Author Topic: New Front Page Pie Graph?  (Read 6232 times)

ThinleyWangchuk

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Re: New Front Page Pie Graph?
« Reply #15 on: December 24, 2013, 12:33:27 AM »
Credit card loans average 18-24% APR thus it makes sense for a borrower to come to LC and borrow at 15%ish.  However, personal loans, HELOCS and car lines usually carry a maximum interest rate of 12%.  Thus it is not practical for a borrower @ 15%ish on LC.  Those who borrow for CC consolidation are likely to use the money for legitimate purposes, whereas those who borrow for other debt consolidation are likely frauds.

Disclosure: The statement above is 100% speculation.

Zach

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Re: New Front Page Pie Graph?
« Reply #16 on: December 24, 2013, 02:58:04 AM »
While your above statement would seem logical, many borrowers simply don't institute logical thinking in their decisions. To them, they may rather have one fixed monthly debt payment as opposed to many individual credit card payments, HELOC payments, etc. In other words, it's not that uncommon to see a borrower consolidating debt that's at a lower interest rate.

pplinvestor

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Re: New Front Page Pie Graph?
« Reply #17 on: December 24, 2013, 05:44:41 PM »
If borrower borrows at higher interests at LC to pay/consolidate lower interest loans, it will mean the borrower will be in deeper financial trouble and is likely to default down the road.
When I first started, I always asked borrowers what debt to be paid off.  If old debt interest rates were higher than LC rates, I would lend.  Otherwise, I wouldn't lend.  Of course, we don't have that luxury today.   Yes, I have had enough of LC and I am exiting LC slowly.

rawraw

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Re: New Front Page Pie Graph?
« Reply #18 on: December 25, 2013, 09:26:57 AM »
While your above statement would seem logical, many borrowers simply don't institute logical thinking in their decisions. To them, they may rather have one fixed monthly debt payment as opposed to many individual credit card payments, HELOC payments, etc. In other words, it's not that uncommon to see a borrower consolidating debt that's at a lower interest rate.
I'd rather invest in a note with a new, lower monthly payment than a higher payment than the borrower has had.  Since we don't have much info on their ability to pay, if they haven't missed a payment at the old level things look better for a lower than old level amount moving forward.

I do read descriptions, although they are rarely there.  I don't fund debt consolidations that tell they are consolidated debt which would be lower rates to this one.  I compare amount requested to revolving outstanding.

Keltset

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Re: New Front Page Pie Graph?
« Reply #19 on: December 26, 2013, 12:04:20 PM »
Something worth noting is that -sometimes- it is logical to refinance lower interest debt into a higher interest loan. I would not personally suggest it but sometimes you see situations where debt minimum payments can really add up and a consolidated loan frees up cashflow that may have been a problem for the borrower. This does not necessarily means they are going to dig a bigger hole, sometimes this can actually help to resolve a dedicated persons debt issues even if it does carry a net higher cost to the debtor.