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Looking into late loans
We've talked about "bad debt" and "defaults" numerous times on the P2P money site, but one thing that we haven't covered much are "late loans". Usually before a loan is written off it is late, as the borrower has fallen behind on repayments for whatever reason. Hopefully the delay is only temporary and the borrower gets back on track with repayments, but unfortunately that isn't always the case. By looking at the number of loans that are classed as late will give an indication of future bad debt. This figure is also an indication of how good the provider is of chasing late payments.
Zopa, as part of their monthly statistics, also publish bad debt assuming that half of all loans that are currently late will eventually default. Some peer-to-peer providers publish lates for 1 month and / or 2 months plus, and it is therefore possible to compare and contrast the totals these late loans.
The provider with the current lowest "late rate" is Squirrl.com with an amazing 0.00%, but this isn't surprising as some of these loans have only been running for a few months. It perhaps won't come as a surprise that the next lowest provider with a minuscule 0.06% of late loans by value is RateSetter. Zopa currently have 0.69% of loans by value that are late. Funding Circle is higher at 2.12%, but lets also not forget that Funding Circle are the best performing P2P provider against their estimated bad debts, but if these lates do eventually default this could threaten their number one position.
In fifth and sixth place are YES-secure (pre and post rebranding as Encash) at >6.76% and >9.52%. These figures are not quite comparable with the others as YES-secure only publish lates after 2 months of being late. In addition they only publish the number of loans that are late, rather than their value, but the percentage wouldn't be greatly affected if it was by value.
In summary, there is a wide variation in "late rates" between the P2P providers so it is also worth taking this into consideration when choosing a P2P provider. The P2P money website will publish this data on a monthly basis.