Up until this point I thought my preference for auto funding loans was psychological. They pop up in my bids, they close, they fund… wam bam thank you mam. As opposed to non auto funding loans which can be fully funded early with a high interest rate and then waste time (up to 10 days) having their interest rates bid down only to have me outbid in the long run. Auto funding loans are better for my IRR because my money is deployed quicker.
However in the spirit of this blog, I thought I should explore this area a little further…
Here are all listings broken down by funding option, listing status, and listing status percentage for the funding option. All listings are roughly 50/50 with the two funding options.
| Funding Option | Status | Percentage |
|---|---|---|
| Close When Funded | ||
| Active | 2% | |
| Cancelled | 1% | |
| Completed | 8% | |
| Expired | 49% | |
| Pending Verification | 0% | |
| Withdrawn | 41% | |
| Open For Duration | ||
| Active | 2% | |
| Cancelled | 1% | |
| Completed | 9% | |
| Expired | 48% | |
| Pending Verification | 0% | |
| Withdrawn | 40% |
OK the number completed is a wash. What about interest rates?
Here are all completed listings by credit grade and funding option interest rate.
| Credit Grade | Close When Funded Lender Rate | Open For Duration Lender Rate |
|---|---|---|
| AA | 12.37% | 9.72% |
| A | 14.00% | 11.75% |
| B | 17.50% | 13.93% |
| C | 19.04% | 15.92% |
| D | 22.84% | 19.05% |
| E | 25.25% | 22.61% |
| HR | 25.23% | 22.42% |
| NC | 22.85% | 21.91% |
| ALL | 21.09% | 15.39% |
Wow! I wasn’t expecting that big of a difference. So in addition to the psychological advantages listed above, the interest rates are significantly higher on average across the board.
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3 comments ↓
Yea, but what about default rates. It’s one thing to get a great interest rate, but that doesn’t do much good if the loan is not repaid. AF’s have a bad track record wrt paying their loans back.
Oh, and if you could, would you please include a date on your post so we can tell how timely it is?
thx…
– jcw3rd
In reverse order… Good idea on the timestamp. Done!
If you use the ROI tool with my extended credit requirements you will see that the higher interest rates make up for the higher default rate.
You need to evaluate each loan individually: http://rateladder.com/loan-rate-analyzer/
I was just pointing out that on average the AF loans have much higher interest rates.
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