DoFinance – buyback with a different approach

This post is also available in: Deutsch (German)

Again there is a brand new p2p platform. With DoFinance another baltic loan originator (Alfa Finance Group, incorporated in 2015) launches a platform to collect funds for their operations. This is comparable to Swaper or Viainvest from the setup (all loan originators with own platforms). Buyback is provided for all loans (although a particular kind, I’ll give more details later).
Alfa Finance funded its first loan during February 2016 according to their stats and has multipled since then (see chart below). If you check out the about us page you get a better picture who their borrowers are.

 

Buyback with a particular solution

As announced above, now we are heading towards the buyback mechanism, which is probably unique (or odd ;)). You can choose between loans with interest rates set at 6, 8 and 12 percent. Where are the differences? This is explained quite quick: Die minimum duration is 1 month for 6% loans, 2 months for 8ers and six for 12 percenters. The maximum duration is capped at 60 months for all loans. All loans are bullet and therefor now cash flow occurs before maturity (but interest is compounded, but I don’t know at which periodicity). There is no secondary market, but an early termination of the loan is possible. Sounds nice, doesn’t it ? Yes, BUT with the early termination you completely relinquish the interest (depending on the loan). The 6% loans can be called with a 14 day waiting period, but you get the complete interest for your holding period. With the 8% loans you can choose if you want your money after 14 days without any interest, or wait 28 days to get the repayment plus all accrued interest. The 12% loans can be terminated within 28 days, but you forgo all accrued interest…. Tom y knowledge there is any other p2p platform which operates this way.

General impression / risk

At the end of the day the platform looks nice and modest. The autoinvest facility does not work properly at the moment, so you need to go at least semi-manual. You set investment period and interest rate plus your amount and hit invest and all is invested, see screenshot. The site loads quickly. As always when I buyback is involved it is only as good as the party (and their financial capability) which guarantees the buyback. As of now, I don’t know how financial stable DoFinance or their mother company are, but I will try to find it out.

Conclusion

I believe DoFinance can be used as alternative addition to the p2p portfolio. One just need to be sure, that it is possible you must forgo your interest, if you need your money back quickly. It should be clear, that no one should invest money into p2p which is needed back in a short time. There are always risks within this asset class.

Maybe some of my readers have experience regarding DoFinance? Please share your opinion with us!

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