I wonder whether 'payment protect' is misleading people with literacy issues into believing there are no consequences for not paying back the loan. NZ has about 40% of people defined as having literacy issues with 20.7% of people having level 1 literacy (this means they struggle to read and understand simple sentences). I would imagine, given the creative spelling of the majority of the reasons for the loans, that the proportion of people with literacy issues taking out Harmoney loans is quite a lot more than the average.
Since Oct 15 last year, 9 months after payment protect was launched, 8 of 13 of my charged off loans have payment protect, and I didn't typically invest in that many payment protect loans. "Payment protect" sounds like they are protected from consequences and, in a way, they are. The description is here:
https://www.harmoney.co.nz/payment-protect/borrowers It covers terminal illness, which many people get, and your remaining loan payments are waived.
I've stopped investing in loans that have payment protect as my earnings from the protect rebates are $45.73 while the losses are $231.50. The recent spate of bad loans has taken my returns from around 17% down to 15% and I've been treading water for 3 months. I've stopped investing in anything over D2 since the rate changes. I'm 40% weighted in C with about 5% in A, 20% in B, 25% in D and 10% in E.
Originally Posted by darrenc
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