Income investors always seek opportunities to balance risk and reward. When analyzing the behavior of investors on the Income platform, we noticed a strong demand for shorter-term loans. Investors seem to prefer loans with a term that is shorter than 16 months.
To better serve Loan Originators (LO) with longer-term loans, Income is introducing a new feature called “Early Buyback.” With this feature, when listing the loans, the LO can define when the system triggers the normal buyback process. This feature will help to spread buyback events evenly and provide better demand for LO with longer-term loans. The payment schedule and investors’ payments follow the original installment schedule until the loan is bought back on the set date. Interest is accrued on a daily basis as before.
Once the loan is bought back, it can be re-listed on the platform, and the loan can be invested in again. This new feature allows investors to choose loans that fit their investment horizon. For loans listed using the Early Buyback feature, investors will see a new “Set Buyback” section with a date indicating when the system will trigger the buyback.
The first adopter of this feature is Hoovi, an SME lender who has started listing 3-year term loans with an “Early Buyback” set to 12 months. Hoovi plans to list €200,000 worth of loans with an 8% yield using this feature. As one of the first adopters, they will monitor investor appetite for these types of loans and make necessary amendments.
Please review your Auto Invest filters to ensure they reflect your interest in Early Buyback loans. With this new feature, Income hopes to provide more opportunities for investors to earn attractive returns while managing their risk.
In conclusion, Income’s Early Buyback feature is an exciting addition to the platform that will benefit both LO and investors. We look forward to seeing how this feature performs and how it will help investors to optimize their cashflows.