Selling your loans can result in a loss of the original principal, as the secondary market typically does not provide a high enough premium for current loans to compensate for the non-performing part of the portfolio. Therefore, we advise to proceed with caution and not to try and sell everything at once if you see a percentage of your portfolio in default. It is likely that you will quickly sell the performing part of your portfolio and be left with the loans in recovery, significantly damaging your expected return.
Why can selling my loans have a negative impact on my net return?
When selling your loans on the secondary market, it is highly likely that this will result in reduced returns or even worse, losses. Why? Because you are losing out on the monthly interest you would have received until maturity on each loan, not to mention if you sold a loan at a discount. To avoid this and to maximize your returns when liquidating your portfolio, why not pause your reinvestments and hold the loans until maturity, taking cash out as the loans are paid back to you on a monthly basis.
If you’re unsure what to do, you should always get in touch on firstname.lastname@example.org and have a chat with one of our experienced Investor Relations Associates who will walk you through everything step by step.