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Post by Deleted on Mar 20, 2017 16:51:13 GMT
Hi,
Can someone please explain to me what's difference between "buyback" and "payment" guarantee? They both look same to me, unless Twino charges separate amount/reduced interest to offer those loans and/or has a "provision fund" of sorts to enable it?
Got following email from Twino :
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Post by clandestino52 on Mar 20, 2017 19:06:29 GMT
I had the same doubt. The only logical reason I think is with buyback guarantee you will receive delayed interest and with guarantee repayment not. But I m not sure.
Also I was wondering if this change is the cause why Twino didn't offer too much loans those last weeks.
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Post by Deleted on Mar 20, 2017 20:01:35 GMT
But they said they will cover interest as well...
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shimself
Member of DD Central
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Post by shimself on Mar 20, 2017 20:11:32 GMT
I think Payment Guarantee means the scheduled payment on the 20th of the month (or whtever) will be made, if not by the borrower then by the platform.
as opposed to wait 60 days and then get bought out (with interest I suppose), which is Buyback
All of which makes me wonder, if the difference is that subtle, why bother? And thinking some more, it's because you the lender will normally never notice if loans are going bad. Which is fine unless too many go bad and the platform goes phut with no notice. I guess the test is if the regular report clarifies how much rescuing the platform has done for you this month then it'll be reasonably obvious.
Wasn't there a T&C overhaul recently? Is it still clear that if the platform goes bust the debt remains (not actually that I think it would do any good for the unsecured high interest loans which form the bulk of the offerings)?
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Post by wiseclerk on Mar 20, 2017 20:48:42 GMT
I think it is a liquidity advantage the platform wants. In case of buyback they have pay the 100% of the outstanding principal and the interest NOW (well after extensions). With PG the platform pays a fraction of the outstaning principal and the interest now and the BULK LATER. So they enjoy lower need for refinancing.
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Post by clandestino52 on Mar 20, 2017 21:39:04 GMT
Yes it seems logic. But this is of point of view of platform. But why buyback guarantee still exist. From point of view of investor what is the benefit of choosing loans with buyback guarantee if I can choose payment guarantee which seems better. I'm missing something
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Post by wiseclerk on Mar 20, 2017 21:59:46 GMT
you don't know the interest rate that will be offered yet?
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Post by clandestino52 on Mar 21, 2017 6:57:22 GMT
you don't know the interest rate that will be offered yet? Yes. I understand now. Thank you
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Post by Deleted on Mar 21, 2017 11:58:50 GMT
After a quick conversation with Twino.
1. Buyback guarantee/payment protection plan will run in parallel for now. With no plan currently to eliminate buyback guarantee loans
2. Buy back guarantee kicks in 30 days after the loan has been delayed with principal + interest paid to investor. Payment guarantee will still make payments on schedule, even if borrower doesn't make payment.
3. Payment guarantee will also have interest in range of 10-12%
4. Payment guarantee loans will be moved directly to "default" if the loans are delayed. Change to default status for those loans, will mean Twino will pay back the loans anyways. (This is part that isn't clear to me why, as in the rationale behind it)
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Post by gmaxkenny on Mar 21, 2017 12:59:07 GMT
It helps their cash flow as outlined by Wiseclerk and I suspect it will replace Buyback. They claim they are the first ones to do this but Omaraha have been doing it with their Secured Loans for about a year now. Their rates are between 9% and 12% total interest depending on loan duration with repayments 100% guaranteed.
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p40l0m4r
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Post by p40l0m4r on Mar 21, 2017 14:40:39 GMT
4. Payment guarantee loans will be moved directly to "default" if the loans are delayed. Change to default status for those loans, will mean Twino will pay back the loans anyways. (This is part that isn't clear to me why, as in the rationale behind it) I think the important thing is that the default or delayed status will be show. I won't feel comfortable if they will maintain the current status for loans in pay back, with no chance for us to see which loan are payed by borrower and which by Twino.
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Post by mopcku on Mar 21, 2017 18:02:55 GMT
I think there is significant difference in risk profile of the both guarantees!
If you have a defaulted loan with BB it will be bought and after that you don’t have risk exposure against Twino. If you have a defaulted loan with PB you get exposure against Twino until the expiry!
This is also the other price for the liquidity advantage of Twino which was mentioned!
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kulerucket
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Post by kulerucket on Mar 23, 2017 8:10:08 GMT
Well, I picked up a load of 12% PGs last night. I think I prefer these because the average interest rates are going to keep falling as time goes on, so I'm happy to keep my money locked into a higher interest rate for longer. At the moment when my 13%/14% loans get bought back it is a struggle to even get a 12% loan to replace them.
EDIT: They were all Russian so it look like the 14% BB have now been replaced with 12% PG.
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kulerucket
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Post by kulerucket on Mar 23, 2017 19:04:42 GMT
That said, right now there are now 50 pages of 12% BB loans so hopefully things are picking up again!
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stevio
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Post by stevio on Mar 23, 2017 21:44:17 GMT
How do either of these actually work?
Is it possible to read up on these without registering?
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