Auto-funding loans… My favorite.

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  Withdrawn 41%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  Withdrawn 40%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 ↓
#1 jcw on 03.02.07 at 2:41 pm

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.

#2 jcw on 03.02.07 at 2:42 pm

Oh, and if you could, would you please include a date on your post so we can tell how timely it is?

thx…
– jcw3rd

#3 Kevin on 03.02.07 at 7:38 pm

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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