AF vs NAF

I have already blogged my affinity for standing orders over manual orders.    Given the choice and the current standing order options I would prefer only auto-funding loans, but there are too many good NAF for this to be the correct strategy. 

With auto-finding loans the interest rate is known so the question is whether or not the loan will get funded…  Well, at the levels at which my orders fire the loan will get funded so problem solved. ;-p

Why are non-auto-funding loans a problem? A NAF is a problem because as a borrower the optimum strategy is to put your loan out for bid at an interest rate that will get funded and watch as the manual bidders bid the loan interest rate down.  While this strategy can backfire with a higher interest rate, it all but guarantees your loan is funded.  So what happens is my standing order fires and bids on a loan, helping to get the loan 100% funded.  Then over time (sometimes as much as 9 days) my order gets out bid leaving me with nothing to show for the effort (when are we getting interest on our accounts?).

In the long run, the number of quality loans in both AF and NAF categories requires that I participate in both types of loan… And I believe in standing orders.  So for now I grin an bear it… but maybe Prosper.com will see fit to add a time remaining option to the standing order offering.

 

Related posts:

• Standing Orders vs Manual Bids Think the best long term solution is Standing Orders.  Standing Orders remove any emotion from the decisions as to which loan to invest. You can...
• New Loan Funded #5989 — $2850 in 45 loans A new loan funded this afternoon (#5989 — PAYING OFF CREDIT CARDS AND HOME IMPROVEMENT — $22,000 14.55%).  I participated via my standing order: High DTI...
• $350 dollars makes its way into play I have $350 that is either pending review or a winning bid. Standing Orders 2 at 14.75%  Pending Review 5 at 18.79%...

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