How many loan originators are currently on Mintos? Do you know?
The correct answer is not 42, but currently there is the incredible number of 59 credit advisers, connected to the P2P platform.
Mintos really does a lot to ensure the sufficient overview. Besides very good automobile originator, last month Mintos’ own credit rating was added. This rating is now also integrated into the automobile vendor, which greatly simplifies the customization. Moreover, there is a very interesting review page, on which all the originators of Mintos are represented. Every investor will find here a lot of information about the vendor, regardless of whether an investment structure or collateralized loan is concerned. Furthermore, there is detailed information on repayment of interest for backlog overdue receipts and residual interest.
Over and over again, I notice that a lot of investors are aware of this information, but they have no idea what does it mean. So this article is for those who want to expand their knowledge.
The site map of Mintos’ originators
In this article, we want to focus on the information that Mintos provides on this site map.
The information you see here is quite understandable.
Evaluation of Mintos. Here you can see how Mintos evaluated the originator.
The type of loan. Does the load originator provide, for instance, consumer instalment credits or vehicle credits?
The country. In which country are the credits provided?
The currency. What currency can I invest in credits?
The guarantee of buyback transaction. Does the originator provide the assurance of buyback transaction or not?
The mutualised risks. The percentage that the originator discretionary leaves for each credit. For instance, the originator has a risk, equal to 15%, and extends a credit at the value of USD 1 000 (One thousand US dollars) for an investment in Mintos. In this case we can invest in credit “just” EUR 850 (eight hundred fifty Euro), as the originator leaves the invested EUR 150 (one hundred fifty Euro).
The size of the mutualised risk varies and ranges from 5% to 20%. Most originators of Mintos have this characteristic between 5% and 10%. The mutualised risk is also called “skin in a game.”
The year of foundation. How long does the originator exist, when it was founded?
The credits granted.The amount of credits is in euros since the company was founded (note that the information is regularly updated by Mintos, this is not live information).
The credit-linked portfolio. What is the current lending amount in euros (note that the information is regularly updated by Mintos, this is not live information).
Outstanding credits on Mintos. What is the current amount of credits in euros from the originator remaining outstanding on the Mintos trading platform?
Annual interest rate on credits. What is the annual interest rate on credits from the originator of Mintos?
Things are quite all right. It is still easy and generally understandable. More interesting information is available on the page with details.
Detailed instructions on the originator on Mintos
To see the details, click the “details” button on the top of the page.
The table form with detailed information is divided into three sections:
- Investment structure
- Income recognition
- Amortization sequence
The investment structure
In this first section we find information about the investment structure, the collateral and the guarantees. In my experience, these are the first problems of explanation which a lot of originators are facing with. What exactly are we talking about?
That’s why let us consider to these three sections in detail.
On the Mintos trading platform you will find two different patterns of investment. These are the “direct” and the “indirect” kinds of the structure
With the direct pattern of investment you have a claim to the credit user himself, and with the indirect pattern of investment you have a claim to the loan originator, but not against the credit user.
Over and over again, now the question of what option is “better” is raised here. It is not easy to give answer to this question. In the first instance, the structure of investment shifts risks.
Each investor can decide for himself which option is “better” for him. Many investors (including me) prefer the direct claim. If the loan originator fails, you still have a chance that the credit user will continue to reimburse his credit.
However, for the indirect structure, the following section provides security.
Pledge of assets
Especially with regard to the indirect structure of investment, where the claim exists only in respect of the originator, the safety aspect is of particular importance. Therefore, for this type we can put “yes“.
Assuming that the loan originators turns bankrupt, Mintos will have the assets confiscated. At the same time, Mintos wants to ensure the discharge of our investors’ claims.
The amount of collateral is slightly higher than the amount of credit financing of the originator on the Mintos market place.
In the direct structure of investment there is no collateral of originator, since the discharge of claims will be related directly to the credit user.
At first glance, everything sounds great. It is good that Mintos easily meets this requirement. But you will first need to prove, how much this deposit costs in case of bankruptcy. This experience is still missing (fortunately).
For some originators, there is a “group guarantee”. The guarantee means that the parent company / undertaking provides a corporate guarantee. This guarantee is intended to provide a guarantee of the buyback transaction from the originator.
If something happens to the loan originator, the group of companies is involved and undertakes the commitments.
This procedure is fixed in the partnership agreements and is legally effective!
As in section 2, the issue of how really well this surety work, we be considered later.
So far so good, let us give a detailed review of the next section.
The record of the income recognition
In the second section we are talking about interest, payments and terms.
It is nice that everywhere there is a “yes”, because all originators pay interest on the schedule.
Interest income on delayed payments
Do I have to pay interest as the credit user if I run behind schedule? This is a question. If the answer is “yes’, then you, as an investor, also receive interest on receivables / delayed payments. Assuming that the credit user pays only after a month. Then he may pay interest for this month (in this case, then the interest is per default).
If the answer is “no”, you will receive interest only for prevailing / scheduled term of credit. In this case, there is no interest on debt. Even if the guarantee of the buyback transaction works.
Several loan originators use penalty fees instead of fines for delay in payment.
These penalty fees are calculated daily, and the rate of interest is shown in the table.
In the case of using the interest receipts of the fixed penalty, they will be credited to us, investors, only if the credit users transfer them. There are cases when collection of the fixed penalties costs more than the penalty itself to the credit user, then it is not chargeable.
The interest receipts of the fixed penalties are similar to the interest receipts of the past due payments. As a result, most people who apply for a credit are either charged interest receipts of the past due payments, or are imposed penalty fees.
The period of grace provides the credit user with a small buffer before the credit is marked as “Payment delay”, and he, for instance, will have to pay the interest per default. Let us presume that the next date of payment is Saturday. Even in the case when the credit user had to make the credit transfer on time (for instance, on Friday), the payment, of course, will be received by the originator in the nearest future. From a purely mathematical point of view, however, the credit should already be marked as “overdue”, and the credit user will have to pay out the penalty fee or the interest per default.
But, as we now have learned from the paragraphs 2 and 3, these penalty fees are often very low, and they are often not demanded.
To give you a little bit of freedom, there is a period of grace. Most originators offer the period of grace up to 5 days. Some of them grant a week, and some give 15 days or more, for instance, PimPay is the only leader with 30 days.
The influence on the guarantee of the buyback transaction
There are many opinions and half-truths around the period of grace. Some investors believe that the period of grace delays the guarantee of buyback transaction. This is not true! I have confirmed this statement separately in the context of this article “Mintos”.The guarantee of buyback transaction always starts on the next day after the date of the missed payment. The period of grace regulates only the period of grace during which the credit user does not have to pay any interest per default or penalty fee. In the case of PimPay with a 30-day period of grace, you will still receive the guarantee of buyback transaction from the credit user after 60 days of inactivity! If a 30-day period of grace has expired on PimPay, the Mintos credit will be marked as “payment delayed for 31-60 days”.
The influence on the fine for delay in payment
A great amount of originators charge the fine for delay in payment. How is the fine for delay in payment calculated during the period of grace?
Let us consider an example. The originator has, for instance, a 15-days period of grace and requires paying the fine for delay in payment.
The credit user misses the date of payment. Now there is the period of grace. If the credit user effects the payment within 15 days, he will not need to pay the interest for this outstanding payment. If the credit user pays only after 20 days, he must pay the interest per default for the full 20 days. Therefore, the period of grace is not a privilege for the credit user!
Currently, it is paid only from Hipocredit and ACEMA, and only in the case when the credit has the “defection” status. Then the specified fine for delay in payment (in this case 6%) will be paid for this period. By the refusal is understood the case, when the credit agreement was terminated and the process of indebtedness collection began. These are legal requirements.
The third and last section focuses on the logic of amortization and how the payments are performed.
The type of the loan
The type of the loan determines the logic of amortization. There are two types. The first type is called «Payment type» and the second one – «Entry based».
In general, the credit user has to perform the repayment. The method of accumulated amortization uses repayment to cover all components (principal sum, interest, fine, fine for delay in payment) of the oldest credit.
In the «Payment type» variant, first of all, the interest and all instalment liabilities are serviced. If the rates of interest are on the first place in order of amortization, then all the other components.
It indicates the order in which payments are effected. For instance, first to pay the interest, then – to pay the principal sum.
The summary regarding originators
As you can see, the information is not so trivial. I hope I can clarify something at one time or another. Now I am wondering whether other investors of Mintos have corrections or additions.
Also remember that, in the opinion of Mintos, a new originator joins each week. Of course, I cannot guarantee that my definitions will apply to all future originators.