Team Loanbase routinely conducts risk analysis in order to decrease defaults and provide the best service for our customers. One of the areas of concern we’ve been researching has been the occurrence of fraudulent activity and we have identified several countries with higher levels of fraudulent activity. In light of our findings, we regretfully had to terminate lending operations in a number of high risk countries.
The following countries have had an unusually elevated risk of defaults and/or fraudulent document submissions, so we’re no longer allowing the submission of verification documents from them:
We have also had to terminate operations in countries where our 3rd party verification partner, Jumio, doesn’t have coverage. Previously we manually rejected all verification requests which Jumio didn’t support, but we’ve now automated the process. Here is the full list of countries we no longer accept verification requests from:
Bonaire, Saint Eustatius and Saba
British Indian Ocean Territory
Central African Republic
Cocos (Keeling) Islands
Falkland Islands (Malvinas)
French Southern Territories
Heard Island and Mcdonald Islands
Holy See (Vatican City State)
Iran, Islamic Republic of
Korea, Democratic People’s Republic of
Northern Mariana Islands
Saint Helena, Ascension and Tristan Da Cunha
Saint Martin (French Part)
Saint Pierre and Miquelon
Sint Maarten (Dutch Part)
South Georgia and the South Sandwich Islands
Svalbard and Jan Mayen
United States Minor Outlying Islands
Virgin Islands, U.S.
Wallis and Futuna
As part of our improvement process, we do periodic reviews of the interest rates and we’ve had to make adjustments in order to ensure the profitability of the platform. The changes to the interest rates are as follows:
- Adjusted for the Bitcoin volatility index, which will be the biggest impact on the interest rates.
- Increase in the risk-based component of the interest rates.
- Term-based adjustments to all of the interest rates.
Fixed Rate Pricing
The new fixed rate pricing starts from about 6.6% for A-rated loans and goes up to about 120% for E-rated loans.
The important thing to note here is that these rates are quoted for loans ranging from 1 to 3 month terms. There will be an adjustment for the terms, so users who select loans from 4 to 9 months will have an additional adjustment to the interest rate based on the loan term. Users will see the final rate in the loan application page, the payment calculator and their loan listings page.
Volatility Index Adjustment
The Bitcoin volatility inevitably has a impact on the risk-based pricing and it’s been primarily accounted for by borrowers requesting shorter term loans (i.e. 1 to 3 months). We’re obtaining the Bitcoin volatility index from the BTCVol website. This will allow more precise pricing and a stabilization in the returns for the lenders even in longer term loans. At this stage we’re looking at the 6 month volatility index. Going forward, we will be updating volatility index on a monthly basis, which may lead to slight increases or decreases of our interest rates.
Risk-based Interest Rate Increase
After our internal review, we have determined that the risk-based pricing needs to see as small increase. This will inevitably increase the cost of the loans, but we’ve added more precision into our pricing by adjusting for the loan term.
Many of you have been asking us to implement term-based adjustments on the interest rates and we’re happy to finally deliver on those requests. Usually the borrowers prefer long-term loans in order to utilize a lower APR, but we’ve seen that investors are reluctant to fund such loan at the same rate and yield as the short-term loans. The term-adjusted rates shall compensate for this imbalance and normalize the yield of the loan over the various terms we offer. As of this release, loans from 1 to 3 months will utilize the fixed rates we show on the Credit Rating page. We will have additional term-based adjustments, depending on the length of the loan. This will normalize the cost of the loan over the various terms we offer.