Unilend corrects partly are auction system.
- 1 Content of the mail
- 2 Why they did that? My opinion:
- 3 This note is to compare the statistics of unilend…
- 4 My advice:
Content of the mail
There are new for lenders on Unilend.
With almost 3 years of experience and more than 280 projects funded by the community, we learned a lot of lenders and borrowers. This decline today allows us to refine our system of interest rates.
Until now, you could set rates of interest between 4 and 10%, regardless of the score and the repayment period of the projects to which you pay. This range is now refined according to the length of the loan and the confidence score Unilend.
See the details of the new minimum and maximum interest rates.
The auction system still work?
Yes. Only the range of possible interest rate changes. As before, the new minimum and maximum interest rates will be offered automatically when formulating your loan offers.
What are the changes for Autolend?
According to the term of the loan or the confidence, the minimum interest rate you have chosen can be higher than the maximum now possible. All affected lenders will receive a personalized email. To be sure to continue to lend to all the projects that meet your criteria, we recommend that you check your Autolend settings.
Is there a consequence on loans in repayment?
No. Nothing will change for your current loans. The new interest rate ranges apply to the new proposed projects.
We believe that these new rate ranges will allow to maintain the right balance between the interests of lenders and borrowers, that meet your interests.
We thank you for your confidence and wish you a beautiful late summer.
The team of Unilend.
Lend presents a risk of non-repayment: well divide your loans and do lend money you don't need immediately.
When you make an offer to loan to a project, you choose the amount and the interest rate that you want to lend.
For each project, a fork of interest rate is set based on the duration of the loan and the confidence score Unilend. Possible interest rate you are offered automatically when formulating your offers.
Remember: only the lowest rate loan offers will be considered.
For example, you make a loan offer in the amount of 100 euros to a project which the trust rating is 4 stars and the repayment period is 24 months: you can set a range between 5.5 percent and 7.5 percent interest rate.
Note: As soon as the minimum interest of a project rate is reached, its fundraising campaign is closed. To be certain to lend to all the projects that meet your criteria, you can enable Autolend.
Why they did that? My opinion:
- Either they want to go on the fixed rate
- Either because some investors have lent to 4% which is absurd. Taking into account risk and taxes to 4% you consistently lose money.
- Investors did not take into account the number of stars that reflect the risk in unilend to lend less to low-risk companies and more risky businesses.
- On autolend there are many investors to let autolend handle with a single rate for all loans.
- Some believe that shorter is less risky and the rate runs should be lower. Others like me believe there will be a reduction of rates, a strong decline and that it is better to lend long and therefore accept that the long-term rate is lower than. Except that in practice there is not much in the auction can matter the length.
Suddenly unilend to to correct these defects even if I find they have imposed their view of things then that did the same, for me the long rate should be lower than the rate short because I was already a sharp drop in rates in my guide of crowdfunding article.
off you can see in the table that the rate short to strongly decrease, I now find it totally uninteresting.
Reminder of the unilend notation.
Admitted companies to file their proposed are then investigated by analysis of the risk of Unilend Committee. To understand the business, it relies on accounting documents provided by the company during the tabling of the Bill. Above all, to understand the project and the ability of the company to assume its refunds, the Committee talks directly with the executives of the company.
For each project, the analysis of the risk of Unilend Committee gives a confidence score.
This note is intended to allow lenders to understand the repayment ability of the enterprise to which they may lend their money.
Criterion 1 (meaning 20%): financial performance
This criterion includes the quality of the financial structure, debt levels, profitability, cash and forecasts provided by the company upon the filing of its project on Unilend.
Criterion 2 (meaning 20%): the company's market
This criterion takes into account the dynamism of the market which is changing the business and its competitive positioning.
Criterion 3 (meaning 20%): management team
This criterion focuses on the experience of leaders and the relevance of the tools used.
Criterion 4 (meaning 40%): external ratings
This criterion to take into account provided ratings by Altares and, where appropriate, by the Bank of France or the Coface.
Each criterion is noted on 10 and weighted according to its importance to form the final score.
So a company that would be rated 7/10 in terms of financial performance, 8/10 in terms of market, 6.5/10 for the quality of its management team and 7.5/10 in its external assessments would be awarded a note of: 7 x 40% + 8 x 30% + 6.5 x 20% + 7.5 x 10%, or a total score equal to 7.25.
Once this score out of 10, it is translated in the form of stars to form Unilend note:
8.5 to 10: 5 stars, the financial strength of the company is excellent
From 7.5 to 8.5: 4.5 stars, the financial strength of the company is very strong
6.5-7.5: 4 stars, the financial strength of the company is strong
5.5 6.5: 3.5 stars, the financial strength of the company is good
4-5.5: 3 stars, the financial strength of the company is acceptable
2 to 4: 2 stars, the financial strength of the company is low. The project may not be featured on Unilend.
From 0 to 2: 1 star, the financial situation of the company is very low. The project may not be featured on Unilend.
Unilend has made the choice to withhold that companies rated at least 3 stars, i.e. those that show above-average financial strength. Others are simply not allowed on Unilend.
This note is to compare the statistics of unilend…
What is the impact of risk on your loan portfolio?
We have simulated the impact of one or more defaults on a loan portfolio.
- the same amount is paid on each of the companies
- the case of these defects are the most pessimistic namely a complete default, i.e. a company that don't would repay no deadline
- the loans are always available at a gross rate of 9.4%
- the average term of the loans is 48 months
How to read the graph below?
If you pay every time the same amount to the gross rate of 9.4%:
- to 200 projects and you have a complete failure: the annual gross rate will fall from 9.4% to 9.1%
- 100 projects and you have a complete failure: the annual gross rate will be reduced from 9.4% to 8.9%
- to 50 projects and you have a complete failure: the annual gross rate will be reduced from 9.4% to 8.3%
- to 10 projects and you have a complete failure: the annual gross rate will increase from 9.4% to 4%
For mathematicians, the formula used is that of the internal rate of return.
- do not pay more money to big projects to small
- spread your loans on a large number of companies
I said he must see also important a point of detail, when a loan is considered in default:
- When the company is liquidated (in which case the default rate is widely under-estimated)?
- or if there is a delay of more than 30 days?
Is there updated many times companies rates? (kind counted once 60 days late and once delayed 30 days)
The recovery rate is how much and when? and with a late penalty?
Unilend takes as default 5,86% rate: sum of capital in arrears and the capital remaining due from companies in liquidation / sum of capital remaining due of all the loans on Unilend what is wrong or right, the stats we can do what we want. However unilend would recommend not to invest based on the size of the project, so that default rate is probably already calculated differently.
These issues greatly influences the answers.
Editor's note I got responses from unilend and I think I did too much statistical bias by taking that delay = no final repayment, which made a loss of almost 1 out of 10 companies (not completely because it is rarely no refund to the first deadline), certainly 1entreprise on 10 to a problem (not outrageous either), but this does not mean that you will be a loser.
Note: having had a response from unilend in the unilend article is serious or is it a scam I said that if you simply numbers business problems/numbers of loans you have 10% but it just means that 10% companies have either a delay, default etc.. Not that you lose money.
It is rather well for the minimum rate which however increases the maximum rate declined further
I liked the surcharge for new investors, it allowed to binge.
Following a unilend response, there was too much statistical bias in my calculation that to change the conclusion.
Well anyway the 10% are never achieved (except at the beginning of the platform) which does not change much.
More than the unconscious have funded at 4% of risk projects, which is a shame for them, because not only they take unnecessary risks, but in most other people cannot fix this because their bids are not low enough and they are eliminated. This can form a speculative bubble on rates too low compared to the risk.
I think that it is possible to stay but do not invest in projects where you are not confident, a project of 10 a delay or a problem any during his life (Nothing aberrant, you pay up to 10% or 10 after your page has, must put things in the balance), so it should not regret his investment.
And you?, what do you think?