[ANN] BTCJam - Peer to Peer Bitcoin Lending

[NotARobit]

The idea is that when someone pays early, you can put that money into another loan and maintain your ROI with a new investment, as opposed to getting extra return from someone who pre-paid.

The downside for us investors is that it takes significant overhead to research a loan. So earning BTC0.1 instead of BTC0.5 in interest would be a disappointment after doing all the research.

[1715315899]

1715315899

[ffcitatos]

Thanks for the note trading feature, Tulkas!

Just one question - what happens to the notes after they are sold? Will they still show up on 'my notes' page, or will they just disappear?

As a general remark, it would be great to have access to a log of what happened with the account. Coins in and out, loans funded, payments made in/out etc. Am I the only one missing that feature?

[sal002]

As a general remark, it would be great to have access to a log of what happened with the account. Coins in and out, loans funded, payments made in/out etc. Am I the only one missing that feature?

Nope - I can't find it either.

[Rassah]

The idea is that when someone pays early, you can put that money into another loan and maintain your ROI with a new investment, as opposed to getting extra return from someone who pre-paid.

The downside for us investors is that it takes significant overhead to research a loan. So earning BTC0.1 instead of BTC0.5 in interest would be a disappointment after doing all the research.

That's not the responsibility of the borrower. You have a contract that any money they take from you they will pay "rent" on. If they don't have your money, it's not right to pay rent on it. It would be like you renting a car for 5 days, returning it after 1, and the rental agency coming back and saying, "Yeah, I know you only had it for 1 day, but we haven't had any customers in the last 4 days, so could you pay us for those days, too?"
If there was a specific laid-out contract that says interest is charged for a specified pay period, regardless of when money comes in, then that would be different. Also, you wouldn't be getting early payments, so you'll still have problems with researching loans overhead.

[Tulkas]

Thanks for the note trading feature, Tulkas!

Just one question - what happens to the notes after they are sold? Will they still show up on 'my notes' page, or will they just disappear?

As a general remark, it would be great to have access to a log of what happened with the account. Coins in and out, loans funded, payments made in/out etc. Am I the only one missing that feature?

Yes, the interface is being made. We are implementing filters because just displaying everything will not be useful.

[boonies4u]

Yeah, you can't really call it interest at that point, since you can't really charge that amount if you are not owed it.

I appreciate all the changes BTCJam, but if they want to move into the real world of collections, transparency is going to be the key.  The incorrect interest calcs, plus the inability to see what payments were made and when as well as the impact on principal and interest is a HUGE problem for this site.  I may sound like a broken record, but in the meantime BTCJam is opening itself up a large potential issue that can EASILY be avoided thru transparency.

We are totally transparent, the interest calc is correct, the only issue is that you want to discount the interest rate in case of early payments and we do not do that.

We can implement that feature, some institutions do not allow early payments, others charge a penalty because it lowers the roi of investors and some allow it, it's really a matter of choice. You can submit this feature request at our uservoice feedback widget, perhaps we can make this optional and let the borrower choose, since it will affect investor returns.

I understand why you don't discount for early payments, it's important that lenders know how much they should be receiving.

Thanks for the note trading feature, Tulkas!

Just one question - what happens to the notes after they are sold? Will they still show up on 'my notes' page, or will they just disappear?

As a general remark, it would be great to have access to a log of what happened with the account. Coins in and out, loans funded, payments made in/out etc. Am I the only one missing that feature?

Yes, the interface is being made. We are implementing filters because just displaying everything will not be useful.

Glad to hear that you're working on new features. Would there be a system in place that would keep someone from buying notes on their own loan? with a sock account?

[Tulkas]

Glad to hear that you're working on new features. Would there be a system in place that would keep someone from buying notes on their own loan? with a sock account?

Can you elaborate more what is the problem in that case?


Also, I've just sent you a PM about your loan.

[boonies4u]

Glad to hear that you're working on new features. Would there be a system in place that would keep someone from buying notes on their own loan? with a sock account?

Can you elaborate more what is the problem in that case?


Also, I've just sent you a PM about your loan.

I was just asking if there are measures to keep someone from buying notes on a loan that they received.

-replied

[🏰 TradeFortress 🏰]

Glad to hear that you're working on new features. Would there be a system in place that would keep someone from buying notes on their own loan? with a sock account?

Can you elaborate more what is the problem in that case?


Also, I've just sent you a PM about your loan.

I was just asking if there are measures to keep someone from buying notes on a loan that they received.

-replied

Why? It doesn't make much sense to forbid that, allows alternate payment plans and if he's very late he still should have negative reputation.

[filharvey]

BTCJam, needs to change the way it works I think.

Firstly, it needs to not accept fee's on the loan being made. And should take fee's from the interest being paid. this means that the would be more interested in people paying back the loans and would help enforce things more.

Secondly, people who are late in paying, must have penalty fees and interest appplied to their loans. They cannot just default because the $$$ rate to BTC is too high and then wait until it is low to pay back.

I'm now sitting with 5 out of 5 loans on BTCJam, of which all are bad. All people had a good rep as far as BTCJam considered (14+). Out of all these loans, not a single payment has been made. So missing about 14 or 15 payments.

Phil

[sal002]

Although I have raised issues about the interest calcs being wrong, as well as what appear to be overstated amortizations on my loans, I have continued to pay the one loan I have (even made payments early) during this period of price swings.  I wish the other issues would be looked at (especially since my calcs show the weekly payments to be incorrect and it looks like I am overpaying at least 1 BTC), but I will continue to pay and just never use BTCJam again until the issues are resolved.

[creativex]

Although I have raised issues about the interest calcs being wrong, as well as what appear to be overstated amortizations on my loans, I have continued to pay the one loan I have (even made payments early) during this period of price swings.  I wish the other issues would be looked at (especially since my calcs show the weekly payments to be incorrect and it looks like I am overpaying at least 1 BTC), but I will continue to pay and just never use BTCJam again until the issues are resolved.

+1

[Tulkas]

Although I have raised issues about the interest calcs being wrong, as well as what appear to be overstated amortizations on my loans, I have continued to pay the one loan I have (even made payments early) during this period of price swings.  I wish the other issues would be looked at (especially since my calcs show the weekly payments to be incorrect and it looks like I am overpaying at least 1 BTC), but I will continue to pay and just never use BTCJam again until the issues are resolved.

I've pointed you to other two pages (not owned by BTCJam) where the calculation matches exactly.

The only issue, if you wish to state it that way, is that early payments are not freed from interest.

So, you want to be able to pay early on a loan and not pay the interest relative to the early payments, is that right? This is a valid point and we are considering this. As any other constructive suggestion we have always listened to our users and implemented anytime it was possible.

Honoring your payments it's nothing to brag about.
 

[Tulkas]

BTCJam, needs to change the way it works I think.

Firstly, it needs to not accept fee's on the loan being made. And should take fee's from the interest being paid. this means that the would be more interested in people paying back the loans and would help enforce things more.

Secondly, people who are late in paying, must have penalty fees and interest appplied to their loans. They cannot just default because the $$$ rate to BTC is too high and then wait until it is low to pay back.

I'm now sitting with 5 out of 5 loans on BTCJam, of which all are bad. All people had a good rep as far as BTCJam considered (14+). Out of all these loans, not a single payment has been made. So missing about 14 or 15 payments.

Phil

There is a late fee of 0.5 BTC per payment. The credit rating system shows the level of verified information, not reputation.

[sal002]

And I have provided you actual calculations based on the true loan terms as I set-up my loan and interest rates in spreadsheet form that show that the abstract payment calculations that you are using on the site are clearly incorrect.  I use the calculations that you referred to, so either there is a rounding error or something else is occurring.

At this point, prepayment is something to brag about especially since there are constant reports (like the one above), that loans just weren't being repaid.  In fact, I also only have one loan outstanding where I am the lender, and that one isn't being repaid either.

But my point on that is the terms of the loans DO NOT make it clear that prepayments DO NOT have an impact on the calculation of interest.  So, by default, people who prepay are overpaying if you are not adjusting the total amount they pay.

That being said, I think at the very least the following items need to be done just for your own potential risk management (and the risk management of every lender):

1.  Either clearly state that prepayment is not allowed and don't functionally allow early payments or adjust the interest calculations accordingly.
2.  A clear transcript and running balance showing the amount of each payment going to principal and each payment going to interest.

[Tulkas]

And I have provided you actual calculations based on the true loan terms as I set-up my loan and interest rates in spreadsheet form that show that the abstract payment calculations that you are using on the site are clearly incorrect.  I use the calculations that you referred to, so either there is a rounding error or something else is occurring.

At this point, prepayment is something to brag about especially since there are constant reports (like the one above), that loans just weren't being repaid.  In fact, I also only have one loan outstanding where I am the lender, and that one isn't being repaid either.

But my point on that is the terms of the loans DO NOT make it clear that prepayments DO NOT have an impact on the calculation of interest.  So, by default, people who prepay are overpaying if you are not adjusting the total amount they pay.

That being said, I think at the very least the following items need to be done just for your own potential risk management (and the risk management of every lender):

1.  Either clearly state that prepayment is not allowed and don't functionally allow early payments or adjust the interest calculations accordingly.
2.  A clear transcript and running balance showing the amount of each payment going to principal and each payment going to interest.

If you think being honest is something to brag about this is up to you.

People who experience defaults are generally much more vocal than others. The loan terms are very clear, you can see on the heading:  N payments of X BTC.

1. Then again, your point is valid and we will probably change or provide an option at the listing creation.
2. this is easier since the payment already have this info on it. i will add the info on the payment list.

[sal002]

The loan terms are very clear, you can see on the heading:  N payments of X BTC.

My mortgage, car loan, etc all say this.  However, they also say x% interest.  If I pay early on those, later payments are adjusted for the decrease interest.  So your terms are not clear at all - especially since it also says right next to it "Amount @ Rate", which conflicts. 

Point is - if you had to go to court over someone who paid early and based on their calculations the loans were paid in fully, you'd have an issue.  Do away with the issue to increase your credibility. 

[sal002]

2. this is easier since the payment already have this info on it. i will add the info on the payment list.

Also, let me see when each payment was made on my outstanding loan so I can make sure I am correctly accounting for the total payments + interest.

[filharvey]

BTCJam, needs to change the way it works I think.

Firstly, it needs to not accept fee's on the loan being made. And should take fee's from the interest being paid. this means that the would be more interested in people paying back the loans and would help enforce things more.

Secondly, people who are late in paying, must have penalty fees and interest appplied to their loans. They cannot just default because the $$$ rate to BTC is too high and then wait until it is low to pay back.

I'm now sitting with 5 out of 5 loans on BTCJam, of which all are bad. All people had a good rep as far as BTCJam considered (14+). Out of all these loans, not a single payment has been made. So missing about 14 or 15 payments.

Phil

There is a late fee of 0.5 BTC per payment. The credit rating system shows the level of verified information, not reputation.

Well ok 0.5 btc late fee per payment, that is not enough, what do I get from that! Nothing?

Phil

[Rassah]

Just FYI, I work at a lender and have worked with many others, and this is how it's typically done:
If an early payment or an extra payment is made, next payment amount doesn't change. What changes is the outstanding balance, which gets recalculated at the time the payment is received. The end result is just that the loan gets paid off earlier. That automatic outstanding balance recalculation shouldn't be too difficult to add in software, and since only the payoff date changes, lenders should still have time to look for other loans.
On rare occasions some loans do have scheduled interest instead of simple interest, in which case you can prepay early, but the interest schedule doesn't change. Typically those loans specify that exactly when you sign up for the loan, however, those loans are extremely uncommon now. The last time I saw one was in 2002, and it was an old loan that we were refinancing for someone.