Peer-to-peer lending sites: MSE guide discussion

MrOverheads

agent69 wrote: »

Just as well. Aren't these the people that charge you for trying to recover your money if a loan goes bad?

Clause 21.2
21.2 We may refer the missed repayment to a collections agency (‘the Collections Agency’) who will attempt to collect the money on behalf of the lenders, the cost of their services (‘Collection Agency Fee’) shall be added to the amount owed by the Borrower and will not reduce the amount available for distribution to lenders.

So in the first instance no, if it simply overdue, then they don't charge.

However Clause 20.12 gives them the right to charge fees via the subsidiary Ameuri Ltd (AL) to recover a loan from the debenture (assuming it's a secured loan):

20.12 Each Lender agrees that AL shall be entitled to be paid, out of the proceeds of any recovery under the Debenture, an amount equal to its reasonable costs (including legal and other professional costs) incurred by AL in taking action to pursue repayment of the loan following a default. Costs may include (but are not limited to) enforcing the terms of the Debenture or in complying with any instructions from any Lender in connection with the Debenture.

It will be cheaper to use AL than it would to appoint say an administrator or liquidator.

It's either that model or the other model is that every repayment of every loan from every business has a micro deduction to build a pot of money to protect lenders against bad debts. So it's down to your own personal risk appetite, if you want to spread the risk equally amongst all lenders and you all take a mico hit on every repayment then go with a fund backed p2p or if you want to make your own judgments based on the loan request descriptions and your own research then one without a pot is for you.

agent69

MrOverheads wrote: »

Clause 21.2
21.2 We may refer the missed repayment to a collections agency (‘the Collections Agency’) who will attempt to collect the money on behalf of the lenders, the cost of their services (‘Collection Agency Fee’) shall be added to the amount owed by the Borrower and will not reduce the amount available for distribution to lenders.

So in the first instance no, if it simply overdue, then they don't charge.

However Clause 20.12 gives them the right to charge fees via the subsidiary Ameuri Ltd (AL) to recover a loan from the debenture (assuming it's a secured loan):

20.12 Each Lender agrees that AL shall be entitled to be paid, out of the proceeds of any recovery under the Debenture, an amount equal to its reasonable costs (including legal and other professional costs) incurred by AL in taking action to pursue repayment of the loan following a default. Costs may include (but are not limited to) enforcing the terms of the Debenture or in complying with any instructions from any Lender in connection with the Debenture.

It will be cheaper to use AL than it would to appoint say an administrator or liquidator.

It's either that model or the other model is that every repayment of every loan from every business has a micro deduction to build a pot of money to protect lenders against bad debts. So it's down to your own personal risk appetite, if you want to spread the risk equally amongst all lenders and you all take a mico hit on every repayment then go with a fund backed p2p or if you want to make your own judgments based on the loan request descriptions and your own research then one without a pot is for you.

I'll take that as a yes then.

MrOverheads

agent69 wrote: »

I'll take that as a yes then.

So I presume you see that as a bad thing? And hence prefer the model where every member of the crowd pays a small percentage into the pot to cover bad debts of some of the crowd?
How else would you suggest it was done? I presume most p2p platforms read this thread and it's an emerging market so all ideas have the ability to gain traction.

rwgray

MrOverheads wrote: »

I presume most p2p platforms read this thread and it's an emerging market so all ideas have the ability to gain traction.

You'd think they each had the common sense to track this forum automatically, to an email inbox.

Like wot I do.

Heh-heh.

Rich.x

agent69

MrOverheads wrote: »

I presume most p2p platforms read this thread.

There are other forums where representatives of P2P platforms actively engage in discussions with potential lenders. Many of these lenders have money spread across various platforms, but I suspect that not many are involved with Rebuilding.

If you have been around for over a year and not turned over much more than £1m, you're not going to survive come the day of reckoning.

Singasong

Can I ask, are there actually any hidden costs when applying for a loan? For example, will I get a surprise £20 charge for them doing the checks even if I am unsucessful?

Or do they do what Payday loan companies do and pass on my information to partner companies who will then charge me?

rwgray

Hello Singasong - I may not be alone among contributors to this forum in that I pay little or no attention to the terms for borrowers when considering lending. Funny that! But everyone writing here appears to be lending through p2p and having the good fortune not to need to borrow through them, as far as I am aware.

So you would need to read very carefully the terms and conditions for each lender's web site.

Thanks for asking - sorry not to be helping! ~ Rich.

ps. Just got my first £25 account credit from RateSetter - it was paid into a monthly loan at 1.9% but will reappear in the holding account in a month, I guess! Worth having. Anyone else wanting to sign up?

youtellme90

I've been looking a little into peer-to-peer lending, and I don't mind taking a few risks with my money, but reading through some of the posts on here seems to suggest it's not all it's cracked up to be?

MrOverheads

youtellme90 wrote: »

it's not all it's cracked up to be?

What in particular puts you off?

youtellme90

I think the view I got from the posts on here are that bad debt can outweigh the benefits. I know it's all about risk and if you don't risk you get poor returns, more risk, in theory more return (if the risk pays off).

I love the theory, I could put £2000 across 100 loans and earn ~10% interest over 3 years. Initial hope was the ~10% is p.a. But it seems it's 1~0% over 3 years? (Unless I misunderstood)

So if I put that £2000 in a Lloyds account at 3% per year I'd only be £25 better offer? So is it worth the risk for that much more? I understand if I was talking £20k, rather than £2k the figure would go up 10 fold, but for me, is it worth the risk?