Funding Circle slow selling

kcrane

I am in the same situation, sold the bulk of my loans a few weeks ago, but 14% didn't sell first time around. It wasn't obvious if that was because they were bad debt (and 14% bad debt would be a big issue) or if there was some other reason for not selling.

I tried re-listing the 14% and it allowed half of it to go on sale. That was a month ago, and so far no luck selling.

In a way my bigger concern is if it turns out that 7% of my capital has been lost to bad debt.

If you haven't downloaded your 18/19 annual Funding Circle tax statement I suggest you take a look.

criston

Take at look at my thread on P2P forums/Funding Circle 'Selling Loans - Time frame'

Give me the dates of all your instructions to sell, eventually followed up by actual date sold & I will add them to my thread.

This will then give us all an idea how long you have to wait

kcrane

Hi @criston

Can't find that thread, can you add a hyperlink?

Ta

criston

Will not allow me to place web site links here.

Website. p2pindependentforum
home
funding circle
'Selling Loans - Time frame'

kcrane

Quick update - my loans have now sold. It took 40 or so days. I have relisted what I can, but I'm stuck with £3k which is late but not yet declared bad.

I have asked FC for a lifetime list of transactions (I have been in since 2012) so that I can take a view on what I paid in versus what I took out. I do know that recent bad debts have been high. I earned £9k in interest in the year 18/19 and lost it all to bad debt. Overall, if I assume the £3k of late loans will turn bad, I have had almost £20k in bad debts, the majority in the last couple of years. Some of the individual loans make eye opening viewing, with interest rates of 15% to 20%, and only a handful of repayments before it went bad. Across my years with FC I have lost 2/3rds of my interest to bad debts.

My takeaway is that I should have kept a closer eye on what the loans looked like, I should have restricted my loans to only A and A+ (though plenty of those have also defaulted), I should have pulled out of FC when they said they would list the business (as my opinion was they would take on high risk loans to drive the lending activity up and so underpin a share offering).

I will have to keep an FC account for many years to wait and see if there are recoveries. I wonder if they will ever offer a "just give up and go" option, where some 3rd party steps in and offers 25p in the £ to buy you out (or whatever the rate would be). I guess not as it wouldn't be the best marketing (though it would be pragmatic).

Oh well, live and learn.

Psyduck1980

kcrane wrote: »

Quick update - my loans have now sold. It took 40 or so days. I have relisted what I can, but I'm stuck with £3k which is late but not yet declared bad.

I have asked FC for a lifetime list of transactions (I have been in since 2012) so that I can take a view on what I paid in versus what I took out. I do know that recent bad debts have been high. I earned £9k in interest in the year 18/19 and lost it all to bad debt. Overall, if I assume the £3k of late loans will turn bad, I have had almost £20k in bad debts, the majority in the last couple of years. Some of the individual loans make eye opening viewing, with interest rates of 15% to 20%, and only a handful of repayments before it went bad. Across my years with FC I have lost 2/3rds of my interest to bad debts.

My takeaway is that I should have kept a closer eye on what the loans looked like, I should have restricted my loans to only A and A+ (though plenty of those have also defaulted), I should have pulled out of FC when they said they would list the business (as my opinion was they would take on high risk loans to drive the lending activity up and so underpin a share offering).

I will have to keep an FC account for many years to wait and see if there are recoveries. I wonder if they will ever offer a "just give up and go" option, where some 3rd party steps in and offers 25p in the £ to buy you out (or whatever the rate would be). I guess not as it wouldn't be the best marketing (though it would be pragmatic).

Oh well, live and learn.

Did you spread your risk across a large number of loans?

kcrane

Yes, I left the % of my investment that could be in one loan at the default amount. I'll need to check what that was, but I did /do have a long list of loans.

It is another learning point. The advice to diversify loans to avoid being caught by a handful that go bad was sensible. What I didn't worry about, but I now realise others had warned about, was that if the level of defaults were high it didn't matter that you had diversified enough to be representative of the average loan book, as you'd see the average level of bad debt, which would be high. I think that is what is happening with FC.

thegardens

Does anyone know the cost to sell Funding Circle loans? I don't know if they publish it anywhere, but by my (rough) calculation I only got about 90% of the value of the remaining principle.

With regard to slow selling, under their new model I would think they could sell them immediately if they chose to use new funds to buy existing loans, rather than investing in new loans. Surely it's entirely up to Funding Circle how long they make you wait?

kcrane

There is no charge, unlike Zopa and Ratesetter. That is the good news.

The bad news is that your 10% could be late or worse, bad debt. Worth trying to sell again. It can take a few iterations to get down to just the bad debts.

System

kcrane wrote: »

I have asked FC for a lifetime list of transactions (I have been in since 2012) so that I can take a view on what I paid in versus what I took out. I do know that recent bad debts have been high. I earned £9k in interest in the year 18/19 and lost it all to bad debt. Overall, if I assume the £3k of late loans will turn bad, I have had almost £20k in bad debts, the majority in the last couple of years. Some of the individual loans make eye opening viewing, with interest rates of 15% to 20%, and only a handful of repayments before it went bad. Across my years with FC I have lost 2/3rds of my interest to bad debts.

My takeaway is that I should have kept a closer eye on what the loans looked like, I should have restricted my loans to only A and A+ (though plenty of those have also defaulted), I should have pulled out of FC when they said they would list the business (as my opinion was they would take on high risk loans to drive the lending activity up and so underpin a share offering).

Comes as no surprise. Borrowers don't use FC because they're good credit worthy individuals who can get decent rates at mainstream banks, borrowers use FC because none of the main financial institutions will touch them with a bargepole which should be all the warnings you need. Those institutions have server farms full of historical financial data and decades if not centuries of experience of lending to people and employ teams of highly qualified and experienced risk assessors and if they come to the conclusion it is a bad risk and they won't lend then usually it means it it.