Peer to Peer lending in NZ

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Forums › Finance and wealth management › Peer to Peer lending in NZ

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620 posts

Ultimate Geek

#1608704 10-Aug-2016 15:52

@Linuxluver

I forgot to say thanks for your earlier posts, they are much appreciated.

Just a quick question, one of my loans was paid off 2 days ago. I thought I'd be able to reinvest the money almost instantly, but it still isn't in my account. How long does it usually take to get your money back?

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Linuxluver

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#1608715 10-Aug-2016 16:10

Sam91:

@Linuxluver

I forgot to say thanks for your earlier posts, they are much appreciated.

Just a quick question, one of my loans was paid off 2 days ago. I thought I'd be able to reinvest the money almost instantly, but it still isn't in my account. How long does it usually take to get your money back?

Are you on Harmoney?

If you are, the principal re-paid (and any interest) should automatically go into "Cash Available" on your Dashboard. You can then either withdraw it or re-invest it.

If this isn't happening, you best give them a call or send them an email and describe the problem as clearly as possible - like provide the identifier for the loan you think was paid back....

There may be a lag of some sort.....but if the loan was paid back days ago and you still aren't seeing the funds, then best to ask the question.

They do not do automatic re-writes, so if a loan is paid off for ANY reason the money goes into "Cash Available".

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I've been on Geekzone over 15 years..... Time flies....

Sam91

620 posts

Ultimate Geek

#1608719 10-Aug-2016 16:18

Linuxluver:

Sam91:

@Linuxluver

I forgot to say thanks for your earlier posts, they are much appreciated.

Just a quick question, one of my loans was paid off 2 days ago. I thought I'd be able to reinvest the money almost instantly, but it still isn't in my account. How long does it usually take to get your money back?

Are you on Harmoney?

If you are, the principal re-paid (and any interest) should automatically go into "Cash Available" on your Dashboard. You can then either withdraw it or re-invest it.

If this isn't happening, you best give them a call or send them an email and describe the problem as clearly as possible - like provide the identifier for the loan you think was paid back....

There may be a lag of some sort.....but if the loan was paid back days ago and you still aren't seeing the funds, then best to ask the question.

They do not do automatic re-writes, so if a loan is paid off for ANY reason the money goes into "Cash Available".

Interesting, the principle plus interest has suddenly appeared in my "cash available". I guess 2 days ain't bad, but I thought it would be faster.

Thanks : )

Sam91

620 posts

Ultimate Geek

#1643851 1-Oct-2016 14:36

I currently have one loan in arrears. They're yet to make a single payment.

F5 (39.99%)
LOAN PURPOSE:Purchase New Vehicle
AGE BAND:Below 20
MARITAL STATUS:Single
NZ REGION:Auckland
RESIDENTIAL STATUS:Living with Parents
BORROWER INCOME:$2,166.00

What was I thinking : P

My RAR hasn't appeared yet, is it meant to take several months to appear?

Linuxluver

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#1721775 17-Feb-2017 12:30

It's been a while since I posted on this topic....and there are a couple of observations I can add that might be useful.

Harmoney has introduced several changes.

They now offer borrowers some level of insurance should they find they can't pay their loan payments. This also benefits lenders.
They now discourage lending more than 4 units ($100) per loan....so strongly encourage lenders to diversify.
They now update your RAR (Real Annual Return) weekly. It used to be monthly.
They now offer "Auto-lend" so lenders can program in how they want their funds to be invested. I haven't fully investigated this yet.

My own observations:

On my very first day, right at the start, I invested $1000 in a single loan. That was dumb. After about 9 months of funds trickling in $979.85 of it was "Charged off". A loss. I can claim that on my taxes, I'm told, so at least I don't pay tax on interest I earned but which was undermined by this loss. Overall, my rate of return annually was still around 4% despite that.....so still roughly equal to a VERY good term deposit rate. This is unlikely to happen again as the other larger loans were re-written and the funds repaid in full plus interest and I now have no loan larger than 100$.

Had I not made that mistake on day one, my real annual return would have been around 13.5%. My bad. Not to be repeated.

But this is where it gets interesting. I have upwards of 200 active loans....and several times each week a loan is re-written and paid out. I then have the money to re-invest.....but I'm picky about my loan classes and I often find that despite there being 5-10 new loans each day, there may be only 2 or 3 I am willing to lend to......and I have to hit them at the right time of day or they are subscribed and closed.

The net effect seems to be that around 200-225 loans the "churn" in loans starts to match the funds available via repayments and the interest being paid (I'm re-investing everything to compound it). Even if I had more money to invest, I would have to begin looking at the dodgier loans if I was determined to invest at all costs. I'm not.

I currently have 3 loans in arrears...and they were basically $25 / one-unit punts on E and F class borrowers. They tend to come right.....but even if they don't, the interest rate on those loans is so high (25%-35%) that I come close to not losing anything at all even if they do default as long as they kept the payments up for about 1/3 of the term of the loan.

It's been an interesting 17 months. On the face of it, if you have a spare $15,000 or so you could gradually squeeze that into a couple of hundred loans and reach the same point......where the churn matches the funds to invest and there isn't really any possibility of cramming any more money into it.

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Linuxluver

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#1721784 17-Feb-2017 12:39

Sam91:

I currently have one loan in arrears. They're yet to make a single payment.

F5 (39.99%)
LOAN PURPOSE:Purchase New Vehicle
AGE BAND:Below 20
MARITAL STATUS:Single
NZ REGION:Auckland
RESIDENTIAL STATUS:Living with Parents
BORROWER INCOME:$2,166.00
What was I thinking : P

My RAR hasn't appeared yet, is it meant to take several months to appear?

Yeah.....car loan? Nup.

Holiday loan? Really? Borrow $15k for 5 years at 24.5% for a holiday? That's more expensive than a credit card. Nup.

Business cash flow? Really? $50,000 at 22% for 5 years and the payments are 20% of your monthly declared income and you have a mortgage? Nup.

Consolidate debt? Really? $35,000 for 5 years at 26%? To pay off credit cards that only charge 19%-23%? Payments 25%of your income? Pull the other one. Nup.

...and so on.

However....for home improvements and payments are 10% 15% of stated income...and class is A or B (9.9% to 18% interest) and it's very likely they will do the work and sell the house and pay out the loan so I can get my money back faster (but suffer higher churn)? Absolutely. I'm in.

RAR takes a while to accumulate data....then refreshes weekly now.

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I've been on Geekzone over 15 years..... Time flies....

networkn

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#1721788 17-Feb-2017 12:43

I am a little tempted to throw 1-2K into this and see how it works out. It would be nice if the return could fund a couple of my smaller hobbies etc.

Linuxluver

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#1721813 17-Feb-2017 13:06

networkn:

I am a little tempted to throw 1-2K into this and see how it works out. It would be nice if the return could fund a couple of my smaller hobbies etc.

For $2000 at an average 13% interest rate and no losses....you'd see a gross income of ($260 annually) about $21.66 / month (before fees and witholding taxes). Much better than the bank.....

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networkn

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#1721815 17-Feb-2017 13:07

This was probably addressed earlier, but who is responsible for chasing people who don't pay etc?

Sam91

620 posts

Ultimate Geek

#1721829 17-Feb-2017 13:36

networkn:

This was probably addressed earlier, but who is responsible for chasing people who don't pay etc?

https://www.harmoney.co.nz/how-it-works/collections-process?_ga=1.77862868.1739978221.1484207135#arrears-30

I have just over $1000 invested. Based on my experience so far, I would avoid E and F grade loans if you're only investing 1-2k. One of my F grades has been charged off, which has seen my RAR drop from around 12% to 6.89%. I currently have an E grade loan in arrears as well which will probably be charged off soon. If I had lots of money to invest, I certainly wouldn't avoid E and F grades, but at 1k, I definitely won't be going near them again. If you're going to invest 1-2k I would recommend sticking to one note ($25) per loan in order to diversify as much as possible.

Thanks for the update Linuxlover.

MikeAqua

6895 posts

Uber Geek

#1721908 17-Feb-2017 16:18

eracode:

Is there anything to stop the borrower lying about the purpose of the loan/reason for borrowing?

It's illegal to provide false information in order to obtain credit. The consequences are quite serious (convictions, fines) if caught and you will be considered untouchable to future creditors.

Thanks to OP for an interesting thread. I like the accessibility of lending/borrowing that Harmoney provides.

Mike

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Ultimate Geek

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#1721959 17-Feb-2017 18:19

Linuxluver:

networkn:

I am a little tempted to throw 1-2K into this and see how it works out. It would be nice if the return could fund a couple of my smaller hobbies etc.

For $2000 at an average 13% interest rate and no losses....you'd see a gross income of ($260 annually) about $21.66 / month (before fees and witholding taxes). Much better than the bank.....

On the other hand, if you had a mortgage at say 4.50% and were on a marginal tax rate of 33% then.....

$2000 @ 13% = $260 p.a. less 33% = $114.20 net less interest on mortgage ($90) = net return $24.20 per annum or an extra $2 a month

Hardly seems worth it - I can save $2 a month by skipping half a coffee or showering at the gym instead of home.

cruxis

384 posts

Ultimate Geek

#1722006 17-Feb-2017 21:03

Does Harmoney give you the defaulters info after 120 days so you use your own recovery team?

throbb

659 posts

Ultimate Geek

#1722031 17-Feb-2017 21:39

cruxis:

Does Harmoney give you the defaulters info after 120 days so you use your own recovery team?

networkn

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#1722069 17-Feb-2017 22:13

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Linuxluver:

networkn:

I am a little tempted to throw 1-2K into this and see how it works out. It would be nice if the return could fund a couple of my smaller hobbies etc.

For $2000 at an average 13% interest rate and no losses....you'd see a gross income of ($260 annually) about $21.66 / month (before fees and witholding taxes). Much better than the bank.....

On the other hand, if you had a mortgage at say 4.50% and were on a marginal tax rate of 33% then.....

$2000 @ 13% = $260 p.a. less 33% = $114.20 net less interest on mortgage ($90) = net return $24.20 per annum or an extra $2 a month

Hardly seems worth it - I can save $2 a month by skipping half a coffee or showering at the gym instead of home.

That's a depressingly thoughtful post lol

Maybe I won't bother after all.

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