Whenever you make an investment one of the main criteria is access i.e. how do you get your money out and when? Often you are locked into a product for a certain period of time and this would appear to be the case with loans. If you buy into a three year loan, then you are in it for three years right? Not necessarily.
Ablrate’s unique Loan Exchange is where our community comes together to trade the loans they own or would like to own. The market runs on a ‘bid and offer’ system much like stock and bond markets where people can offer loans they have for sale at a certain price and people can also make bids to buy loans at a certain price.
The process is automated, so if you like the look of a loan, and it is being offered at a price you are comfortable with, then you just enter the amount you would like to buy and our system calculates the cost and shows this to you in a ‘trade ticket’. If you are happy you can go ahead and execute that trade and our systems takes care of everything else. The financial settlement and the legal agreements are all updated to reflect the new ownership structure of the loan as well as your account balance.
The Loan Exchange has consistently grown, however, please be aware that the liquidity in the market is totally dependent on there being willing buyers and sellers, so we cannot guarantee that past liquidity in the market will be a consistent feature in the future. Also if you buy at a premium and a loan pays back early you may not get the yield that you were hoping for and you could lose money. For example, if you paid £102 for £100 of remaining capital in a loan paying 1% per month and the borrower paid the loan back one month after you had bought it, you would only receive £101, giving you a loss of £1.