'Harmoney' Peer to Peer Lending

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  1. Post
    #1

    'Harmoney' Peer to Peer Lending

    I have just come across it - first peer-to-peer lending licence to be issued in NZ.

    Has anyone used it? Seems like a very interesting idea and probably not a bad way to invest a spare $500...as long as you are sensible with the lending.

    https://www.harmoney.com/

    a few media publications here:

    http://www.nbr.co.nz/article/harmone...ence-bd-158902

    http://www.nzherald.co.nz/personal-f...ectid=11321872

    http://www.3news.co.nz/business/harm...ing-2014091210

    http://www.stuff.co.nz/business/mone...-time-has-come
    Last edited by mechaneer; 1st October 2014 at 12:55 pm.

  2. Post
    #2
    What a stupid name. People are going to confuse it with e-harmony, lol.

  3. Post
    #3
    Pondered throwing money in, but I'm already sitting on a 10%pa+ return at the moment so no urgency.

  4. Post
    #4
    We fractionalise all loans into $25 “notes”. Fractionalisation ensures that investors do not have to carry the full risk of an individual loan by themselves, instead allowing investors to spread their risk over many individual loans.
    Quite a cool idea IMO.

  5. Post
    #5
    teelo6 wrote:
    What a stupid name. People are going to confuse it with e-harmony, lol.
    Already did, came in just to check what the **** op was on about

  6. Post
    #6
    Pretty interesting idea, i'm guessing the company takes a big chunk of the interest though?

    "Investors are charged a Service Fee of 1.25% of the principal and interest payments collected on each note. The service fee is deducted from repayments into the investor account."


    Not bad.

  7. Post
    #7
    Ninjist222 wrote:
    Pretty interesting idea, i'm guessing the company takes a big chunk of the interest though?

    "Investors are charged a Service Fee of 1.25% of the principal and interest payments collected on each note. The service fee is deducted from repayments into the investor account."


    Not bad.
    Yeah, the fees are pretty steep....but interest rates range from 10% to 40%....

    If my maths isn't wrong, the principal service fee is payed off (by interest alone) in 1.5 months on a $500 loan if you get an average interest rate of 11.25% (10% net interest after deduction of service fee on interest).

    It's actually quite good how they have split the service fee. By taking a service fee from the principal, Harmoney ensure that they receive money even if the borrower completely defaults. However it also means that lenders arn't burdened by a higher service fee on interest if compunding interest occurs (due to delayed payments from borrowers).

    And by charging a service fee on interest it gives Harmoney an incentive to chase missed payments (better for the lender!).
    Last edited by mechaneer; 2nd October 2014 at 6:10 pm.

  8. Post
    #8
    mechaneer wrote:
    If my maths isn't wrong, the principal service fee is payed off (by interest alone) in 1.5 months on a $500 loan if you get an average interest rate of 11.25% (10% net interest after deduction of service fee on interest).
    ).
    I can tell you right now if you are lending sub $1000 amounts unsecured you will need to charge a lot more than 11.25% to even come close to breaking even.

    Best in industry collection targets would be 3-4% bad debt on secured mid tier loans with strong credit decisioning rules. Unsecured, low balance loans administered by a company with very little decisioning and collection experience? 10%+ I would estimate (with the emphasis on the +).

  9. Post
    #9
    I would say that even with the emphasis on the + there, you are being a bit generous Mikos. 10% would be miraculous.

  10. Post
    #10
    Anyone actually invest? How's it going?

  11. Post
    #11
    Wow its almost like there's no point in having a centralised money system, just like Catherine Austin fitts argued 15 years ago before the banks shut her down, rofl

  12. Post
    #12
    Also curious, anyone into this?

  13. Post
    #13
    I've got $500 invested with a range of risk levels. Most payments are due the middle of next month....but already had two (small) payments in advance.

  14. Post
    #14
    mechaneer wrote:
    I've got $500 invested with a range of risk levels. Most payments are due the middle of next month....but already had two (small) payments in advance.
    And what are your expected returns ?

  15. Post
    #15
    mechaneer wrote:
    I've got $500 invested with a range of risk levels. Most payments are due the middle of next month....but already had two (small) payments in advance.
    How many loans is that spread across? One of my friends signed up with 10k and there was a total of 3 loans on offer... Which is pretty amusing since Harmony claim they help mitigate the risk by spreading your investment across a significant book. You would been at least 50+ loans really to have any sort of loan risk diversification. Even at a $500 investment level you would expect to be spread across 20 loans as per Harmony's original claim of $25 chunks..

  16. Post
    #16
    Mine is spread across 16 loans (Risk grades A1 - F1). There's currently 15 other loans on offer....but that obviously changes daily.

    I have no idea on expected returns, that is the reason I put $500 in - to see how it performs and maybe look at investing more in future if it performs well.

  17. Post
    #17
    I've calculated that over the past 10 months, FNZ has returned over 10% post-tax, paying off my mortgage has returned 6% post tax, this platform? possibly 6-9% after tax if I'm lucky I reckon.

    In the USA where their banks give 0.5% on a good day, this kinda lending works... not sure it'll be a huge hit here.

  18. Post
    #18
    There's not many people wanting money through the service and the ones that do all have E and F ratings, the people with F ratings all look like beneficiaries.

  19. Post
    #19
    I wanted a short term loan for business purposes and tried Harmoney, but the only option that came back was a 36 month term at I think it was 18% interest.

    I was like:

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  20. Post
    #20
    Signed up and will chuck in $500 to play around with.

    Only problem is that there are currently a whopping 18 loans available, all junk grade (D and lower).

    Anyone know if the loan listings are updated live or periodically?

  21. Post
    #21
    ^^ pitty

    I just found this post and thought its a fantastic idea but doesn't seem to be making much traction.

    I'm considering chucking in $500 as well but from what I've read I'd only lend it out to A1 - B3 borrowers, but all the borrowers are D,E and F lol...

  22. Post
    #22
    They're advertising on TV, saw an ad last night so maybe things will pick up.

  23. Post
    #23
    Give it time. They're what, a month old? It'll take time for their name to go out there as a viable lender, and for people to go through the process of choosing their lender and all the associated due diligence and processes that go with that. I reckon it should be a bit more liquid beginning next year once the Christmas lull is over.

  24. Post
    #24
    Invested in 3 loans, one D and two E. D got refunded and E was issued.

    The grading system seems pretty wonky, there's a B grade loan at the moment where the borrowers are on the benefit.

  25. Post
    #25
    Analgia wrote:
    Invested in 3 loans, one D and two E. D got refunded and E was issued.

    The grading system seems pretty wonky, there's a B grade loan at the moment where the borrowers are on the benefit.
    As long as the loan is small enough that their income is sufficient to service it, a benefit being their source of income shouldn't really be a factor?