marie
Posts: 38 
Likes: 15
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Post by marie on Sept 6, 2017 15:52:50 GMT
(...) The only issue I have with closing stuff down early is that defaults cannot be sold and closing/selling on good loans costs 1% and also the true rate on those loans is less than the headline rate depending how far they have gone. I'm pretty certain that running down a relending book results in lower returns as well. I think! (...) Yep, this is exactly why I've decided to just let the loans finish on their own, and withdraw the repayments. A positive side-effect of lots of people paying re-paying more and earlier than they have to, is that I get my monies back faster! It does contribute to the poor returns though, but there's something about having a cake and eating it too.
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Post by wyndstryke on Sept 8, 2017 17:05:37 GMT
From my weekly email:
I'm not 100% sure whether they're talking about loan performance or selling-system performance, but regardless ... perhaps this is a good opportunity for people on this thread to provide feedback / ask questions.
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Post by bobjones70 on Sept 24, 2017 23:34:11 GMT
It's important to step back from numbers and think about the stories involved.
If you're building up a loan book of people borrowing money from non-mainstream sources to pay for their wedding, a new car, a holiday or a new kitchen, is it really surprising that some of them aren't wonderful at paying you back?
This platform looks fine from the point of view of abstract numbers, but once you realise you're sending your savings out into the world to become other people's spending, well I think it looks pretty frightening. The idea of savings is that you park your money in the bank and they lend it out to businesses investing in plant and equipment that'll generate an income, not that they give it to some guy to pay for a trip to Greece!
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happy
Member of DD Central
Posts: 397 
Likes: 497
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Post by happy on Sept 25, 2017 6:20:16 GMT
It's important to step back from numbers and think about the stories involved. If you're building up a loan book of people borrowing money from non-mainstream sources to pay for their wedding, a new car, a holiday or a new kitchen, is it really surprising that some of them aren't wonderful at paying you back? This platform looks fine from the point of view of abstract numbers, but once you realise you're sending your savings out into the world to become other people's spending, well I think it looks pretty frightening. The idea of savings is that you park your money in the bank and they lend it out to businesses investing in plant and equipment that'll generate an income, not that they give it to some guy to pay for a trip to Greece! Which is exactly why I always thought Plus was a bad idea. It is a lottery what u get given, likewise with all new products since the PF has been abandoned. No choice of who I lend to + No PF to even out the effect of defaults = No investment from Happy Why should I run the risk of massive defaults on my loan book for doing exactly the same as the other guy/gal when he/she gets away with a nice return 'cos he's lucky! At the rates on offer here I'm much happier putting £50k in Premium Bonds, at least there is only the chance I can win a million without any risk of capital and about a 1.5% average return
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ashtondav
Member of DD Central
Posts: 1,814
Likes: 1,092
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Post by ashtondav on Sept 25, 2017 6:53:41 GMT
It's important to step back from numbers and think about the stories involved. If you're building up a loan book of people borrowing money from non-mainstream sources to pay for their wedding, a new car, a holiday or a new kitchen, is it really surprising that some of them aren't wonderful at paying you back? This platform looks fine from the point of view of abstract numbers, but once you realise you're sending your savings out into the world to become other people's spending, well I think it looks pretty frightening. The idea of savings is that you park your money in the bank and they lend it out to businesses investing in plant and equipment that'll generate an income, not that they give it to some guy to pay for a trip to Greece! Er, that's what unsecured lending is about, whether it's a bank, building society, supermarket or p2p. In all cases success depends on the credit checking of borrowers and the mix of risk taken on. Also all of these entities lend to people who want a holiday. In fact with all lenders there is no guarantee that the borrower uses the money for the declared purpose. And no, when you save with a bank or building society they use the money to provide mortgages, unsecured loans and secured loans. Not necessarily to invest in businesses. If you want lending to small business go to funding circle. i would agree that rates on Zopa are not high enough. I would disagree that premium bonds will provide a better return. They almost certainly won't.
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robski
Member of DD Central
Posts: 772
Likes: 462
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Post by robski on Sept 25, 2017 7:45:13 GMT
It's important to step back from numbers and think about the stories involved. If you're building up a loan book of people borrowing money from non-mainstream sources to pay for their wedding, a new car, a holiday or a new kitchen, is it really surprising that some of them aren't wonderful at paying you back? This platform looks fine from the point of view of abstract numbers, but once you realise you're sending your savings out into the world to become other people's spending, well I think it looks pretty frightening. The idea of savings is that you park your money in the bank and they lend it out to businesses investing in plant and equipment that'll generate an income, not that they give it to some guy to pay for a trip to Greece! Have to say, if you consider Zopa to be a savings product your misrepresenting what your actually doing Your investing, with the risks of lock in and with defaults that comes with each product.
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aju
Member of DD Central
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Post by aju on Sept 25, 2017 9:14:54 GMT
its most definitely a long term product, however, once the investment is made and is recycling then you could use it as an income tool. You would clearly have to be a bit more hands on by turning on/off recycling taking what you need and recycling back on again. (The relent part would obviously be classed as new money and be lent slower than recycled money)
I've not tried it other than to invest in Plus when it started a while back I turned off recycle on sg until I had roughly 10% of my sg - took about 2 months to get £1000 at the time - lent it out to plus and left it to recycle.
In my case if I did this I would be able to take roughly £50 a month on the "Investment side" ISA side is still ramping up.
You would have to perhaps be mindful of defaults etc but it may work going forward. I can;t see me needing to do this for quite a while as yet though thankfully.
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Post by wyndstryke on Sept 25, 2017 9:54:09 GMT
... The idea of savings is that you park your money in the bank and they lend it out to businesses investing in plant and equipment that'll generate an income, not that they give it to some guy to pay for a trip to Greece! Businesses are quite high risk IMO. They fail / go bankrupt a lot more frequently than the general population, which is why the interest rate on business loans is so high. I agree with the others - it's a long-term investment not savings, and the nature of P2P lending is that you are lending to other people who want the money for all sorts of reasons. But if you put the money into a bank, you are (in the long run) also lending to other people (as well as businesses, stock markets, etc), with the bank as a middle-man.
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Post by blanik on Sept 25, 2017 18:14:14 GMT
its most definitely a long term product, however, once the investment is made and is recycling then you could use it as an income tool. You would clearly have to be a bit more hands on by turning on/off recycling taking what you need and recycling back on again. (The relent part would obviously be classed as new money and be lent slower than recycled money) There is an advanced reinvestment setting, as it is in Beta it is only available by request from Zopa. You can specify a maximum amount in the holding account - once the holding account reaches this any further repayments will be re-invested. [ although I have found the system sometimes gets confused where to put some repayments between the settings by product and settings for new money ].
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aju
Member of DD Central
Posts: 3,500
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Post by aju on Sept 25, 2017 22:44:02 GMT
That could be very interesting when the time comes I need to spend some as well as re-invest some.
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Post by propman on Sept 26, 2017 7:13:46 GMT
It's important to step back from numbers and think about the stories involved. If you're building up a loan book of people borrowing money from non-mainstream sources to pay for their wedding, a new car, a holiday or a new kitchen, is it really surprising that some of them aren't wonderful at paying you back? This platform looks fine from the point of view of abstract numbers, but once you realise you're sending your savings out into the world to become other people's spending, well I think it looks pretty frightening. The idea of savings is that you park your money in the bank and they lend it out to businesses investing in plant and equipment that'll generate an income, not that they give it to some guy to pay for a trip to Greece! Businesses borrowing for plant would probably either go with a leasing option or a secured loan. I would expect most business loans of £25k or less will be "working capital" which often means covering a cash shortfall that might merely be the owner needing to take some money out for a holiday, or because there own debtors aren't paying back as fast as they would like.
An unsecured personal loan is basically a bet on the borrower's income, while it is harder for them to get out if they can't afford it than for a limited company.
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