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Loans go unfunded on Encash / YES-secure
Following the recent post on the rebranding of YES-secure to Encash, we also reported on the comments from lenders concerning the reduction in maximum lending rates. Subsequently we published our analysis on the lending rates with the bad debt rates, and we concluded that lenders would be better off keeping their money in the bank.
There has been a lot of continuing activity on the YES-secure forum (which hasn't been rebranded as Encash). The lender paulnkaty wrote:
Following reading the various points of view from both encash, borrowers and lenders and having given it a couple of days of thought i propose a new rate structure being imposed, which i feel fair to borrowers and lenders alike, and hope that encash will give it serious consideration and lenders will do the same to resolve the current situation before the business suffers serious long term damage from many loans going unfunded and lenders start to remove their funds elsewhere and they are lost to the platform, The following rates i propose would be on the agreement that they are then NOT changed again by encash, and from now the rates are allowed to fall naturally from lender competition as new lenders join, AND that encash will take a very serious look at the way the credit grades are assesed to get them reliable, YS/encash has appeared to made some significant progress recently on underwriting (time will show how well these improvements have been), the same needs to be done with the allocation of the credit grades.
My proposal for rates for each grade on this basis would be as follows =
A* 12 month @14% / A* 24 months @ 15% /A* 36 @ month 16% /A* 48 @ month 17% / A* 60 month @ 18%
A 12 month @ 16% / A 24 months @ 17% / A 36 month @18% / A 48 month @ 19% / A 60 month@ 20%
B 12 month @ 17% / B 24 month @18% / B 36 @ 19% / B 48 @20% / B 60@ 21%
C 12 month @ 18% / C 24 month @ 19% / C 36 @ 20% / C 48 @21% / C 60 22%
D 12 month @ 21% / D 24 month @ 22% / D 36 @ 25% /D 48 @ 26% / D 60 28%
E 12 month @ 23% / E 24 month@ 25% / E 36 @ 27% / E 48@ 30% E 60 @ 30%
These rates would i feel be the starting point which would be a fair and reasonable rate to risk ratio to START bids at, though the grade system would need to be improved to be reliable, with lenders competeing, and lenders being confident in underwriting improvements and better grade reliabilty i feel sure that there would be a natural gradual downward pressure on rates especially as new lenders joined. You see higher rates on D and E 48 and 60 months to encourage lending as often in the past these got little interest even on the previous rates.
I ASK ENCASH and other lenders and if they wish borrowers to give their opinions on this proposal to see if it would be supported as a suggestion, and if they feel it fair and reasonable, hopefully we can then find a common ground starting point for all. I look forward to peoples opinion.
The lender hor1997 replied:
This is a fair proposal, well balanced and discriminating correctly among grades and lenght of loan (somthing Yes-Secure had forgot completely). I would come back and lend my money if this structure is implemented.
The only loosing out at the moment are borrowers.
Nothwithstanding some 'strange new entries' among lenders (ys under cover?) I keep seeing auction after action failing to reach the minimum funding required... Almost a week has gone since the new branding and only 1 or so small loan was successfully completed (and even this one was with mixed funding, partly coming from the previous rate scheme...).
Just this morning/early afternoon, 6 consecutive auctions have fallen/will fall victim of this cash shortage due to the current excessive low rates...
(in order of expiry times.... id 4925, 4945, 4940, 4932, 4971, 4970)
There were a large number of lenders giving their support for this. Surprisingly there has been absolutely no comment from Encash / YES-secure since the rebranding. As stated above, loans are going unfunded as lenders appear to be voting with their feet. Lets hope the Encash / YES-secure management start listening.