P2P Lending

[robbo1172]

We haven't been particularly smart with our money in the past so I am tidying things up.

As part of this I have consolidated some cards etc into the homeloan but did not have room for our personal loan, which is with GE Money.

GE Money are charging us a pretty high interest rate and I want to move it elsewhere.

Researching interest rates I came across Society One, with rates that start at 9.95%. http://www.societyone.com.au/

Has anyone had anything to do with these types of loans?

At the end of the day I will do my research and make a decision based on that, but I'm interested in peoples experiances.

Thanks in advance...

Robbo

[gronk]

Get stuck into it and pay it off....then don't ever get a personal loan again..   

Personal loans and credit cards are a sure way of burying yourself in debt....now paying for everything with cash is obviously the best idea, but when you need a loan, against the home loan is the smartest.....even if you have a home loan almost paid off, leave a few token dollars in it for if/when you need another loan for something..

[Swannie]

Get stuck into it and pay it off....then don't ever get a personal loan again..   

Personal loans and credit cards are a sure way of burying yourself in debt....now paying for everything with cash is obviously the best idea, but when you need a loan, against the home loan is the smartest.....even if you have a home loan almost paid off, leave a few token dollars in it for if/when you need another loan for something..

I agree with Gronk, although sometimes people add to their home loan and because the repayments don't increase much they get a little lax with paying additional off it, if you add to your home loan pay the amount a personal loan would have been and you will pay it off a lot quicker
Swannie

[loanrangie]

What about taking that GE loan and putting it on a CC with 0% for 18 months or so, used GE once but never again.
  Oh and not everyone can consolidate or increase their home loan, a good short term fix is to change your home loan to interest only for 2 years and use the savings to pay out the GE ASAP.

[robbo1172]

Thanks for the replies so far.

Our position is far from dire but we have made no progress over the past 5 years or so, so I have decided to take the reigns for a while and I know I will have things squared away in the next two years at most.

The personal loan isn't huge so as soon as it is paid, the money for it will then go onto the home loan.

With three kids, the eldest starting school next year, I need to be on top of these things.

The rates for the P2P lending look good, so was hoping someone may of used them in the past with good reports.

Robbo

[Bird]

What about taking that GE loan and putting it on a CC with 0% for 18 months or so, used GE once but never again

mate of mine had 70k on GE over 3yrs of doing up his house... his wage wasn't keeping up with it.


same as some of these "Instant" loans on TV these days,

https://au.finance.yahoo.com/news/payday-lender-nimble-money-under-090336436.html

""Somebody who takes out a $1,000 loan over six weeks, they have to pay $240 in finance costs - that's just completely extortionate and inappropriate," he said."


http://www.brisbanetimes.com.au/comment/nimbles-dumb-little-loans-20150103-12emh5.html
"As Choice points out, the "annual comparison rate for a two-week $250 pay day loan" from Cash Train is "742 per cent". Nimble charges the maximum allowed by law - a 20 per cent establishment fee plus four per cent interest per month, which translates to 92 per cent annually if compounded monthly. Nimble also spank you $35 for missed repayments and $7 per day until you've cleared the overdue debt."

[loanrangie]

Last year we needed a cash boost but didnt qualify for extending our homeloan , so swapped to interest only for 2 years which saved us $760/month. Then i got a personal loan in my name only and we are still $300 a month in front.

[McTavish]

Robbo - I have no experience with that particular lender - but first thing to do is check out the 'fine print'.    Research all of your options...

How much in fees?
Establishment Fee
Monthly Fee
Early Payout Fee

What is the interest rate stated - but more importantly what is the Comparison Rate - this is the interest rate which takes those fees above and adds it to the overall cost so you can compare various lenders.   I had a quick look on their website and they are pretty sketchy on detail - just says 'from' 9.95% - depending on credit score etc etc..  Maybe given them a call and get the full story first.  You'd want to also know if you can pay off faster - will they reduce the interest charge on the now lower balance as you pay it off, or is it a fixed amount of interest you will pay irrespective of the time taken to payout?

Couple of standard principles I've heard of:
 
Try and save a minimum amount of money to make sure you're covering enough for living costs and you have enough up your sleave for bills due in the next 3-6months.
Then...
Target the highest interest loan first and knock it over.
Then target the next highest interest rate and use the payments you were making on the first on top of the minimum amount you were paying on this one and repeat until all credit cards and personal loans are paid off.
Then use the repayment amount to go to a savings account (not linked to your cash card) to save up a buffer for emergencies (read - not a holiday).  Pick a figure that means you can sleep at night and know you have enough up your sleeve for any issues including Medical, Hot water system, Insurance excess if some Doe Doe writes off your car etc.   Use these funds as 100% offset against the home loan.
Then keep going with these payments and pop them on top of your home loan payment and maybe weekly, fortnightly may help if interest calculated daily.

Also - if you tack personal debt on the home loan you are paying a lower rate - but if you take 20 years to pay this portion off you will pay much more interest than a higher rate over a shorter period of time.   I.e. if you do a home equity/additional home loan to refinance debt - then at least use your repayments from what you were paying on the personal loan on top of the payments currently being made on the house to pay off that portion of the debt in a shorter period of time than a personal loan (as the interest rate is usually lower).

If you go down the interest only option as suggested then use the savings to pay straight off the personal loan then this works - but do not fall into the trap of now having a cash flow savings and then saying - oh well we're ok now to buy ?? Blah Blah ?? We Deserve etc ??   Get back to paying the Principle and Interest on the home loan as soon as you can...

No easy fix with debt repayment - just consistency and perseverance and good financial habits.

And of course - this is all just the opinion of a random anonymous swagger - with no interest in night time TV to write this drivel - General info only - Go and see someone who knows what they are talking about and get some real advice hey ...

[Nomad]

What McT said.

There is nothing worse than putting a short term debt onto a long term asset.
Banks love it when you go and say to them I want to buy a car....can I extend my home loan.

Recently I had to dodge up a scenrio for my BIL whos been paying a massive interest rate on a motorcycle, as well as a spirling credit card debt.

Shifting it all onto a single personal loan wasn't going to do much.

What I did do was get a Citibank credit card with 0% on transfers for 18 months. Citibank allow loans to go on the card, where as most banks will only transfer other cc debts.

Anyway theres about 11k on the Citibank card and I set up a direct debit, weekly, because thats how he likes to pay his bills.
So he pays $170 per week and in about 65 weeks the cc will be paid down and then cut up. It cost about $240 to apply for the Credit Card, so say 67 weeks to pay including the application fee.

As long as he stays committed to paying the cc down it should work out ok.

[Jeepers Creepers]

We have shares in GE, so please leave it where it is. 

[Streetkid]

What McT said.

There is nothing worse than putting a short term debt onto a long term asset.
Banks love it when you go and say to them I want to buy a car....can I extend my home loan.

Recently I had to dodge up a scenrio for my BIL whos been paying a massive interest rate on a motorcycle, as well as a spirling credit card debt.

Shifting it all onto a single personal loan wasn't going to do much.

What I did do was get a Citibank credit card with 0% on transfers for 18 months. Citibank allow loans to go on the card, where as most banks will only transfer other cc debts.

Anyway theres about 11k on the Citibank card and I set up a direct debit, weekly, because thats how he likes to pay his bills.
So he pays $170 per week and in about 65 weeks the cc will be paid down and then cut up. It cost about $240 to apply for the Credit Card, so say 67 weeks to pay including the application fee.

As long as he stays committed to paying the cc down it should work out ok.

Wouldn't it be best to cut the credit card up straight away? Its the temptation that gets most people.

[gronk]

As long as he stays committed to paying the cc down it should work out ok.

That therin is the problem with a lot of people these days......and credit cards !

I use a credit card all the time, but I pay the amount off the next day, so it's used for transactions (like paypal etc ) NOT as a loan centre..

As I have told my kids ( now late twenties ), unless you have commitment , pay the card off, then cut it up !!

[robbo1172]

I was more interested in the P2P lending rather than financial advice as such, as I know where our problems lay and how to deal with them (I am good with money, the wife? Not so much...)

Basically we have two cards (one was an interest free that I was assured had been paid off three months ago and the money that freed up was going towards our other card  ) and a personal loan, currently with GE.

I wanted one loan to consolidate the three into one, but with 3 dependents and one wage, the only personal loan option is GE, at 17% over five years.

So I put the two cards into the home loan and I will transfer the personal loan to one with around 13%. I know I can pay this off in 18mth at most, and then the money that this frees up will go into the home loan to square away the cards, within one year at most.

Cheers all for the advice, but I still can't find anyone that has used P2P lending instead of finance companies or banks.

Oh well, I'm happy to be a guinea pig and report back...

 

Robbo

[Ratbag]

Gidday Robbo

Have you approached any credit unions? Their rates are not generally as good as home loan rates, but usually better than finance companies, and bucketloads better than the bloody loan sharks!

All the best with sorting it out, mate.

[robbo1172]

Gidday Robbo

Have you approached any credit unions? Their rates are not generally as good as home loan rates, but usually better than finance companies, and bucketloads better than the bloody loan sharks!

All the best with sorting it out, mate.

Made a few calls but three dependents and one wage kills your borrowing capacity. GE were the only ones prepared to lend us the full amount we needed, but at 17%.

Only option was home loan for the two cards so then I could refinance the personal loan to a loan with an acceptable rate.

It's all good, it's our fault at the end of the day, and the situation is far from dire, just frustrating. 

Robbo

[Ratbag]

^ Good oh, mate.

Old Jewish Proverb:

"Money can't buy happiness, but try being happy without any".

Most of us have had periods in our lives when things have been very tight financially. It is usually possible to work one's way out of it. However, like losing weight or quitting smoking, one really has to want to achieve it. Sounds to me that you are striving valiantly in the right direction. Keep on battling!

[gronk]

I was more interested in the P2P lending rather than financial advice as such,

Sorry if it got off track, but sometimes these sort of threads can benefit some of the people reading as well as the poster..


BTW, I've got no idea what P2P means ??

[chillipepperz]

Citibank has some nice low interest flexible unsecured personal loans at the moment http://www.citibank.com.au/personal-loans/low-rate.htm?cid=PS-Readycredit-Google4.9_3-CL12015&Code=R1Z2QHV5&Code1=R1Z2QHV5&Code2=R1Z2QFV9

Cheers!
Andrew

[robbo1172]

No all good. P2P is peer to peer. You post up your loan details and investors bid on it to loan you the money. Lots of people basically.loan you lots of small amounts til it equals your loan amount. It's all bundled up and managed by the service and they take a small piece of the pie. Your offered interest rate is mostly determined by your credit score. Anywhere from 9.95% to 14%. All very interesting...

Robbo

[oldmate]

No all good. P2P is peer to peer. You post up your loan details and investors bid on it to loan you the money. Lots of people basically.loan you lots of small amounts til it equals your loan amount. It's all bundled up and managed by the service and they take a small piece of the pie. Your offered interest rate is mostly determined by your credit score. Anywhere from 9.95% to 14%. All very interesting...

Robbo

Wow, sounds scary

[McTavish]

Robbo - the first part of my reply (above) regards the fine print was meant to address your subject of P2P.   The rest was just general financial principles to read/take note of/ignore...

Their web site is pretty light on with detail - and it sounds like you need to apply for the loan and see what the rate is you will be offered depending on your 'credit score'.  The stated rate (when they give it to you) is easy to compare but they don't seem to offer any detail on fees, comparison rates and limitations on being able to pay the loan off faster than a prescribed amount and prescribed time.    Maybe you have to apply and then they give you the full story??

So if you know what the deal is when using the criteria of Fees, Interest rates (and how they are calculated) and repayment schedule you can compare to GE and see how you fair after that.  The major banks seem to provide unsecured personal loans at around the 12% - 15% mark anyway...

Sounds like you are pretty switched on with this stuff.  Will be interesting to hear what you find out.   

And it does sound like an interesting finance model these guys are introducing.   

[gronk]

No wonder the banks are having record profits.....they charge you 12% for a loan , but only give you 3% for an investment....

[solarpanel4]

  This is something I saw posted elsewhere.

Included in our swag of junk mail this morning was a flier for mob that do personal loans, anyway they happened to include the various costs associated with taking out a loan - they are:

20% establishment fee

4% flat monthly fee

plus the normal I.D. sureties etc.

So, if you want to borrow $1000 for a year the costs are:

Establishment fee = $200

4% flat monthly fee (4 X 12) = $480

So at the end of the year you have paid back $1680 including the $1000 you borrowed.   That's an annual interest rate of 68%.

ps...fine print says "additional fees and charges may be applied in the event of default"


The final price is a bit scary.

   Regards  Jeff

[Moggy]

  This is something I saw posted elsewhere.

Included in our swag of junk mail this morning was a flier for mob that do personal loans, anyway they happened to include the various costs associated with taking out a loan - they are:

20% establishment fee

4% flat monthly fee

plus the normal I.D. sureties etc.

So, if you want to borrow $1000 for a year the costs are:

Establishment fee = $200

4% flat monthly fee (4 X 12) = $480

So at the end of the year you have paid back $1680 including the $1000 you borrowed.   That's an annual interest rate of 68%.

ps...fine print says "additional fees and charges may be applied in the event of default"


The final price is a bit scary.

   Regards  Jeff

And people wonder were terrorists get their money from???

Actually the question should probably be "Who are the REAL terrorists"?

Sent from my SM-G900I using Tapatalk

[robbo1172]

Robbo - the first part of my reply (above) regards the fine print was meant to address your subject of P2P.   The rest was just general financial principles to read/take note of/ignore...

Their web site is pretty light on with detail - and it sounds like you need to apply for the loan and see what the rate is you will be offered depending on your 'credit score'.  The stated rate (when they give it to you) is easy to compare but they don't seem to offer any detail on fees, comparison rates and limitations on being able to pay the loan off faster than a prescribed amount and prescribed time.    Maybe you have to apply and then they give you the full story??

So if you know what the deal is when using the criteria of Fees, Interest rates (and how they are calculated) and repayment schedule you can compare to GE and see how you fair after that.  The major banks seem to provide unsecured personal loans at around the 12% - 15% mark anyway...

Sounds like you are pretty switched on with this stuff.  Will be interesting to hear what you find out.   

And it does sound like an interesting finance model these guys are introducing.

Yep, agree, it's all good info.

Here is the current rate guide http://www.societyone.com.au/fee-schedule which shows establishment fees (none for this month) and comparison rates.

I actually rang them regarding expected interest rates and if you know your credit score, you can find the bracket that you fit in a see what interest rate you can expect. They did say if you ring them with your credit score, they will tell you the rate you should get. They also have a site (currently under maintenance) where you can get your score for free, instead of paying for it https://www.getcreditscore.com.au/. This way you can compare before posting your loan for funding.

Anyway, it's all food for thought.

By the way, the investment model appears interesting as well...

Robbo