Harmoney

[kiwi_on_OE]

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.

Thx for confirming that the fee has been reflected in the principal. Can you confirm which of the PP Pricing categories the loan is in, so that I can work out what fees Harmoney have deducted?

"Payment Protection" seems to be a misleading description. I wonder if they will use it on their advertising.

I agree with Darchie about PP not offering much. It seems to have it's costs/benefits around the wrong way - if the lender repays correctly I'll get paid more than normal, if they have some problem I agree to be paid less. If normal insurance was involved I would expect to receive slightly less if the loan was repaid normally, and to receive a payout if the loan got into trouble.

It's good that Harmoney have provided this sort of thing, for those that want it, and they do a lot of stuff better than others, but at the same time they seem to shoot themselves in the foot with bad communications and strange features.

[Darchie]

Harmoneys systems with repaid loans seem to be rather clogged at present .. i still have 18 loans sitting in repaid status, but I'm yet to receive funds.

[permutation]

Thx for confirming that the fee has been reflected in the principal. Can you confirm which of the PP Pricing categories the loan is in, so that I can work out what fees Harmoney have deducted?

The loan is for partial cover and it is a 60 month loan. The payment protection fee: says $1.98, I have $1.29 added to my outstanding principal total $26.29 so I guess the remaining 69c. goes to Harmoney if the loan runs it's entire duration.

What I don't understand is, that if the borrower defaults on this loan then will I lose all my principal that hasn't yet been repaid anyway???

[kiwi_on_OE]

The loan is for partial cover and it is a 60 month loan. The payment protection fee: says $1.98, I have $1.29 added to my outstanding principal total $26.29 so I guess the remaining 69c. goes to Harmoney if the loan runs it's entire duration.

What I don't understand is, that if the borrower defaults on this loan then will I lose all my principal that hasn't yet been repaid anyway???

Thx permutation. 69c of $1.98 seems to match their statement that their fee would be 15% + 20% ie. 35%. But the $1.98 doesn't seem to match with the table on their website saying it would be an 8.18% fee ($2.045 on $25) for an individual taking partial cover on a 60 month loan.

Have I got the maths wrong, or do I not understand what Harmoney are doing? (doing some tests, it looks a bit like the fee is rounded to the nearest $25)

I was thinking about these loans. They actually seem to be a way of increasing the riskiness of a loan from our perspective, as we agree not to require repayments in certain circumstances. Harmoney could've chosen to increase the interest rate, as is normally done when a loan is assessed as riskier. But I can understand why they preferred to take their fee upfront.

Perhaps there's a business opportunity for a new type of P2P model - charge everyone interest at 5% and then an upfront fee that is added to their loan to account for the borrower's riskiness. Maybe $5 on a $25 A1 loan and $30 on a F5 loan.

I'm also a bit surprised that the "full cover" fee isn't somewhat dependent on the borrower's category, or am I wrong to assume that risky borrower's are more likely to be made redundant?

I wonder if Harmoney will ever try to clarify this feature for us?

[humvee]

So I lose $2.39 - of my principle in fees and get no interest

Harmoney-take-full-fees-on-payment-protect-loan-thats-paid-of-in-under-a-month.JPG

[Ketel One]

It seems to me like the main outcome of the introduction of payment "protect" is actually just a mechanism to re-introduce a fee that's taken from lenders each time meaning Harmoney can benefit from loan churn / rewrites again...

Unless I'm missing something?

[kiwi_on_OE]

It seems to me like the main outcome of the introduction of payment "protect" is actually just a mechanism to re-introduce a fee that's taken from lenders each time meaning Harmoney can benefit from loan churn / rewrites again...

To be fair, they clip the ticket by taking a fee on the extra interest too. ;-)

Good to see they've done a couple of examples now. Although it would be good to see an example of an early repayment scenario as humvee experienced last week.

One aspect that appears positive, if I understand correctly, is the margin lenders make on the fee. Harmoney take 35%, waivers are expected to take 24% (or is it 21%?) or 33%, leaving 32% or 41% for lenders. So their modelling would need to be fairly bad not to make money. But I'm not sure I trust their modelling.

I find it interesting that this is done as a waiver product rather than an insurance product. I suppose that does mean we take the risk if the modelling is wrong, rather than Harmoney if they provided it as insurance.

How do other lenders intend to treat it from a tax perspective? Presumably for a lending business the net fee would be income and waived payments would be expenses? But for someone not in the business of lending where bad debts can't be expensed (do I remember that correctly?), presumably a waived payment is a bad debt and can't be expensed? How many lenders will ignore the fee, and just put the interest in their tax return?

[Finite]

It seems to me that the ratio of 36 to 60 month loans has moved significantly over the last few months.
There are hardly any 36 month loans these days.
A sign of the times and the deteriorating situation most consumers are finding themselves in?

[kiwi_on_OE]

I haven't done a thorough analysis, but my mix of 36 and 60 month loans appears to be pretty much the same, perhaps a few more 60 month loans. It could be that the criteria I use just happens to produce that result.

[Soolaimon]

The loan terms have definatley changed for me. In the first year I had 80% 36 month loans and now after 2 years they are running 50% and that is using pretty much the same filters.