LendingCROWD NZ P2P

[icyfire]

Finance Direct have run out of money so are not taking their share?

That has now changed as Finance Direct raised $400k before Xmas to invest in LC loans.

[leesal]

A question for somebody who wont be answering cynically

What is your approach to referral loans (will you be taking them, or avoiding?). One I picked up yesterday below.

Am thinking of either avoiding these loans (if I get a chance). Alternatively just taking the rough with the smooth - and factor that interest flex of 17.5% overall.

Capture.JPG

[Bjauck]

A question for somebody who wont be answering cynically

What is your approach to referral loans (will you be taking them, or avoiding?). One I picked up yesterday below.

Am thinking of either avoiding these loans (if I get a chance). Alternatively just taking the rough with the smooth - and factor that interest flex of 17.5% overall.

Capture.JPG

I will try not to be cynical.
If you had the choice of investing in two loans with the same interest rate and risk profile but one was charging you flex of 25% and the other was charging you flex of 10%, which one would you take? I am not sure if I understand the situation correctly but does the person/ organisation who made the referral get to keep their commission in the event of a default whilst the p2p lender carries the risk of the capital loss whilst having paid the higher non-recoverable interest flex?

[leesal]

I will try not to be cynical.
If you had the choice of investing in two loans with the same interest rate and risk profile but one was charging you flex of 25% and the other was charging you flex of 10%, which one would you take? I am not sure if I understand the situation correctly but does the person/ organisation who made the referral get to keep their commission in the event of a default whilst the p2p lender carries the risk of the capital loss whilst having paid the higher non-recoverable interest flex?

The lender would carry the full risk of capital risk, agents risk is that introductory client doesn't pay or repays early without refinancing (losing the commission stream).

The above question (between investing in 2 risks with/without interest flex at same interest rate) i wouldn't consider, as my objective is to build a diversified portfolio of loans where availability is a consideration. Thus the question is what is my overall system for risk selection, whether would consider investing in each of these loans on their own merits:

1. A1 loan at 7.99%
2. A2 loan at 10.99%
3. B1 loan at 14.54% with 25% interest flex
4. B2 loan at 17.99% with 25% interest flex

Generally speaking, I'm investing in 2,3,4. Although not with huge enthusiasm. My question is what is everyone else doing in terms of their risk selection criteria?

[Saamee]

[QUOTE=leesal

1. A1 loan at 7.99%
2. A2 loan at 10.99%
3. B1 loan at 14.54% with 25% interest flex
4. B2 loan at 17.99% with 25% interest flex

Generally speaking, I'm investing in 2,3,4. Although not with huge enthusiasm. My question is what is everyone else doing in terms of their risk selection criteria?[/QUOTE]

I'm only going for 3's...

I'm after maintaining a NAV around 13%

Happy to invest in either Flex types as I feel it is better to be in a loan than money sitting in the bank \ in LC's bank getting little \ no interest

I ONLY invest in loans with Property as Security.

[Saamee]

So what do you think is the largest 'Threat' to our investments in P2P within NZ?

I've just been mulling this over, especially with another World Economic crisis breathing down everyone's necks!

Well my take and penny worth is this > Personal Bankruptcies > Personal Borrowers that go 'Belly Up' ( Mortgage, Car Loan, P2P Loan etc )

Where P2P Borrowers decide the pain is not worth the gain.... So allow themselves to be taken through the Bankruptcy process.

[Bjauck]

The lender would carry the full risk of capital risk, agents risk is that introductory client doesn't pay or repays early without refinancing (losing the commission stream).

The above question (between investing in 2 risks with/without interest flex at same interest rate) i wouldn't consider, as my objective is to build a diversified portfolio of loans where availability is a consideration. Thus the question is what is my overall system for risk selection, whether would consider investing in each of these loans on their own merits:

1. A1 loan at 7.99%
2. A2 loan at 10.99%
3. B1 loan at 14.54% with 25% interest flex
4. B2 loan at 17.99% with 25% interest flex

Generally speaking, I'm investing in 2,3,4. Although not with huge enthusiasm. My question is what is everyone else doing in terms of their risk selection criteria?

I think the net interest is a relevant factor.
Personally I would not consider that the extra risk of a B1 over an A2 loan would be worth it if the B1 loan was being charged 25% flex and the A2 loan was being charged with 10% flex. I would not consider B1 loans that are charged 25% flex. I would not consider B2 loans with either 10% or 25% flex at this stage in the business cycle.

Real estate Property security is a plus unless the mortgaged property has been owned for a year or less.

In effect you you would be earning 9.89% on the A2; 10.91% on the B1.
However that would need to be weighed up with the lower risk alternatives of earning approx 3.8% in a big Aussie bank term deposit or 0% in the account at Squirrel.

[leesal]

I'm only going for 3's...

I'm after maintaining a NAV around 13%

Happy to invest in either Flex types as I feel it is better to be in a loan than money sitting in the bank \ in LC's bank getting little \ no interest

I ONLY invest in loans with Property as Security.

Thanks for your input, appreciated. However I'm interested in your thoughts.... A B2 25% flex loan is costing you nearly 3% over the standard. But compares favorably to your other options like bank/cash uninvested.

You consider the B2 with only Vehicle as security on 10%, giving you a 16.2% return as an unattractive? (relative to the bank or generating no return options?). My theory on this, and could be incorrect which is why am bringing up, is that the type of security would be factored into the grading/inherent riskiness of the loan. So to provide an example a B2 with vehicle may improve to a A2 if property was added.

Just interested, as these discussions help me refine my logic

[leesal]

I think the net interest is a relevant factor.
Personally I would not consider that the extra risk of a B1 over an A2 loan would be worth it if the B1 loan was being charged 25% flex and the A2 loan was being charged with 10% flex. I would not consider B1 loans that are charged 25% flex. I would not consider B2 loans with either 10% or 25% flex at this stage in the business cycle.

Real estate Property security is a plus unless the mortgaged property has been owned for a year or less.

In effect you you would be earning 9.89% on the A2; 10.91% on the B1.
However that would need to be weighed up with the lower risk alternatives of earning approx 3.8% in a big Aussie bank term deposit or 0% in the account at Squirrel.

Agree with your logic, however if the B1/B2 10% flex loans weren't available, you'd be forced to consider the 25% flex against the other P2P and investment options.

Not quite sure that agree on avoiding B2 loans. There is no certainty a recession will hit in the next year, coupled with the (albeit limited) historical data from Lending Club from 2007 and 2008, that demonstrate small positive returns from A-C grades (without any security). Do you view B2 as more risky then a Lending Club (or for that matter Harmoney) unsecured loan?

[CR_111]

I'm wondering how a $30K loan is all gone in less than a minute.