Harmoney

[kiwi_on_OE]

Can anyone explain the Payment Protect, their FAQ just confuses me, and I have only the vaguest of ideas about what this product is.

I can see: -
- it's a payment waiver policy, so the borrower may be excused from making repayments
- it's optional for the borrower,
- there are two levels of cover
- some or all of the repayments may be waived
- if the loan is repaid early some of the fee is rebated to the borrower

It appears, but isn't clear to me: -
- the borrower pays for the Payment Protect with the fee capitalised into their loan
- the fee varies from 7.24% to 11.66%
- Harmoney's fee is included/excluded in the above
- Harmoney's fee is deducted from the amount we lend
- if the loan is repaid early, do we get a rebate from Harmoney
- there is absolutely no guidance on the tax implications

I wish Harmoney had given some examples. So I'll try my own. If I lend $100 to a Payment Protect loan: -
- Harmoney will take $3 or $4 in fees to start with
- the loan repayments will be set so that I should get about $108 to $111 (depending on the PP fee) back over the term of the loan
- if the loan is repaid/rewritten half way through, I'll get back $104 to $105, as half the PP fee is rebated to the borrower
- if the loan is repaid/rewritten after almost immediately, I'll get back the $100 from the borrower, and they'll get back all of the PP fee, but my net return will be only $96-$97, because Harmoney have taken their $3-$4 fee from me upfront.

Questions: -
- in the above, what do I get if the borrower dies on day one, it seems to be nothing.

With the lack of clarity about this product, and with no indication of how to treat it for tax purposes, I think I'll give it a miss.

[Darchie]

I'm not that keen on unsecured lending figure going up to $70,000 ... just seems rather high in my view!
What's your thoughts on this higher figure?

[RMJH]

I'm not that keen on unsecured lending figure going up to $70,000 ... just seems rather high in my view!
What's your thoughts on this higher figure?

Tend to agree, wouldn't feel comfortable without further information to get comfortable that the algorithm can handle such large unsecured loans.

[alistar_mid]

whats peoples strat here on reinvesting or taking the money out?

If you recycle the money its in there for another 3-5 years (well it comes out in portions over this time)

I thought to as I get repayments each month to just take this money out.

Also does anyone know if their assessed default rates are based on a recent data set (ie the last 8 years or so when the economy has been strong) which would not be as relevant if the economy tanked and the unemployment rate went up?

[Onion]

If you log in to Harmony, then go to this page: https://app.harmoney.com/api/v1/inve...t=100&offset=0

Seems like there is a "bureau_score" for each loan listing. What is it? A score from Veda?

They have your answer:

https://www.harmoney.co.nz/how-it-wo...eporting#score

[Darchie]

Can anyone explain the Payment Protect, their FAQ just confuses me, and I have only the vaguest of ideas about what this product is.

I can see: -
- it's a payment waiver policy, so the borrower may be excused from making repayments
- it's optional for the borrower,
- there are two levels of cover
- some or all of the repayments may be waived
- if the loan is repaid early some of the fee is rebated to the borrower

It appears, but isn't clear to me: -
- the borrower pays for the Payment Protect with the fee capitalised into their loan
- the fee varies from 7.24% to 11.66%
- Harmoney's fee is included/excluded in the above
- Harmoney's fee is deducted from the amount we lend
- if the loan is repaid early, do we get a rebate from Harmoney
- there is absolutely no guidance on the tax implications

I wish Harmoney had given some examples. So I'll try my own. If I lend $100 to a Payment Protect loan: -
- Harmoney will take $3 or $4 in fees to start with
- the loan repayments will be set so that I should get about $108 to $111 (depending on the PP fee) back over the term of the loan
- if the loan is repaid/rewritten half way through, I'll get back $104 to $105, as half the PP fee is rebated to the borrower
- if the loan is repaid/rewritten after almost immediately, I'll get back the $100 from the borrower, and they'll get back all of the PP fee, but my net return will be only $96-$97, because Harmoney have taken their $3-$4 fee from me upfront.

Questions: -
- in the above, what do I get if the borrower dies on day one, it seems to be nothing.

With the lack of clarity about this product, and with no indication of how to treat it for tax purposes, I think I'll give it a miss.

Inclined to Agree
No matter how many times i read through Harmoneys blurb on this PP product I just can not see it is offering the lender much in the way of anything at all! ...
HM gather their commission & fees up front ... basically just by hard selling their product ... the loan is increased by that amount, so more notes to fill it, and lets the Lender take all the risk ...(unsure how each note receives their % of PP fee that's been added onto the loan amount!). which as i see it ... this all is still unsecured borrowers, that can just walk away from their commitment and by what I'm guessing is it only scars their credit history for two years ... then they can wipe that and do it all again! (I've never really borrowed much over the years so possibly don't understand how that credit history really works) maybe someone can elaborate upon that aspect.
I ask fellow lenders ... what advantages lenders are there with PP?

[Darchie]

And ... there's certainly a lot of loans in the process of being repaid ... i can see that in the reports...
No doubt rewriting to expand their limits.

[777]

And ... there's certainly a lot of loans in the process of being repaid ... i can see that in the reports...
No doubt rewriting to expand their limits.

Good. I can get my money out quicker.

[Soolaimon]

Inclined to Agree
No matter how many times i read through Harmoneys blurb on this PP product I just can not see it is offering the lender much in the way of anything at all! ...
HM gather their commission & fees up front ... basically just by hard selling their product ... the loan is increased by that amount, so more notes to fill it, and lets the Lender take all the risk ...(unsure how each note receives their % of PP fee that's been added onto the loan amount!). which as i see it ... this all is still unsecured borrowers, that can just walk away from their commitment and by what I'm guessing is it only scars their credit history for two years ... then they can wipe that and do it all again! (I've never really borrowed much over the years so possibly don't understand how that credit history really works) maybe someone can elaborate upon that aspect.
I ask fellow lenders ... what advantages lenders are there with PP?

Cant see any advantages, probably because I too cannot make head or tail of it. I notice that already ther are several loans listed with this PP thing. I have put 1 note into 3 of them to watch.
Other than that I am still withdrawing most of the re-paids over to LC and now only investing 1 or2 notes in loans here. I was putting 4 to 6 in a loan butt got hit with a couple of defauts in the 6 range (C andD) that knocked my RAR down to 12%. It is slowly recovering, now 12.65%.
Happier over at LC.

[permutation]

Did a bit of a survey of my loans history over the last 18 months.
With over 600 loans during that time 86% are in the A_D grades with only 1 of 8 defaults=12.5%. The remaining 14% taken are E and F grades with 7 of 8 defaults=87.5%

I have invested 1 note $25 in one of these new "pp" loans. The outstanding principal on this loan shows $26.29, so I figure this will be the extra amount I will receive if the note goes the full term.

So I figure based on my stats above, if I only ever lend A_D grades, according to my criteria of selecting loans which I have made in previous posts, with "pp" added my return will be enhanced and my defaults will continue to be minimal.