Author Topic: 6 loans fully paid since May  (Read 12457 times)

Amelia

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6 loans fully paid since May
« on: August 27, 2013, 05:15:06 PM »
Out of 256 notes, 6 that funded in May have been fully paid.  This seems kind of high and kind of curious.  A lot of work (not really) for $3.73 - 1%

Rob L

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Re: 6 loans fully paid since May
« Reply #1 on: August 27, 2013, 05:27:39 PM »
I've bought 1,800 notes since early May and 22 are fully paid. More than I would have guessed, but it is what it is. Not as bad as your luck though.

Fred

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Re: 6 loans fully paid since May
« Reply #2 on: August 27, 2013, 05:28:04 PM »
Fully prepaid loans, although not ideals, are much better than lates, defaults, or charged-offs.  ;)

New Jersey Guy

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Re: 6 loans fully paid since May
« Reply #3 on: August 27, 2013, 06:02:08 PM »
"Out of 256 notes, 6 that funded in May have been fully paid."

I agree.  That seems high.  It'll probably change.
Out of curiosity, were these higher grade loans (B3 to A1)?
Return over deposits:   66.82%
IRR:   86.54%
As of April 30, 2014

Ran

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Re: 6 loans fully paid since May
« Reply #4 on: August 27, 2013, 07:47:32 PM »
Fully prepaid loans, although not ideals, are much better than lates, defaults, or charged-offs.  ;)

I will caution about this. Currently LC is charging 1% fee for payment and also issuing process is taking longer than thought. Prepay does not hurt your bottom line but does hurt investment return.
I actually restarted to model annual returns assuming 15~20% annual prepayment rate.

Rob L

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Re: 6 loans fully paid since May
« Reply #5 on: August 27, 2013, 09:08:34 PM »
NJ Guy mine were all over the map. A1 -> D3, no E or F.

Randawl

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Re: 6 loans fully paid since May
« Reply #6 on: August 27, 2013, 09:21:37 PM »
I have seen a moderate spike in fully paid loans as well.

415ab

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Re: 6 loans fully paid since May
« Reply #7 on: August 27, 2013, 09:53:27 PM »
Similar story here, but more loans paid off.  Started investing in late April of this year.  I now have 243 loans, of those 9 have paid off after the first or second payment.  B3 : 2, C2 : 2, C5 :2, D4 : 1, D5 : 1, E2 : 1.   5 had already paid in full by the time that I had around 100 notes.

Amelia

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Re: 6 loans fully paid since May
« Reply #8 on: August 27, 2013, 10:21:27 PM »
"Out of 256 notes, 6 that funded in May have been fully paid."

I agree.  That seems high.  It'll probably change.
Out of curiosity, were these higher grade loans (B3 to A1)?

A = 2 [2,3]
B = 2 [3,4]
C = 2 [2,4]


Dennis

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Re: 6 loans fully paid since May
« Reply #9 on: August 28, 2013, 02:24:52 AM »
Out of 256 notes, 6 that funded in May have been fully paid.  This seems kind of high and kind of curious.  A lot of work (not really) for $3.73 - 1%

I've always thought that the number of early payoffs was way too high in my 2 year experience with P2P.  I know Prosper used to solicit borrowers who had made as little as a few payments, to refinance into a lower interest rate as their credit score increased (more origination money for Prosper), but I've not heard of LC doing that - if anyone knows different please post. 

I'm exactly at 2 years with LC, and of the 825 purchased notes in my main LC account (I also have an LC IRA with similar numbers), 148 notes to date have been paid off early.  Most of the early payoffs made fewer than 6 payments, and all of them together represent about 18% of the total notes I purchased, or in other words, almost 1 in 5 of my notes paid off early in the first 2 years with LC.  The numbers are even higher in my Prosper account.  It frustrates me to have to continually replace early payoff notes with new ones, especially now that notes are so hard to obtain.  But almost everyday now, between 3 P2P accounts, I have to deal with an early payoff.  Am I being irrational in my frustration?  Or should I just embrace it as a part of the P2P model???     
« Last Edit: August 28, 2013, 02:26:24 AM by Dennis »

Fred

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Re: 6 loans fully paid since May
« Reply #10 on: August 28, 2013, 03:27:01 AM »
I actually restarted to model annual returns assuming 15~20% annual prepayment rate.

Or, you can treat P2P loans as callable bonds, and price them as such -- http://people.stern.nyu.edu/jcarpen0/courses/b403333/19callable.pdf.
« Last Edit: August 28, 2013, 03:37:03 AM by Fred »

core

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Re: 6 loans fully paid since May
« Reply #11 on: August 28, 2013, 03:45:44 AM »
I know Prosper used to solicit borrowers who had made as little as a few payments, to refinance into a lower interest rate as their credit score increased (more origination money for Prosper)

I didn't know they did that.  What I like about what Prosper does though, is if the borrower pays extra it just goes towards the next payment, unless they specify otherwise (apparently -- I never dug into the docs to find out why). The borrower ends up "pre paying" interest and it doesn't affect your return.  That's kinda slimy, but hey I'm not complaining.

It frustrates me to have to continually replace early payoff notes with new ones, especially now that notes are so hard to obtain.  But almost everyday now, between 3 P2P accounts, I have to deal with an early payoff.  Am I being irrational in my frustration?  Or should I just embrace it as a part of the P2P model???   

I doubt anybody's plan is to intentionally stay in debt for 5 years if they have the means to get out, and keep in mind we're raping these people on interest especially as their credit improves.  I don't think it's specific to p2p but I'm not in the banking biz so I wouldn't know.  Think about how the credit card companies feel when your debt consolidation loan was used to pay them off. 

But I think this whole discussion is similar to an undertaker complaining that not enough people died this week.

Amelia

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Re: 6 loans fully paid since May
« Reply #12 on: August 28, 2013, 09:00:43 AM »
Quote
But I think this whole discussion is similar to an undertaker complaining that not enough people died this week.

Now that's a phrase I've not heard in a long time and it made me laugh.  You're right of course!

cfb

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Re: 6 loans fully paid since May
« Reply #13 on: August 28, 2013, 09:14:20 AM »
Here's a fun stat: I've written about 2400 notes and 280 have paid in full, all early.  82 went to Charged Off.  BTW, the LC people I've talked to about this were fairly fascinated by the ratio of paid off early vs defaults.

My guess is I'm picking people that in many cases turn out to not need the money or they get it from somewhere else at better terms.

When I'm looking at a note and in the comments they say something like "I'll pay this off in less than a year!" I throw them back.  Given the time it takes for some notes to issue and how hard its been to find good ones, I'd prefer people who'll actually pay the full term and all of the interest...

gamassey

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Re: 6 loans fully paid since May
« Reply #14 on: August 28, 2013, 10:25:12 AM »
Could it be that paying the LC loan on time for 12 to 18 months boosts the credit score enough that they can borrow money at a much lower interest rate?