As a person who just started a job with stable income and just got into investing, I looked into the easiest and cheapest opportunities and came across Mintos – loan marketplace. Soon I decided which loan originators to avoid.
If you are reading this, you probably already know what Mintos does and what it offers, but I want to break down how to set up auto-invest and eliminate the loan originators that offer the terms that I would rather avoid.
Of course, this is not financial advice, it is just my opinion. always do your own research before you start investing since it may result in losing your capital.
Loan originators that offer no Buyback
Mintos defines the Buyback guarantee the following way:
A buyback guarantee is a guarantee issued by the loan originator to the investor for a particular loan, that confirms the loan originator will repurchase the loan from the investor if that particular loan is delayed by more than 60 days. The buyback guarantee is given at an individual loan level and is marked by shield. If a loan with a buyback guarantee is delayed by more than 60 days, the loan is automatically bought back by the loan originator from the investor at the nominal value of the outstanding principal, plus accrued interest income.
So if the loan is delayed by 60 days, you will get your investment back by the loan originator buying back the loan. you will receive the principal and the interest.
But these loan originators do not offer it on any loans:
Though, 1pm, Debifo and eFactor loans I have not seen on the Primary market for a while. I think they are still worth mentioning since they are still in the list of the Lenders. I think there is a possibility that their loans will be returned.
These loan originators offer the buyback on some loans:
- Aforti Finance
- IFN Extra Finance
Though these types of loans can easily be filtered out in the primary and secondary market as well as in Auto-invest since fortunately, there is a filter for it.
Furthermore, if you are using Mintos Invest & Access, these type of loans are excluded from there as well. But I consider it worth mentioning that there are still some lending companies that offer this type of unacceptable term.
No Income on Delayed Payments
There are different types of income that the loan originators offer on delayed payments:
- Interest income on delayed payments – Interest income is accrued for the overdue days based on the outstanding delayed principal. The interest income is accrued based on the annual interest rate offered to investors.
- Penalty Income – Penalty income is accrued based on the outstanding delayed payment (principal and interest) on a daily basis using the rate specified.
- Default interest – Interest rate accrued for the loan after the loan agreement is terminated.
These loan originators do not offer any of these, which means that if the loan is delayed you will only get what is included in the Buyback (if it is available). Additionally, there is no filter for these criteria, therefore it’s necessary to manually filter out these lenders if you want to avoid them.
|Lender||Buyback||Available on the primary market (August 2019)|
|“MOGO” Universal Credit Organization LLC Armenia||✔️|
|Mogo LLC Georgia||❌|
|Mogo LTD Moldova||✔️|
|Mogo OÜ Estonia||✔️|
For me, these loan originators are not offering acceptable terms, and even if they are evaluated as A-B grade on Mintos, I would not lend them my money. Thus, to make sure I don’t accidentally invest in those loans, they are filtered out from my Auto-Invest or manual invest portfolios.