).
Frankly Zopa is not for me - they can keep the RAF bonus, I have cancelled my unlent amount, started selling my loans & I'm out ASAP. They made the mistake of asking why I'm selling!
Where to next - reluctant to put much more into RS - ablrate is interesting, but want to start small...
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Post by fuzzyiceberg on Aug 12, 2016 6:47:48 GMT
@ JNM21 From the above I think you are right: Zopa is not for you. I suspect you would be happier with something more 'hands on' where you choose the loans etc.
For other folks it is worth remembering that Zopa is not some new 'wannabe' platform, but has been around and successfully doing business for more than 10 years now. The downside (for a lot of activist investors like those on this board, rather than for the great majority of ordinary people) is that being a veteran, very large platform Zopa's business model is now largely hands off - you choose your product(s) from the 3 on offer put your money in and then let Zopa get on with it.
If you are Ok with the product risk/rate balance then all that remains is to see if you can live with the UI and logistics of the platform (and the method and cost of withdrawing investment in an unplanned situation). No point in worrying about individual microloan rates, what matters is the overall microloan portfolio return.
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jnm21
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Post by jnm21 on Aug 12, 2016 7:48:03 GMT
Yes, more hands on like ratesetter where I can choose the rate and timeframe, but not sure about actually selecting the lender - to do that with the level of diversification recommended would be intensive. Then again I don't want to overload 1 platform (RS is my only investment outside normal savings and a handful of shares), so for me I wanted to like Zopa, which is why I am so annoyed with the bugs, which really should not be there in an established platform. I do not think it any investor would accept inaccurate reporting of returns or confusing an estimate request as a stop investing authorisation. Anyhow, off to see if the best feature is the sell out (I can but hope).  |
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Post by wyndstryke on Aug 15, 2016 7:57:30 GMT
I would advise simply ignoring apparent 0.01 discrepancies - each repayment goes to many decimal places, and 'under the hood' everything is stored to full precision, but only displayed to 0.01. Because the displayed amounts are shown rounded, the totals won't add up exactly to 0.01.
The traditional example is this: 3 repayments, each of 0.333333...333. Each is displayed as 0.33, so you end up with an apparent discrepancy of 0.01 on the total. It's just in the way that it is displayed since you have the correct amount of cash.
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Oh yes, that is right, I can't sell them & only after much looking, I find out I have to wait about 10 days until the direct debit is set up.
