As you may have read in our recent blog post, the Loan Exchange is a great place to diversify your LendingCrowd investment portfolio and to buy investments in loans that you missed when they were on the Loan Market.
Here at LendingCrowd we are building a product that is shaped by you. Your feedback drives a lot of the new features and updates we are making and intend to make in the future.
One of our most recent updates is the new Loan Exchange, which is intended to make investing in loans you may have missed more straightforward. If you do have any feedback make sure to send it to us via our Contact Us page.
So what is the Loan Exchange, and why should you use it?
Put simply, the Loan Exchange is LendingCrowd’s secondary marketplace, where investors can buy and sell loan parts. You may want to buy loan parts to diversify your portfolio and thereby help reduce risk, or because you missed out on investing in a company when it was on the Loan Market. You could also sell investments to free up capital so you can invest in other loans. The Loan Exchange gives you the chance to purchase an instant investment, without having to wait for a loan auction to finish, so that you can start earning interest immediately.
You can list investments for sale on the Loan Exchange by clicking Manage for any company in the My Investments section of your Investor summary. Please note that there is a 0.5% fee charged on the value of the loan part sold. It is quick and easy to list your loan parts for sale, and if you change your mind before a whole loan part has been sold, you can choose to ‘unlist’ it to return it to your investment portfolio.
How are the rates and amounts shown on the Loan Exchange calculated?
Aggregation of the Loan Exchange is one way that we have updated it to make it easier to use. You will now be shown one interest rate and one maximum available amount for each company loan.
The interest rate listed for each company loan is indicative of the weighted average interest rate of all the investments available for that loan. All of the investments listed for sale will have rates contributing to this indicative weighed average. The average rate is weighted by the different values of the available investments.
The maximum available investment is the total combined value of all of the investments available for sale in a particular company loan, minus those that you own.
Please be aware that the indicative interest rate shown may differ from the actual interest rate available for the amount you want to invest.
How do I buy loan parts on the Loan Exchange?
The maximum available investment and the indicative weighted interest rate are shown for each loan. Simply choose the loan you want to invest in, and click “Invest in this loan” as seen below.
This will take you to the company’s page, where you can enter the amount you want to invest in the loan. After you have entered the amount you’re looking to buy, the availability of this investment will be checked.
As you can see in the example below, the interest rate available for the amount you wish to buy may be different to the indicative rate shown. This could be because another lender has listed or unlisted an investment, or if another lender has bought an investment in the same loan you are looking at.
The rate you are shown for the amount you have entered is correct at the time the availability was calculated – if you leave the Loan Exchange without purchasing the investment and then come back later, the same rate may not still be available.
Finally, double-check the amount and rate of the investment you are purchasing, read and accept the Terms & Conditions, and click Confirm Purchase. That’s it – you have an instant investment in the loan and are earning interest immediately!