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Thread: Harmoney

  1. #3166
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    Quote Originally Posted by Soolaimon View Post
    Correct, my RAR has been around 12.8% now for a year or more. Bank term deposits averaging 3.55% so all is well..so far.
    I imagine, that Not everyone can be so confident There is greater risk surrounding that before tax unsecured RAR. Also, unless you can be certain that you can deduct both charge-offs and lender fees, then you effective tax rate could be much greater than 33%. Plus how much do you have sitting in the Harmoney platform non-interesting bearing account waiting for loans or waiting for loan notes to be taken up by borrowers?

    Charge offs comprise 22% of gross interest is and that is in a fairly benign economy.

  2. #3167
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    Quote Originally Posted by Bjauck View Post
    I imagine, that Not everyone can be so confident There is greater risk surrounding that before tax unsecured RAR. Also, unless you can be certain that you can deduct both charge-offs and lender fees, then you effective tax rate could be much greater than 33%. Plus how much do you have sitting in the Harmoney platform non-interesting bearing account waiting for loans or waiting for loan notes to be taken up by borrowers?

    Charge offs comprise 22% of gross interest is and that is in a fairly benign economy.
    Somewhat subjective Bj - charge off rates vary and can be affected by the number of loans and range of loan grades. 22% is an industry quoted figure for unsecured personal loans but will vary significantly from lender to lender. E.g.- a lender with just one loan written off after one payment = 6,000%. In my case, 8 months in with 2,100 loans, RAR = 12.68%, gross interest = $3,950, charge offs = $224 = 5.67%. Smarter lending decisions will reduce bad debts - ask any banker. Agree absolutely that the economy is benign atm and that a tightening could change everything but generally, a recession will cause charge offs to increase by half - certainly a steep decrease in returns but not an absolute catastrophy and certainly not back to current bank deposit rates. Most asset classes will not escape unscathed from a recession (bar bank deposits).

  3. #3168
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    Quote Originally Posted by Bjauck View Post
    I imagine, that Not everyone can be so confident There is greater risk surrounding that before tax unsecured RAR. Also, unless you can be certain that you can deduct both charge-offs and lender fees, then you effective tax rate could be much greater than 33%. Plus how much do you have sitting in the Harmoney platform non-interesting bearing account waiting for loans or waiting for loan notes to be taken up by borrowers?

    Charge offs comprise 22% of gross interest is and that is in a fairly benign economy.
    My charge offs are just under 10% of gross interest. Been in since the start and I did cop a few larger charge offs when I was buying up to 8 notes per loan. In the last 18 months have limited buying to 1-2 notes and a few at 3. Perhaps it was just bad luck earlier but the charge off's now I feel are at an acceptable level. B and C loans with the occasional D grade.
    Soolaimon

  4. #3169
    yeah, nah
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    Milestone reached for me today - just over 12 months of investing.

    milestone.png

    A few other numbers of interest:

    1941 loans in total
    596 loans paid off
    22 loans charged off
    22.03% average weighted loan interest rate

    Harmoney average suggested default rate for my loans = 1.33%
    My loans actual default rate = 1.13%

    Charge offs (I have a split something like 10% B, 40% C, 35% D, 15% E):
    1 x B (1:194)
    7 x C (1:111)
    6 x D (1:113)
    8 x E (1:36)

    The default ratio shown in brackets (i.e. 1 loan in 194 defaults for B's) is interesting - shows very little difference in my loan set for C and D loans?

  5. #3170
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    Quote Originally Posted by joker View Post
    Somewhat subjective Bj - charge off rates vary and can be affected by the number of loans and range of loan grades. 22% is an industry quoted figure for unsecured personal loans but will vary significantly from lender to lender. E.g.- a lender with just one loan written off after one payment = 6,000%.
    I think that the 22% of gross interest was the platform wide figure revealed by Harmoney. However I cannot find a citation for this.


    In my case, 8 months in with 2,100 loans, RAR = 12.68%, gross interest = $3,950, charge offs = $224 = 5.67%. Smarter lending decisions will reduce bad debts - ask any banker. Agree absolutely that the economy is benign atm and that a tightening could change everything but generally, a recession will cause charge offs to increase by half - certainly a steep decrease in returns but not an absolute catastrophy and certainly not back to current bank deposit rates. Most asset classes will not escape unscathed from a recession (bar bank deposits).
    I think eight months in is about the time when you may start to hit the charge-off bulge.


    I agree that Harmoney may produce after tax returns eceeding TDs for most, however P2P is a young industry and I think it comes with considerably greater associated future risk especially during the next downturn.


    Quote Originally Posted by Soolaimon View Post
    My charge offs are just under 10% of gross interest. Been in since the start and I did cop a few larger charge offs when I was buying up to 8 notes per loan. In the last 18 months have limited buying to 1-2 notes and a few at 3. Perhaps it was just bad luck earlier but the charge off's now I feel are at an acceptable level. B and C loans with the occasional D grade.
    Your charge rate is lower than platform (if the platform rate is at 22% of gross interest). Maybe your portfolio and results would be in the goldilocks range for those P2P lenders who may not be able to claim charge-offs for tax purposes...maximising interest yield, whilst keeping charge-ofs at a moderate level.

  6. #3171
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    Quote Originally Posted by myles View Post
    22.03% average weighted loan interest rate


    The default ratio shown in brackets (i.e. 1 loan in 194 defaults for B's) is interesting - shows very little difference in my loan set for C and D loans?
    Congratulations myles on the 20k gross, absolutely enviable results and well deserved, as you backed your calculations and convictions and ventured into the risky frontier, despite recent risk averse chatter a year ago.

    Interesting C-D ratios indeed. Would be interesting to see if your loan picking filters will eventually beat Harmoney's grading system ...

  7. #3172
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    Earns $26,000 monthly after tax, needs to borrow $3,000, willing to pay $500 for the re-write to get the loan increase. One has to seriously doubt the veracity of the information that Harmoney provides us with to base our investment decisions upon. There is obviously little checking of the data supplied by borrowers and no red flags are being raised in unusual/unbelievable circumstances.
    ScreenHunt.jpg

  8. #3173
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    Quote Originally Posted by joker View Post
    Earns $26,000 monthly after tax, needs to borrow $3,000, willing to pay $500 for the re-write to get the loan increase. One has to seriously doubt the veracity of the information that Harmoney provides us with to base our investment decisions upon. There is obviously little checking of the data supplied by borrowers and no red flags are being raised in unusual/unbelievable circumstances.
    ScreenHunt.jpg
    Looks like a business loan too but filter would not have caught it. If they are orchardists it could be they have very seasonal cash flow but no way I would touch it!

  9. #3174
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    After some write offs I asked Harmoney how they confirmed the income and they said they review bank statements. I bet the $26k monthly income is top line revenue for a crop sale and not net income. If it was its hard to imagine they would need this expensive loan.

  10. #3175
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    Default Payment Protect Fee

    There are no fee charged if loan returned in full in cooling-off period. This loan was issued and paid-off on the same date. No service fee charged, but is Payment Protect Fees still charged?

    PP fees on loan paid off same day as issued.JPG

  11. #3176
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    At sub 10% returns, Harmoney no longer holds the yield advantage over competition, especially for smaller portfolios, and it looks like the sub 10% returns are here to stay due to the high Harmoney fees and feeble investor returns from its Payment Protect option. It still remains strong in the investment mix for the 'real' peers despite its poor track record in communications and lender satisfaction, because the competition has comparatively poor volume. At this stage...

  12. #3177
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    Err, the retail RAR is 12.4'ish...

    Why do people constantly compare themselves to the platform RAR when it should be the retail RAR? If your RAR, as a retail investor, is below 12.4, you're below the average of your 'peers'...

  13. #3178
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    Quote Originally Posted by myles View Post
    Err, the retail RAR is 12.4'ish...

    Why do people constantly compare themselves to the platform RAR when it should be the retail RAR? If your RAR, as a retail investor, is below 12.4, you're below the average of your 'peers'...
    Individual performance is as much a matter of luck as it is of an individual's loan picking nous, especially if loan numbers are small in the portfolio, which they are for most retail customers. But of course, it is a valid way to segment, and benchmark.

    Benchmarking to the platform RAR seems more appropriate to me for my purposes, and hence I have talked about it more, as it measures HM loan vetting performance, which I (and the institutional lenders - 75%+ of the HM Loan book) am forced to predominantly rely on. But, to each their own.

  14. #3179
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    Also, even at (the still declining) 12.4% retail RAR of the pick n choose segment, HM offering is only second best now, since it reduced the reward for carrying unsecured loans 2 years ago (by raising its fees to 20%, 17.5% etc.) and the non tax-deductibility of its (comparatively much higher) defaults for the 'real/retail' peer. Watching this space with interest.

  15. #3180
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    Quote Originally Posted by beacon View Post
    Also, even at (the still declining) 12.4% retail RAR of the pick n choose segment, HM offering is only second best now, since it reduced the reward for carrying unsecured loans 2 years ago (by raising its fees to 20%, 17.5% etc.) and the non tax-deductibility of its (comparatively much higher) defaults for the 'real/retail' peer. Watching this space with interest.
    No doubt its going to get lower. However I feel the autofilter is worth a good 2%

    And what is the alternative - lendme lacks the volume to make it viable for most investors. Haven't looked at Squirrel.

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