In order to improve platform functionalities and client experience we are introducing some updates that will go live in a couple of days. We are pleased to share these news with you and we are inviting you to explore them in detail.
Introduction of auto invest feature
We are launching auto invest feature on 24th January, 2018, which will help you save time and invest in the loans of your choice at ease. You just need to select your investment criteria (loan originator, loan types, interest rate, term, etc.). Moreover, investors will be able to create up to 10 different auto invest profiles of their choice which can be activated simultaneously.
Changes to buyback guarantee policy.
We are changing buyback guarantee policy for our loan originators. It will be in effect on 1st February, 2018. We are seeking to improve our portfolio management processes and execute buyback once a loan is overdue for 60 days. Please see more detailed explanation:
Current buyback guarantee:
Updated buyback guarantee:
If the borrower is at least one day late with payment of instalments, the loans operator, on the same day, pays the debt with his own funds. In the case that this occurs three times in a row (if 90 days overdue), loan originator buys out the outstanding loan amount from the investors and the project is closed.
If the borrower is late with payment of instalment for 60 days, the loan originator has 2 days (61st and 62nd day) to buyback outstanding loan amount from investors with accrued interest.
Why are we changing buyback policy?
We are seeking to improve our internal portfolio management processes to eliminate any mistakes from our side. Moreover, we do not want to rob our loan originators of their working capital for no reason as some clients do not pay on the exact scheduled day. This practice is widely used by most popular European platforms.
Overview of loans with buyback guarantee.
Currently, only First Finance offers loans with buyback guarantee. According to the current First Finance outstanding portfolio at Lenndy platform, we can see that there are no overdue secured car and mortgage loans. It is due to buyback guarantee covering come of the late payments.
First Finance statistics show that almost 70% of clients make payments within 5 working days of the scheduled payment date and such clients are not considered to be risky. Aim of the buyback guarantee is to prevent losses to investors when borrower become risky or even insolvent. Updated buyback guarantee will improve management of loan portfolio and pay more attention to platform security and user experience for investors. Investors that choose to invest in loans with buyback guarantee from 1st February automatically accept policy changes.
Grace period and late payment fees.
In addition to buyback policy changes, we are introducing changes to how interest is calculated, which should increase the amount investors earn. Given borrower is overdue for more than 10 days (11 or more), investors will receive additional late payment fees (calculated using overdue amount) equal to the interest rate of the corresponding loan.
Company A borrowed money from loan originator and investors invested 1000 EUR to this loan for 12% annual interest. According to payment schedule, Company A has interest payment of 10 EUR on 10th January, but was late to cover it and piad only on 21st January. This means that we calculate late payment fee from total payment amount (10 EUR) for all late days (11 in this case) and it is calculated using such formula: 10EUR*12%/365*11=0.132EUR. Therefore, investors will receive a total of 0.132 EUR together with the payment on 21st of January. If the payment is done between 10th and 20th of January, no late payment fees would be received by investors.
Grace period will not be applied to invoice financing loans and other loans which have just one payment (principal & interest) at maturity. For such loans interest will be calculated on a daily basis as usually.
Lastly, from 24th February investors will be able to choose what kind of information they want to receive by email. You will be able to choose among these letters:
Lenndy team puts a lot of effort to ensure great experience for our investors. We take into consideration all your feedback and we constantly work on improvements and new features that you request. Follow our news and stat earning money! You can reach us by sending email to firstname.lastname@example.org if you have any additional questions.