Buy or sell loans on RainFin’s secondary marketplaceAug 20, 2017 Blog Buy and sell loans , Secondary market
Did you know that you can buy or sell loans on RainFin’s secondary marketplace?
What is the secondary marketplace?
It is a platform that provides lenders with an opportunity to sell their loan capital prior to the maturity date and as a result, offers other lenders additional lending opportunities. Only performing loans can be sold on the secondary market, making this a very attractive opportunity for returns. When purchasing a loan on the secondary market, you buy the available outstanding capital, irrespective of the asking price and offer made.
The secondary marketplace offers complete visibility of the borrower’s repayment performance as well as the potential profit or loss a lender would be making with the sale of a loan. Furthermore, lenders can purchase loans at a discount and possibly have access to part of a loan that they previously missed out on.
How does the Secondary Marketplace work?
Lenders select the loans they wish to sell and set the asking price. Potential buyers browse these loans and make offers to purchase on loans they wish to acquire. The image below explains in more detail:
How do I sell my loan?
First you check the status of the loan you would like to sell. Loans are temporarily unavailable to be sold 5 days before and 5 days after the loan repayment date. Loans can also not be sold in the first and last month of repayment. You select the loan you would like to sell and set an asking price – remember you will have to sell the full outstanding capital. The loan will now be posted on the secondary marketplace for a limited time and automatically removed 5 days before the repayment day. You can cancel the sale at any time. You will be notified when other lenders make offers on your loan and you can accept or decline these offers as you wish. Offers higher than your asking price will automatically be accepted. Once successful, a transfer certificate is generated. You, as the seller, will pay a transaction fee of 1 month’s interest plus VAT if the sale is concluded and this fee is payable before withdrawal.
How do I buy a loan?
If you click on the Marketplace on RainFin, you will see that there are two options – Primary Market and Secondary Market. See example below:
You have to click on Secondary Market. Browse through the loans on offer and find one matching your risk criteria and budget. You can view the seller’s asking price and calculate your preferable offer. You will be able to view your potential loss or gain on the loan. When you confirm your offer, a notification e-mail will be sent to the seller. Note that a higher offer on the asking price will automatically be accepted – an offer lower however, can be accepted or denied by the seller. You will be notified via e-mail of the outcome. You can make more than one offer on a loan and the value of the offers will be reserved in your RainFin account until the offer/s are accepted or declined. If accepted, RainFin will transfer the rights of the loan and you, as the buyer will pay the standard 1.14% service fee (VAT included) on the monthly payment received. All interest and outstanding capital will now be paid to you, the new owner. You can re-sell the loan at any time. As with all loans on the RainFin platform, collections get done on behalf of the lender and all payments after the transfer of rights will be paid into the account of the new owner (buyer).
Together with the special interest rates and discount pricing that is usually on offer, these loans add up to a very attractive lending opportunity, only available to RainFin lenders.
Information contained herein is for information purposes only and is merely illustrative. It is not deemed as advice as defined in the Financial Advisory and Intermediary Services Act (FAIS Act).