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193 posts

Master Geek
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  Reply # 1774194 2-May-2017 12:11
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For auto-lend, I actually just read there "how it works"
http://www.geekzone.co.nz/forums.asp?forumid=48&topicid=196490&page_no=5

 

"""
The Auto-lend engine prioritises which Lender it orders notes for first using a prioritisation ratio of 'Funds available' to 'principal outstanding +1'. The Lenders with the highest ratio will get the first orders of notes. For example:

 

  • Lender A has $50 Funds available and $1,000 Principal Outstanding, so a ratio of 5% (50 / 1001)
  • Lender B had $300 Funds available and $8,000 Principal Outstanding, so a ratio of 3.75% (300 / 8001)
  • Lender C has $8,300 Funds available and $187,800 Principal Outstanding, so a ratio of 4.41% (8,300 / 187,801)
    """

So, more principal outstanding (more invested) - the less priority you get.
eg. Say I have 15,000 outstanding, and I have $25 available = ratio of 0.166%  - not very likely going to get auto-lended.

Not sure when I will stop auto-lending.

My eventual plan would be to just change my program to withdraw interest earned only (keep outstanding principal constant).
That way the investment remains constant and so should the interest return.


757 posts

Ultimate Geek
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  Reply # 1774195 2-May-2017 12:15
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I wouldn't touch Harmoney with a 20 foot barge pole.

 

They are great at offering outrageous rates of interest but like many financiers before them, when it's all laid bare, afterwards people go "what the hell happened"? It would be nice if people were wiser this time but...

 

I contacted Harmoney and initially received a whitewash after which they didn't respond. Further calls were met with promises but no follow up. I take that as a big red flag.

 

I wanted to discuss with them-

 

1. Refinancing loans - the first lenders take the biggest risk and 2 or 3 months later Harmoney screws them over.

 

2. Information asymmerty - Harmoney (and likely favored wholesale lenders as well) have access to more information then the retail lenders.

 

3. Harmoney and co. also playing in the same sandpit - massive moral hazard here?

 

4. The common-place appearance of mis-grading loans.

 

Banks are throwing money around at sub 20%. If people are willing to borrow at almost 40% there is something wrong.

 

As a lender I can't wait to bail and I don't trust them one bit.

 

All of this discourse in this thread about how to play their game seems to have totally missed what a bad game it is. But like people who go to Skycity and gamble away money.... You all hope you will win, right?





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193 posts

Master Geek
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  Reply # 1774223 2-May-2017 12:41
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I found when interacting with their non-published API, there were a few more fields than their website shows (eg. bureau score).

Here is all the info the API returns for a loan


{"id":32410,"name":"LAI-00095554","amount":10500.0,"interest_rate":38.25,"term":60,"expected_default_rate":6.05,"amount_funded":7625.0,"note_value":25.0,"is_fractionalised":true,"created_date":"2017-05-01T09:51:47.157Z","funding_amount":10500.0,"has_protect":false,"features":[],"expiry_date":"2017-05-16","loan_purpose":"Loan to Family Member","grade":"E5","application_type":"Individual","bureau_score":547,"already_invested_amount":25,"repayment_to_income_ratio":0.18235846153846155,"monthly_payment":395.11,"borrower":{"residential_status":"Boarding","months_at_current_residence":313,"years_at_current_employment":2.0833,"age_band":"20-29","employment_type":"Office-based Employment","monthly_income":2166.6666666666665,"income_type":"Employment or Self Employed","comment":null,"region":"Auckland","marital_status":"Single","total_defaults":0,"enquiries_in_last_6_months":1,"bureau_score":547}}

As for your first point, I think of it like this:
As soon as a loan is re-financed - my risk in that loan is gone (I get back all my principal and made some interest on it)


For me, the risk of losing $25 is OK knowing that the borrower will be stuffed financially for the next X years.
I even contacted them and made sure there are some decent consequences.


For me it seems like a very safe investment (as long as Harmoney don't go belly-up)
They are owned by Trademe now so that gives me a bit more comfort I guess.


 


757 posts

Ultimate Geek
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  Reply # 1774228 2-May-2017 12:46
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 You took the risk upfront. Then when Harmoney decides the borrower is a good credit risk, they grab the loan and the full lender fee for the entire period.

 

I see a very real risk here the suckers end up with the dud loans while Harmoney and co. grab the goods ones.

 

I have given them an opportunity to counter this and their silence was telling.





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193 posts

Master Geek
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  Reply # 1774254 2-May-2017 13:06
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Oh, I see.

 

So, they see a customer make good payments - offer them an increased loan.
They accept, and Harmoney offers the new loan to their mates?

 

I wasn't sure of Harmoney actively pushed borrowers to borrow more...
But it sounds like they might?
(Like credit card companys pushing increased limits)

 

Harmoney recently change their fees to only be a % on the interest paid?
https://www.harmoney.co.nz/how-it-works/how-harmoney-earns-money

"Retail Lenders pay a fee called the "Lender Fee" that is a percentage of gross interest received from Borrowers"

Therefore, if it's re-written - I don't see how they grab the full lender fee?


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Ultimate Geek
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  Reply # 1774259 2-May-2017 13:14
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They must have changed that because of the backlash from lenders. Previously, they charged the full lender fee even when they enticed the borrower to refinance. But it still doesn't change my overall assessment of Harmoney one bit. What I have said has been raised by others both in the mainstream media and on blogs, and I have asked them to explain their point of view and the brazen non-response is obvious.

 

To answer your other question - they absolutely do target borrowers to refinance. According to them a borrower can refinance in as little as 3 months - which they claimed to me was sufficient time to assess the borrowers credit worthiness.

 

You sound like someone who can find and read stuff so I suggest you do a bit of research about what this company is doing and how they are behaving before you commit any funds you can't afford to lose.

 

There is nothing I have said which hasn't already been said by others. Just like their compatriots at Trade Me, there is only one party this company gives a damn about.

 

 





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193 posts

Master Geek
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  Reply # 1774260 2-May-2017 13:15
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rphenix:

 

I see a lot of posts about Harmoney - any others other than tripp used Squirrel?  It seems like Squirrel could be the safer option if your risk adverse?

 

 

 

 

I have just started with Squirrel and have $1000 in two investments at 7.9% for two years. I will invest more.

 

I've been to a presentation on Simplicity Kiwisaver which I am already in, Squirrel Money and Lifetime Retirement Income.

 

 

 

Squirrel is very low risk from what I understand with reserve funds to cover defaults, ethical in providing good rates for borrowers and lenders, it is very simple. 

 

Yes the returns are way less than Harmoney, but still twice what I can get at my bank. And it is not promoted like Harmoney.

 

 

 

 


193 posts

Master Geek
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  Reply # 1774283 2-May-2017 14:31
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@MichaelNZ

Yes, that is why I haven't touched my main savings to invest in them.
Just slowly built up the $$$ invested over time.

 

To re-finance, the borrower would still need to pay the loan fee again I assume.
 I'm sure quite a few will decline.

 

With the new fee scheme - I do feel now that it is more in their best interest to get the lenders interest paid (so they get their cut).

 

It would also take some pretty big catastrophe for me to lose money.
Even if 10% defaulted, the other 90% would easily cover that.

 

But, I do think Harmoney only works when you have a decent amount of loans.
If your going in with $1000 and just buying all D,E,F loans - your going to have a bad time.
Or if your investing more than $25 in a loan.

 

I've so far had 3x loans default out of 695 loans

You must also remember your "risk" decreases after each payment.
If they default after 80% of the total loan period - you've most likely got back 100% of the $$ you put in.

 

 


IcI

679 posts

Ultimate Geek
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  Reply # 1774679 2-May-2017 22:35
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sonyxperiageek: ... I have noticed that there are lesser and lesser loans available out there, so people not borrowing as much? Not too sure.

 

Maybe it's all the autolending that is grabbing the loans and you don't get to see them?

 

 

 

kotuku4: 

 

rphenix: ... - any others other than tripp used Squirrel?  ...

 

I have just started with Squirrel and ... I will invest more.

 

Take note that in Squirrelmoney.co.nz, every order must be at least $500. If you have payouts & interest in your account, it will simply sit there doing nothing until you have $500 again for the next order. For me, that's a lot of money doing nothing, unlike Harmoney, where the next $25 is invested using the AutoLend.


193 posts

Master Geek
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  Reply # 1774758 3-May-2017 09:14
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Take note that in Squirrelmoney.co.nz, every order must be at least $500. If you have payouts & interest in your account, it will simply sit there doing nothing until you have $500 again for the next order. For me, that's a lot of money doing nothing, unlike Harmoney, where the next $25 is invested using the AutoLend.

 

Yes in that case i would take the money out and use it, or more likely keep topping up my account and investing.  Nothing worse than having money sitting not earning a return.


193 posts

Master Geek
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  Reply # 1774763 3-May-2017 09:27
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You could even use the interest earned from Squirrel to buy Harmoney loans :)

Use interest earned to invest in riskier things doesn't seem that silly to me.


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Ultimate Geek
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  Reply # 1774766 3-May-2017 09:29
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All money is equal when it's in your hands.

 

You can do what you want as long as you don't expect a handout when it goes pear shaped.





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193 posts

Master Geek
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  Reply # 1774768 3-May-2017 09:35
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OK so perhaps I should look at Harmoney as well, and spread my investments :)

 

Just not really comfortable with the Harmoney platform yet.


193 posts

Master Geek
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  Reply # 1774774 3-May-2017 09:40
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I personally am less attached to interest earned and happy to take more risk with it.

Especially with a minimum of $500 needed on Squirrel, i'd rather take $25 of interest earned out and risk it on a 15% B grade Harmoney loan immediately.
Rather than it sitting there waiting for $500 to be reached.

 

My main chunk of savings is still just sitting in Rabo Direct.
I don't want to buy a house, so really need to do something with it (their interest rate is down to a miserable 2.6%).
Putting it all into Harmoney / Squirrel seems a bit too risky and it would take ages in Harmoney to buy that many loans.

 

Anyone recommend something smart to do with it?
My kiwi saver is with Milford Asset so maybe I split it up over some of their PIE funds?


10 posts

Wannabe Geek


  Reply # 1774858 3-May-2017 11:37
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mattrix:

 

My main chunk of savings is still just sitting in Rabo Direct.
I don't want to buy a house, so really need to do something with it (their interest rate is down to a miserable 2.6%).
Putting it all into Harmoney / Squirrel seems a bit too risky and it would take ages in Harmoney to buy that many loans.

 

Anyone recommend something smart to do with it?
My kiwi saver is with Milford Asset so maybe I split it up over some of their PIE funds?

 

I would look at investing some money in Smartshares and Simplicity Funds, both have low fees and pretty good returns.


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