Lendy’s Overdue Loan Explanation

IF you are concerned about the amount of past due loans on Lendy’s website, here is an explanation from Paul Riddell, Lendy’s marketing chap.

“It’s common for individuals investing in P2P loans to ask ‘how often are loans late in repaying?’ The good news for Lendy investors is a number of loans have been repaid over the past few weeks, including PBL088, which went just over term, and PBL075, which was in default but repaid 269 days post term.

For most of us, our experience with property lending is with our own residential mortgages, where if a payment is significantly late, something may have gone wrong. Bridging and development loans follow a different set of rules, as they relate to commercial transactions.

Delays are a routine part of the process, and can often mean nothing at all as regards the final repayment of the loan. Delays can be caused by slow completion of a property sale or a refinance with a bank, by complications with planning permission, or by any number of other minor issues. Both borrowers and lenders in the market understand that delays happen regularly, and price that in accordingly.

We’ve pulled the stats on all the 98 loans that have been repaid to investors through the Lendy platform since its inception. The stats show that of those loans, 42 were repaid on time. That means 56 were repaid late, to a greater or lesser degree. 34 of those loans were repaid under 90 days late, 13 were repaid between 90 and 180 days late, and nine were more than 180 days late.

But how many loans have ended up in losses for Lendy investors? None so far – although of course that’s no guarantee that it won’t ever happen.

At Lendy, we’ve published a new default policy to provide clarity for our investors over where each loan is in its repayment process. We’re as transparent as possible when our borrowers are late in making a repayment. That means it can sometimes look a little worrying when a few loans are late.

But in bridging and development lending, being late can simply be part of the process. And although we can’t make any guarantees, it is still rare for lenders to suffer losses.”

– Paul Riddell, Head of Communications and Marketing @ Lendy