Squirrel Money P2P

[lawson]

Had a loan repay in full yesterday about 9 months into a 3 year term. Was able to reinvest immediately so no worries. It actually makes sense to me that people borrowing in this way would knock the loan on the head as circumstances allowed. Main thing is to get the rate of interest on the money invested and be able to roll it on to someone else when someone repays.

A further 51,000 awaiting funding at 9% for 5 years at the moment according to the portal

[icyfire]

There is now 93k for 5 years awaiting funding if anyone is interested.

[Saamee]

360K currently waiting for investing in 5 Year loans....

5 Year lending appears to have slowed right down since the end of the last quarter at SM

Has anybody been getting serious funding into 5 Year loans recently apart from rats and mice single figures?

My Interest and Capital payments from SM are now going into Finance Direct ( Lending Crowd's parent )

[beacon]

Interesting that Squirrel issues loan to borrowers at fixed listed rates (average 12.56% according to the site currently), takes its 2% cut, deducts its 2% shield buffer, but then also keeps the Investor rate difference (loan bought first by squirrel at 9%, then onsold to investor at 8.5%, due to lack of sufficient loans causing investors to undercut each other). Isn't this a hidden unadvertised fees on loan, or have I misunderstood this model?

[Saamee]

Interesting that Squirrel issues loan to borrowers at fixed listed rates (average 12.56% according to the site currently), takes its 2% cut, deducts its 2% shield buffer, but then also keeps the Investor rate difference (loan bought first by squirrel at 9%, then onsold to investor at 8.5%, due to lack of sufficient loans causing investors to undercut each other). Isn't this a hidden unadvertised fees on loan, or have I misunderstood this model?

Or just Free market principles at work?

[beacon]

Or just Free market principles at work?

Free market in the ability investors have to undercut each other and jump the Q. But if you are Squirrel, and you buy a $100,000 loan at 9% for 5 years and sell it a microsecond later to 10 investors at 8.5%, you are reaping 0.5% on the life of the loan with no money down. In my understanding it is called Fee, not Free Market... but maybe that's not what Squirrel is doing... Or is it?

[JB@Squirrel]

Free market in the ability investors have to undercut each other and jump the Q. But if you are Squirrel, and you buy a $100,000 loan at 9% for 5 years and sell it a microsecond later to 10 investors at 8.5%, you are reaping 0.5% on the life of the loan with no money down. In my understanding it is called Fee, not Free Market... but maybe that's not what Squirrel is doing... Or is it?

We don't bid on any loans for 24 hours and then we only bid in at the maximum investor rate to settle the loan, so Squirrel never makes any money on the secondary market and the investor return is maximised. We essentially only bid in where there is a shortage of investor funds to get the loan settled. We're not bidding at all at the moment as plenty of investor bidding going on. Hope that clarifies.

We've had a big week of loan settlements this week, so will hopefully clear surplus investor funds over the coming couple of weeks.

[JB@Squirrel]

Interesting that Squirrel issues loan to borrowers at fixed listed rates (average 12.56% according to the site currently), takes its 2% cut, deducts its 2% shield buffer, but then also keeps the Investor rate difference (loan bought first by squirrel at 9%, then onsold to investor at 8.5%, due to lack of sufficient loans causing investors to undercut each other). Isn't this a hidden unadvertised fees on loan, or have I misunderstood this model?

Sorry Beacon hadn't been on here a while so just picked up your query.

The borrower rates are carded based on their risk (including applied risk premium) and assuming the high end of the investor bid spread. The borrower always gets the advertised rate. The Squirrel margin is also always the same (1% on A grade, 2% on B grade ....) If investors bid down their return we pass the difference to the reserve fund which benefits all investors and covers any potential losses.

At the moment we've had a bit of a surge in investor activity so we have surplus funds in the platform and investors have started to bid rates down a bit. This will be good for growing the reserve fund.

We've got about $1m of borrowers coming through monthly and whilst that is growing, it's only growing slowly. The joys of 100% retail funding and wanting to keep acquisition costs sustainable!

[Entrep]

Wow, you're saying Squirrel is bidding for loans on its own platform? That would be highly unethical...

And yes I am having trouble putting money to work now.

[Saamee]

Wow, you're saying Squirrel is bidding for loans on its own platform? That would be highly unethical...

And yes I am having trouble putting money to work now.

Yes, I was not quite sure what Beacon was trying to say.

I know I have bought Squirrel loans before ( @ 9% ) - Sounds like somehow Beacon knew they were SM issued loans and then the free market of Investors had a Dutch Auction lowering the rate obtained!