We want to announce some important updates to the Early Buyback function on Income. These changes are designed to enhance your investment experience and provide more flexibility and transparency to all marketplace participants. This change does not affect the old Assignment Agreements.
Original Early Buyback Feature
When we first introduced the Early Buyback feature, it addressed the demand for shorter-term loans by allowing Loan Originators (LOs) to set an earlier buyback date for longer-term loans. This feature has helped balance buyback events and create better demand for longer-term loans, benefiting both investors and LOs.
Key Updates to the Assignment Agreement regarding the Early Buyback Feature
- Early Buyback with Investor Consent:
- LOs now allow investors to give advance consent for an early buyback of their claims at a specified date before the final maturity date. The consent is given at the moment of the investment into that loan.
- If the LOs have cashflow delays, they may inform us beforehand and not exercise an earlier buyback on the agreed date. In such a case, the investor may not receive the money at the stated (earlier) date. The regular buyback obligation is not affected anyhow and continues to be in effect, with LOs expected to exercise buybacks at the given dates.
- The LOs understand that investors are aware of the direct link between them not respecting the Early Buyback dates and investor appetite, so they naturally aim to stick to pre-agreed dates. The new functionality is considered a remedy for the potential critical cases to provide a balanced experience to marketplace participants.
- Discount Mechanism:
- A discount may apply to the final amount paid out to the investor if the buyback is executed early. This discount depends on the proximity of the buyback date to the acquisition date of the claim or other factors determined by the LO. Meaning the interest rate received by investors may be lower if the loan gets bought back earlier than indicated.
- Any potential maximum discount rates and conditions will be disclosed at the time of listing the loan on the platform.
Practical Implications for Investors
- Transparency: You will be informed clearly about any early buyback conditions, including potential discounts, when a loan is listed. This ensures there are no surprises or retrospective changes.
- Flexibility: The Early Buyback feature provides more options to match your investment horizon and risk preferences.
- Risk Management: While the regular buyback obligation remains unchanged, the Early Buyback offers a remedy for LO critical situations, ensuring a balanced experience for all marketplace participants.
Action Required
Please review your Auto Invest filters to ensure they reflect your interest in loans with the Early Buyback feature. This update offers new opportunities to optimize your cash flows and earn attractive returns.
We believe these enhancements to the Early Buyback feature will benefit both investors and LOs by providing more flexibility and transparency. Thank you for your continued trust in Income. We look forward to seeing how these changes improve your investment experience.
So that you won’t miss anything, when any LO starts offering loans with potential discounts, we will inform investors of this separately. As of today, no loans with discounts are listed on the platform.
