Dying to go on holiday...?Attachment 9673
Hard to see why it's only worth 7.99% interest.
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Dying to go on holiday...?Attachment 9673
Hard to see why it's only worth 7.99% interest.
I suspect these anomalies are due to the loan being re-written i.e. it was probably a holiday expense loan that has been re-written to include funeral expenses or the other way round?
Yeah you're probably correct. I'm just poking fun at it, I don't have any serious complaints about Harmoney.
I know this has been discussed previously but does anyone have any updated input about Payment Protect? I think that the investor only receives the full premium once a loan is fully repaid at maturity, so it may take years to see if it was worthwhile. So far I've lost more to the net effect of payment protect payment waivers/lender rebates than I have from defaults. I'm now avoiding these loans after previously deciding to invest in them to avoid missing opportunities to invest.
I suspect the provided figures in the 'My Dashboard' may be a bit confusing. My rough interpretation:
Protect Rebates (Lender): The amount of PP rebate paid to lender at this point in time.
Protect Rebates (Borrower): The amount of PP rebated due to early repayment - this is not a loss, this is balancing the Outstanding Principal which is inflated when the PP is taken out.
Principal waived: This is a loss due to a payment not being made.
When a PP is taken out, the lenders Outstanding Principal value is inflated above the value of the loan - this results in a higher gross interest return which, combined with the PP payment by the borrower throughout the loan, gives the benefit. I assume the PP 15%pa management fee is included in the Service / Lender fees...
It is difficult to put in words - have a look at the examples Harmoney provide which may help?
https://www.harmoney.co.nz/payment-protect/lenders
Added: The 'Premium' does not get paid at the end of the loan - PP is paid throughout the loan. However, rebates are paid at early termination of the loan.
PP is a complicated product, designed to increase Harmoney revenue substantially (at the cost of lender returns, due to early repaid). I have observed that PP loans are also much more likely to repay early than others. Harmoney have not cared to published examples of tax treatment of PP loans and affect of early repayment on PP loans, even though those scenarios have been worked out. There must be good (for Harmoney) reasons why those examples haven't seen sunlight to date...
As I understand it, the PP running amount can be seen on the Account Summary page as follows:
(Borrower Principal amount ) - (Loan Investments funded) - (Protect Rebates Borrower) + (Protect Rebates Lender) = Current Running $Value
The "Lender Rebate" is the realized amount, crystallized due to a rewrite or early repayment.
As the loan heads towards full term, more and more of the P/P fee becomes a credit to the Lender.
Borrower making almost $10k a month after tax needs $17k to go on holiday. Just hard to believe the monthly income
Attachment 9680