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Post by easteregg on Jul 2, 2014 11:17:44 GMT
While we are all well aware of the headline lending rates, I was interested to see what rates individual lenders have achieved on individual loans?
In the early days of Zopa I did manage to achieve a few micro loans at 20%, but since then individual rates have dropped on most mature platforms. There are some higher individual rates on rebuildingsociety, but what have other lenders managed to achieve, and on which platforms?
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Post by batchoy on Jul 2, 2014 11:55:17 GMT
The highest individual rate I have is 41% on a Bondora+ ESP A1000 9 month loan, I am waiting to see if the borrower will make the first payment, it will sell on the SM with a 5% mark up or whether it will default before I can sell it at a markdown.
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Post by easteregg on Jul 2, 2014 12:40:29 GMT
The highest individual rate I have is 41% on a Bondora+ ESP A1000 9 month loan, I am waiting to see if the borrower will make the first payment, it will sell on the SM with a 5% mark up or whether it will default before I can sell it at a markdown. Wow that is impressive, but you also highlight something important. There is a correlation between higher loan rates and bad debt. These are inextricably linked; borrower is desperate and prepared to pay a higher rate; rate is higher causing borrower to get into difficulties. I can see this from my Zopa panel as the average rates for default is significantly higher than the average rate for successful repayments.
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Post by batchoy on Jul 2, 2014 15:32:46 GMT
The highest individual rate I have is 41% on a Bondora+ ESP A1000 9 month loan, I am waiting to see if the borrower will make the first payment, it will sell on the SM with a 5% mark up or whether it will default before I can sell it at a markdown. Wow that is impressive, but you also highlight something important. There is a correlation between higher loan rates and bad debt. These are inextricably linked; borrower is desperate and prepared to pay a higher rate; rate is higher causing borrower to get into difficulties. I can see this from my Zopa panel as the average rates for default is significantly higher than the average rate for successful repayments. As you say it is a high risk loan on a high risk market, but in this instance the borrower should now be paying significantly less than they were on the loans that this one was intended to consolidate. Whilst 41% seems high a little bit of research shows the Spanish lenders for the original loans typically charge rates akin to Quickquid where your are talking of APRs in the region of 300% on loans of a similar amount and duration.
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james
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Post by james on Jul 5, 2014 12:10:29 GMT
I have a Bondora loan at 40% interest rate. 48 months A 1000 Estonian. 30 year old male, 43.11% debt to income ratio, higher education, civil service or military job, joint home ownership. At application there were 19 loans to be repaid with this €6700 loan, all or most appearing to be payday types so the borrower is probably saving a fortune. Five payments due so far, all paid on time with no late payment reminders or other collection activity. Eleven B or C loans also Estonian 1000 at 33%. B or C means less free cash, not bad credit.
The highest I know of is one that I sold at something in the 70%-90% return range for the buyer. The loan had previously defaulted and bailiffs had visited after arbitration court judgement. Payment arrangement in place and the loan had changed from default to on time status. Payments since then have often been late but the most recent activity was rescheduling to a higher payment per month. The buyer probably ended up with a really good deal in that case. The high rate happens because it includes effect of capitalised penalties and any capital price discounts. I sold many parts of this loan but also kept many.
A check of the resale market shows many Bondora (not +) loans available at 30%+ interest rate for borrowers who were in the Estonian A 1000 credit grade. This is because there's at least one late payment. Highest is in the 50% range for one that is due to default in the next week or so, selling at capital value discounts that top out at -17% or -18%. This means that those sellers are offering a price that is less good than they would expect from average debt collection performance. A fair number at 40%+. Higher probably available in non-Estonian markets. For those who don't mind it there are probably significant profits to be made from buying and holding some of these loans and waiting for debt collection to do its work.
At Bondora a loan can be sold provided it is not in actual default - 60+ days since payment - state.
It probably won't be surprising that there is a large surplus of money supply for the main Estonian market at Bondora.
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