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Post by extremis on Aug 21, 2016 21:45:43 GMT
For the sake of diversification, i consider investing in Bondora. I cannot see any loans offered at their website; i guess i should register first. But, in order to decide whether i should invest with Bondora or some other platform, i would like to know some loan details, like terms, interest rates, available loans, etc... Is there any way to find such information prior to registering?
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shimself
Member of DD Central
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Post by shimself on Aug 21, 2016 22:30:12 GMT
For the sake of diversification, i consider investing in Bondora. I cannot see any loans offered at their website; i guess i should register first. But, in order to decide whether i should invest with Bondora or some other platform, i would like to know some loan details, like terms, interest rates, available loans, etc... Is there any way to find such information prior to registering? The word missing from your list is defaults, of which there have been far too many. Recovery rate is important, and that has been pathetic. The omly platform where I have lost money. They tell us they are getting better, but the evidence seems to me to be smoke and mirrors. Assuming your outgoings are in Pounds then you would also be adding currency risk.
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Post by extremis on Aug 21, 2016 23:27:33 GMT
The omly platform where I have lost money. Really? That's too bad to hear. According to their statistics, 1-3% of investors do loose some money. As far as i understand, the chances of loosing money are bigger for small investors and short-term investments. I have also read many complaints about the recent surge of defaults. Personal (unsecured) loans typically have high default rates and low recovery rates. However, if interest rates are high enough, good loans should easily compensate for bad loans. Again, their statistics show there are people with 25+ gains and i have read stories that support the claim. But i am reluctant to invest in a platform that i have not even seen how their loans look like...
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james
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Post by james on Aug 22, 2016 5:01:48 GMT
their statistics show there are people with 25+ gains and i have read stories that support the claim Their statistics tell me that I have returns of over 24% and that I am in the top 20% of lenders for returns. But XIRR tells me that I have returns of 12% in Pounds or 15% 17% in Euros. The difference is that Bondora pretends that all future capital and interest payments will be made on loans that have defaulted. I do not pretend that, I know they won't all be made so I assume no recovery for my base case. Then I assume some realistic recovery level for other more optimistic cases that could take my Euro returns as high as 20%. It is much easier to make claims of low loss rates if you pretend that all future payments on defaulted loans will be made. The highest that Bondora really expects is 70-80% for Estonian borrowers or 30% or so for Spanish.
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Post by extremis on Aug 22, 2016 22:12:18 GMT
So, even if you assume that none of the defaulted loans will make a payment you get XIRR of 15%, while, in reality, you expect your XIRR to be anywhere in the range 15-20%. That's really great! Maybe not exactly as advertised, but still great. How about loan terms? Is there enough supply for short-term loans (<12m)? If not, can you easily sell your loan portfolio on SM at par value if you need your money back? In other words, how liquid is SM?
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james
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Post by james on Aug 22, 2016 23:52:47 GMT
So, even if you assume that none of the defaulted loans will make a payment you get XIRR of 15%, while, in reality, you expect your XIRR to be anywhere in the range 15-20%. That's really great! Maybe not exactly as advertised, but still great. It's also worth knowing that I only invested in Estonian loans and only between November 2012 and the December 2014 inclusive. Don't expect similar returns from investing today and do remember that this is from someone in the top 20%, not the average result. I just checked my spreadsheet and if I assume 70% recovery of capital from my defaulted loans my returns would be 20% in Euros and 15.9% in Pounds today, ignoring future cash flows. I think that actual returns will be a little higher than this because my loans are now quite mature with low new default rate and I have sold low interest rate loans so my average per loan interest rate for non-defaulted loans is now about 26.8%. That will gradually produce an increase in returns as the payments happen. Recovery from defaulted loans will also help. So an updated guess at my eventual return on this portfolio is about 2% above what I gave for current level, so final maybe 22-24% Euros or 18-19% GBP. Perhaps a bit higher if I am fortunate with recoveries. I used Bondora's forecast feature in cash flow and set use my portfolio history and it offered these values when I clicked on use only your portfolio history, income tax assumed to be 0%: 95% Principal from current and overdue loans (overall Bondora portfolio says 85%) 95% Principal from loans in default (35%) 80% Interest from current and overdue loans (75%) 10% Interest from loans in default (0%) I do not know what effect me selling many late and defaulted loans has had on these numbers but it has reduced my default rate significantly and has probably also increased my capital recovery from defaulted loans a lot. With those values used the cash flow to 2026 for all my loans is projected to be: €9256 principal €2526 interest If I change to a more realistic Estonian recovery (not using selling that I did) of 70% for capital the numbers are: €8558 principal €2526 interest If I do not use those values (assumes 100%) the numbers are: €9743 principal €4343 interest Hopefully that gives you some idea of the effect that Bondora's 100% cash flow assumption has compared to more realistic numbers. I expect closer to the 8558/2526 result than Bondora's 9743/4343. I have sold both low interest/high risk loans and low interest loans so this is how my on time and overdue but not defaulted, repaid or sold loan portfolio looks today, Bondora rating, interest rate, approximate number of loans: AA 27.3% 6 loans A 27.5% 40 B 26.6% 94 C 26.1% 90 D 27.5% 68 E 27.8% 8 F 28.5% 4 HR 28.8% 9 Loans with no rating: quite a lot I can get 10% tax free from investing in VCTs in Britain for some of my money, along with 30% purchase price reduction, capped at the amount of income tax I pay in the tax year. the 10% is after I allow for the effect of the purchase price difference. In lending on British platforms in GBP I can get 12% before bad debt on secured lending, with property of various types the security. The property can be anything from buildings to cars, pawned items and a wide range of other things. No exchange rate risk for me if I do this.
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james
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Post by james on Aug 23, 2016 0:00:26 GMT
How about loan terms? Is there enough supply for short-term loans (<12m)? If not, can you easily sell your loan portfolio on SM at par value if you need your money back? In other words, how liquid is SM? It is too long since I used both for me to have a current opinion. Better to let someone else who has more recent use of those things give an answer. In the past I found liquidity on the secondary market OK except when I knew that I was pushing for a higher price than wold normally be paid. To work that out I checked the history of secondary market sales to find the past selling rates for every loan that I was trying to sell before I set the price I wanted. Those checks helped to prevent me making pricing mistakes. I expect selling on time loans at 5% or higher markup to be easy and par to be very easy. Exception if there is not much time remaining because the possible markup depends on how much money still has to be paid in interest and what that does to XIRR.
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Post by rahafoorum on Aug 23, 2016 7:07:09 GMT
How about loan terms? Is there enough supply for short-term loans (<12m)? If not, can you easily sell your loan portfolio on SM at par value if you need your money back? In other words, how liquid is SM? It is too long since I used both for me to have a current opinion. Better to let someone else who has more recent use of those things give an answer. In the past I found liquidity on the secondary market OK except when I knew that I was pushing for a higher price than wold normally be paid. To work that out I checked the history of secondary market sales to find the past selling rates for every loan that I was trying to sell before I set the price I wanted. Those checks helped to prevent me making pricing mistakes. I expect selling on time loans at 5% or higher markup to be easy and par to be very easy. Exception if there is not much time remaining because the possible markup depends on how much money still has to be paid in interest and what that does to XIRR. My own XIRR calculation with all defaults and overdues deducted is over 28%. Mostly because I started investing in 2010 and I've sold most of the loans by now and exited. If I started today, I'd probably look at secondary market and if I'm extremely lucky, I'd be able to get a return close to 20%. Investing on primary market won't get you even close today though. 10% would be more realistic I think. In your case of 12m loans, the amount of those has been quite low since ever and I doubt you'll get into many of those, since they're usually smaller amounts and will be filled by the black-box PM before you will get a chance to invest manually or through API. Considering the expected return of something like 8%(?) on those loans, I'm not too sure you'd be very much interested in those anyway. Secondary market highly depends on the loans you have and investor demand. Great EST loans will sell at par quite fast. Others might not sell at all. I had a Finnish loan that was current on sale for a week recently at 0% mark-up offering 36% XIRR and no-one bought it. It's not very liquid nor efficient. Supposedly portfolio managers are supposed to buy up current loans at par from there nowadays, but no-one seemed to want that Fin loan still. Edit: Note that the 20% return on SM is probably only achievable if you know what you're doing and you will analyze the sh*t out of the data beforehand. AND only in the case there won't be any economic downturn or Bondora won't go out of business before the loans reach end of term.
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Post by extremis on Aug 23, 2016 20:00:07 GMT
Thank you all for your detailed information. It seems like i missed the good old days of Bondora and now it's really much harder to make significant gains. But then again, that's the story with many other platforms out there...
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miso
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Post by miso on Aug 24, 2016 7:23:03 GMT
For the sake of diversification, i consider investing in Bondora. I cannot see any loans offered at their website; i guess i should register first. But, in order to decide whether i should invest with Bondora or some other platform, i would like to know some loan details, like terms, interest rates, available loans, etc... Is there any way to find such information prior to registering? Back to your original question, heaps of data available without registering is available here: www.bondora.com/en/public-reports
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shimself
Member of DD Central
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Post by shimself on Aug 24, 2016 10:40:42 GMT
For the sake of diversification, i consider investing in Bondora. I cannot see any loans offered at their website; i guess i should register first. But, in order to decide whether i should invest with Bondora or some other platform, i would like to know some loan details, like terms, interest rates, available loans, etc... Is there any way to find such information prior to registering? Back to your original question, heaps of data available without registering is available here: www.bondora.com/en/public-reportsAt a glance I didn't see any data about defaults and recoveries (noting as above the mendacious assumption that everything will be repaid in the future)
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