Harmoney, New Zealand's first licenced peer-to-peer lender, is now open for business.
"Peer to peer (P2P) lending is now live in New Zealand," the company's website says.
As intermediaries, online P2P lending platform operators will match lenders with borrowers seeking loans for personal, charitable, or small business purposes and receive fees for doing so.
Harmoney's website is promoting debt consolidation, car loans, holiday loans and home improvement loans with interest rates for borrowers, priced via a risk gradient, ranging from 9.99% to 39.99%.
Harmoney has said investors' net returns, net of defaults and Harmoney's fees, will range from 10% through to 24%.
Harmoney will charge a minimum loan origination fee of $300. There's also a $15 dishonour fee if a borrower’s repayment is dishonoured, a $30 per month overdue fee if a payment is not made in full and the account goes into arrears, which rises to $75 per month if the account has been overdue for over 60 days.
Harmoney will break every borrower's loan into $25 "notes", spreading their loan around different investors to help manage risk. Investors will be charged a service fee of 1.25% of the principal and interest payments collected on each note.
Borrowers can choose a loan term of between three and five years. Investors will receive monthly repayments, as they are made by borrowers, for the duration of a loan.
The Financial Markets Authority granted Harmoney a P2P lending licence in July. The passing of the Financial Markets Conduct Act last year enabled the development of P2P lending in New Zealand. See all our stories on P2P lending here, and a video interview with Harmoney's CEO and founder Neil Roberts here.
Meanwhile, in Australia borrowers can now access their credit scores free through a new website backed by peer-to-peer lender SocietyOne.
7 Comments
If borrowers are paying as little as 9.99%, how can the return to lenders, net of fees (1.25%) and defaults, be a minimum of 10%? Is this a Ponzi scheme?
Do investors not get to choose their risk level? Or are they always forced to have some higher-risk, higher-rate borrows in the mix to bring up the average rate?
Take a look at my video interview with Harmoney CEO Neil Roberts. It explains how they will operate - http://www.interest.co.nz/personal-finance/69587/banks-personal-loans-a…
Having poked around on the site it appears to me that borrowers are being offered loan terms of a minimum of 3 years. What is not clear to me is what the minimum term is that is available for an investor - presumably 3 years as well? Can the Harmoney people comment?
Ditto to comment above - I signed up for updates and recieved none.
I'm not from Harmoney, but I'll try to answer this.
As an investor, you buy "notes" in a loan, so at loan origination the minimum term is the same for both investors and borrowers.
You can, however, buy and sell notes on the secondary market. This means you could theoretically buy notes with only a short time remaining, if they were available.
In relation to the secondary market, this is taken from Harmoney's website:
"At this stage, Harmoney does not have a secondary market that allows investors to sell loans. However, there are plans to develop one in time."
In other words, an investment at this stage is for the full term, with a regular fixed repayment amount (some interest, some principal, varying during the term).
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