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P2P Borrower Clears Debt Fast
Topic Started: 29 Aug 2015, 02:00 PM (1,280 Views)
Terry
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Just had a borrower pay off his total debt (over a 36-month term) to me in 3 months. That's 13.84% in interest I cannot see for the next 2 years and 9 months.

I know how the banks must feel when this happens. Best to keep people drip feeding instead of taking the bull by the horns.
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peter fraser
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Terry
29 Aug 2015, 02:00 PM
Just had a borrower pay off his total debt (over a 36-month term) to me in 3 months. That's 13.84% in interest I cannot see for the next 2 years and 9 months.

I know how the banks must feel when this happens. Best to keep people drip feeding instead of taking the bull by the horns.
Is there something prohibiting you from lending that money out again?
Any expressed market opinion is my own and is not to be taken as financial advice
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Terry
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peter fraser
29 Aug 2015, 02:07 PM
Is there something prohibiting you from lending that money out again?
Theoretically, no. Practically, yes. It's called strategic limitation.
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peter fraser
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Terry
29 Aug 2015, 02:09 PM
Theoretically, no. Practically, yes. It's called strategic limitation.
That's because for you it's a hobby, but a bank has a constant stream of borrowers and a processing system and staff to keep the lending stream running constantly.

If someone pays a loan back to a bank it's hardly a problem, the wheels keep on turning.
Perhaps you need to treat your latest toy as a business instead of a substitute for a jigsaw puzzle on a rainy suburban afternoon.
Any expressed market opinion is my own and is not to be taken as financial advice
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Terry
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peter fraser
29 Aug 2015, 02:17 PM
That's because for you it's a hobby, but a bank has a constant stream of borrowers and a processing system and staff to keep the lending stream running constantly.

If someone pays a loan back to a bank it's hardly a problem, the wheels keep on turning.
Perhaps you need to treat your latest toy as a business instead of a substitute for a jigsaw puzzle on a rainy suburban afternoon.
Wrong. Banks are essentially guaranteed by the taxpayer, where my capital is not. Also banks would need to look to diversify their revenue streams if customers prioritized the repayment of debt.
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Trollie
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Terry
29 Aug 2015, 02:59 PM
Banks are essentially guaranteed by the taxpayer,
Nothing to do with paying back the debt before it's due.

So much for the bears claiming buying houses limits capital. :z:
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Terry
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Trollie
29 Aug 2015, 03:05 PM
Nothing to do with paying back the debt before it's due.

So much for the bears claiming buying houses limits capital. :z:
The borrower works to optimize his situation, much like the borrower. All part of the risk equation when lending capital.
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peter fraser
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Terry
29 Aug 2015, 02:59 PM
Wrong. Banks are essentially guaranteed by the taxpayer, where my capital is not. Also banks would need to look to diversify their revenue streams if customers prioritized the repayment of debt.
Actually they aren't backed by the taxpayer. If a bank experiences substantial losses, then once the capital backing that the shareholder have in reserve is used up, the bank is lost. The government may choose to nationalise it to save the depositors who in many countries have a deposit guarantee, but that's a decision for the government of the day on that day.

But the shareholders are lost either way.

Customers are prioritising the repayment of debt right now, but if in aggregate they repay debts faster than new loans are taken out the country will plunge into recession, and the accumulation of money to enable them to repay debts is difficult - in aggregate of course. There are always individuals who are able to buck the trend.
Any expressed market opinion is my own and is not to be taken as financial advice
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Terry
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peter fraser
29 Aug 2015, 04:30 PM
Actually they aren't backed by the taxpayer. If a bank experiences substantial losses, then once the capital backing that the shareholder have in reserve is used up, the bank is lost. The government may choose to nationalise it to save the depositors who in many countries have a deposit guarantee, but that's a decision for the government of the day on that day.

But the shareholders are lost either way.

Customers are prioritising the repayment of debt right now, but if in aggregate they repay debts faster than new loans are taken out the country will plunge into recession, and the accumulation of money to enable them to repay debts is difficult - in aggregate of course. There are always individuals who are able to buck the trend.
They are backed the taxpayer as all resources used to ensure the banking system is integrated with the political and legislative framework is paid for by the taxpayer. Even deposits in banks are protected by the taxpayer to some extent. With the P2P lending, 100% of the risk is taken by the lender.
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Trollie
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Terry
29 Aug 2015, 05:01 PM
They are backed the taxpayer as all resources used to ensure the banking system is integrated with the political and legislative framework is paid for by the taxpayer. Even deposits in banks are protected by the taxpayer to some extent. With the P2P lending, 100% of the risk is taken by the lender.
What's the risk though.

I have funds in ratesetter and provisional fund covers defaults.
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