Zopa - Default loans

Zopa - Default loans

Author
Discussion

Frankstar123

Original Poster:

162 posts

134 months

Tuesday 19th September 2017
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Hi All,

I've had a Peer to Peer Lending account with Zopa for 8+ years.

In that time i've had quite a lot of loans Default (In Zopas eyes this is anyone who misses 4 payments).

Has anyone on this forum ever received money after a loan has defaulted? I've never seen an example of some monies recovered from a default loan in all the time I've had an account with Zopa. I'm just wondering if anyone else has?

From Zopa Site
"Recoveries are payments which are collected after a loan has gone into default. Any payments which we recover will be passed back to investors, net of fees."

I'm also a bit concerned about some of the loans which have defaulted before a single payment has even been made; i do expect some defaults but crikey not before a single payment has even been made. Any thoughts on P2P lending; i'm no longer sure its right for me as defaults "appear" to be increasing....

Thanks

Frankie

Phateuk

751 posts

136 months

Tuesday 19th September 2017
quotequote all
I've had one default, you should see the return on your statement. I don't think it's instant though it may take a while to recover the money.
zopastatement said:
Bad debt: Repayments from defaults
of which £0.02 had been eligible for tax relief
£0.02
It seems to be repaid at 2p/month at the moment - assuming everyone that debtor owed is being repaid at the same rate

terrydacktal

2,655 posts

81 months

Wednesday 20th September 2017
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I have had some in P2P over the last two years and find it terrifying. I've pulled all I can out but there's a chunk left that can't be sold on and is probably going to default I imagine. It seems ok while you're in it and receiving monthly returns but when you leave, the skeletons in the closets become apparent.

Jimmy Recard

17,540 posts

178 months

Wednesday 20th September 2017
quotequote all
terrydacktal said:
I have had some in P2P over the last two years and find it terrifying. I've pulled all I can out but there's a chunk left that can't be sold on and is probably going to default I imagine. It seems ok while you're in it and receiving monthly returns but when you leave, the skeletons in the closets become apparent.
I’ve thought about doing it a few times over the years but this possibility has always put me off. I’ll keep looking into it I think

200Plus Club

10,676 posts

277 months

Wednesday 20th September 2017
quotequote all
Frankstar123 said:
Hi All,

I've had a Peer to Peer Lending account with Zopa for 8+ years.

In that time i've had quite a lot of loans Default (In Zopas eyes this is anyone who misses 4 payments).

Has anyone on this forum ever received money after a loan has defaulted? I've never seen an example of some monies recovered from a default loan in all the time I've had an account with Zopa. I'm just wondering if anyone else has?

From Zopa Site
"Recoveries are payments which are collected after a loan has gone into default. Any payments which we recover will be passed back to investors, net of fees."

I'm also a bit concerned about some of the loans which have defaulted before a single payment has even been made; i do expect some defaults but crikey not before a single payment has even been made. Any thoughts on P2P lending; i'm no longer sure its right for me as defaults "appear" to be increasing....

Thanks

Frankie
i believed that they have a default "slush" fund to cover situations like this, to which a claim is made?

Countdown

39,690 posts

195 months

Wednesday 20th September 2017
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200Plus Club said:
i believed that they have a default "slush" fund to cover situations like this, to which a claim is made?
RateSetter have a "provisions" fund for covering bad debts. I assumed that Zopa was the same....??

Jimmy Recard

17,540 posts

178 months

Wednesday 20th September 2017
quotequote all
The Zopa website is pretty clear that you can lose the money you put down and the FSCS will not cover it either

200Plus Club

10,676 posts

277 months

Wednesday 20th September 2017
quotequote all
i thought it was covered and it is with Zopa, here you go. if you are in the higher rate savings fund that is more risk biased and does not cover defaults, the lower rate funds are covered. Ratesetter also run a fund to cover defaults.

from Zopa FAQ
What if I want to close my account and I have borrowers in arrears?
Any loans you hold that are in arrears may not be sold to the secondary market. They must either come back in line with repayments for you then to be able to sell them, or if they reach four months’ worth of arrears the loan will move to default. In Access or Classic the Safeguard fund will look to reimburse you shortly after default. In Core or Plus, these loans become a capital loss, but our Recoveries team will do everything possible to recoup funds to credit back to you.

Until recently, any loans that are not currently in arrears, do not have Safeguard protection but have a history of arrears may not be sold to the secondary market. Our improved selling function allows investors to now sell these loans but at an appropriate discount to the purchasing investor inherits the loan in a fairer way.

terrydacktal

2,655 posts

81 months

Wednesday 20th September 2017
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I have loans that are safeguarded but am not able to sell them to release the funds as they are late in repayments.

It's only a couple of hundred quid so I don't care but I used to have a lot in there and this sort of thing worries me deeply.

200Plus Club

10,676 posts

277 months

Wednesday 20th September 2017
quotequote all
safeguard means safeguard, you will eventually get the money back from the default fund. thats the advantage of it, albeit at a lesser rate of return.

tharriso

108 posts

124 months

Wednesday 20th September 2017
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You have to spread your investment over many loans so you are not prone to individual defaults.

That way you will get something like the average rate of defaults and not concern yourself with individual losses.

200Plus Club

10,676 posts

277 months

Wednesday 20th September 2017
quotequote all
tharriso said:
You have to spread your investment over many loans so you are not prone to individual defaults.

That way you will get something like the average rate of defaults and not concern yourself with individual losses.
zopa and ratesetter do that for you automatically, no one loan of more than £10 or £20 per person, so everyone spreads the risk. i'm in both and yet to have a single default, or missed payment. been getting 3.4% on the 1 yr market give or take (before tax)

Jimmy Recard

17,540 posts

178 months

Wednesday 20th September 2017
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Interesting 200, thanks. I'm still interested and will read more around the subject

200Plus Club

10,676 posts

277 months

Wednesday 20th September 2017
quotequote all
Message me if you want in and I'll split the referal fee :-)
Ratesetter are offering a sign up bonus if you keep 1k I for 1 year so it's free money tbh

HootersGsy

731 posts

135 months

Wednesday 20th September 2017
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I thought Zopa were stopping any new loans in the products that have safeguard? I seem to recall that the reinvestment was automatically moved away from Access/Classic and into Core/Plus.

There was some chat about them adjusting the expected return accordingly but who knows longer term how that will play out.

200Plus Club

10,676 posts

277 months

Wednesday 20th September 2017
quotequote all
HootersGsy said:
I thought Zopa were stopping any new loans in the products that have safeguard? I seem to recall that the reinvestment was automatically moved away from Access/Classic and into Core/Plus.

There was some chat about them adjusting the expected return accordingly but who knows longer term how that will play out.
Yes to be fair the new products in zopa don't have safeguard protection. The classic fund is protected upto 2020 or 2022 when all those loans will be repaid. After then Zopa is fully capital at risk, however they are amending rates to factor in defaults.
I'm in the one year market and am watching what's happening but have got reinvestment turned off in Zopa and am withdrawing most of my money to just leave grand or so in it.

200Plus Club

10,676 posts

277 months

Wednesday 20th September 2017
quotequote all
To add, Ratesetter at this time still have a provision fund scheme covering all predicted losses in full. Obviously you need to keep watching this provision fund and any announcements as they happen.

otherman

2,190 posts

164 months

Thursday 21st September 2017
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200Plus Club said:
i'm in both and yet to have a single default, or missed payment. been getting 3.4% on the 1 yr market give or take (before tax)
Well, at only 3.4% you wouldn't expect many defaults, because otherwise you might as well stay in the building society. Thin Cats saw 10% returns in past years, so of course the default rate was higher. I did about 4 years in there and did very well, but pulled out because the later loans had increased bdefault rate. I'm currently having a try with housecrowd, because there the loans have much better security. We shall see.

200Plus Club

10,676 posts

277 months

Thursday 21st September 2017
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I'm also watching as default rates are creeping up typically in both areas, zopa only protecting existing funds made me think about reinvesting there. You can set/Get higher rates than market if you put your own return rate in but might be waiting longer to loan in ratesetter.
The other reason I started with ratesetter was the £100 bonus for putting a grand in it for the first year, daft not to really and get the free bonus plus had a few referral fees etc.

Behemoth

2,105 posts

130 months

Thursday 21st September 2017
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I think increasing or expected increases in defaults probably led Funding Circle to change their platform completely this week. Previously, you could decide your risk strategy across a number of bands but you now only have two - low risk & medium.

I suspect the market is pessimistic and the regulators are demanding safer lending.

I'm slowly pulling my investments from P2P as loans reach maturity.