|« YES-secure go quiet||Publicising P2P »|
Predicted vs. actual bad debts
Most peer-lenders give predictions on what bad debt a lender should expect either annually or over the lifetime of a loan. Unfortunately the occurence of a bad debt isn't spread uniformly over the period of a loan. For several years Zopa was reporting 0.05% lifetime bad debt until the credit crunch hit.
P2P Money has analysed the major peer-lenders and published an analysis of actual bad debt against predicted bad debt, along with a figure indicating how well they performed to estimates. This will be tweaked over time as more data becomes available.
In summary, all of the major peer-lenders that have published data have performed better than their estimates. This is good news, but as some of these lenders are expanding quickly, some loans won't have been around long enough to go bad. I will let readers draw their own conclusion on any companies that haven't provided any data.