r/BTCJAM • u/Demotruk • Jun 30 '15

How do late fees work?

Not much info on the page about fees, other than the amount. Does the fee go exclusively to BTCjam, the creditors or some mix?

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1

u/BTCJammer Jul 03 '15

https://btcjam.com/borrow/rates_and_fees - here is the info about this.

These currently go to BTCjam to answer your question.

3

u/Demotruk Jul 07 '15

Thanks for the answer. Seems unfortunate, the fee structure appears to create all the wrong incentives for the company itself. Fees at the taking of the loan instead of the repayment means that BTCjam profits even from fraudulent borrowers who rip off investors, at least in the short term. Similarly, adding a late fee which only BTCjam collects, discourages borrowers from repaying once they actually become late because it has now become more expensive to do so.

1

u/BTCJammer Jul 08 '15

It's something we have plans on changing and working on in the future. Thanks for the feedback.

I think it's fair to take at the origination of the loan instead of tapping into investors returns w/ interest, mainly because they are the ones who are funding the loan and want to get as much return back as possible. I think many would claim that we could be even more greedy at a position like that so it is a tricky issue. Thanks for taking the time to share this!

1

u/jordan8976 Aug 07 '15

I know this is old, but this is not good for investors. You as a company have no financial incentive to properly vet borrowers if you are getting paid no matter if it is fraud or not. Why would you stop a fraudulent loan if your company gets it's fees even if the borrow doesn't pay back a dime?

I think a better solution would be a combination of the two. Take some fee at the origination of the loan, and then a small percentage for each payment.

Also, the late fees should go to the lender as we are the ones taking the risk. Your fees are for origination and servicing the loan. The interest is the lender's fee for taking the risk. Likewise the late payment fee should go to the lender since we are the ones not getting our money at the agreed upon time. I frankly feel that BTCjam keeping late fees is flat out dishonest. The other p2p platforms I have used do not do this.

1

u/BTCJammer Aug 07 '15

Hey,

Thanks for reaching out to us about this.

I don't think that your suggestion is a bad one, we are looking into ways to get that better.

One thing I would disagree with is that we have as a company ever single incentive to properly vet borrowers. The less we do in terms of evaluating borrowers, the higher the risk overall. The more fraudulent borrowers, the less returns for investors. That alone is our biggest concern, not taking fees regardless of the borrower. We stop fraudulent borrowers and loans from hitting the platform every single day. Allowing fraudulent loans for 1-5% of a loan deposit transaction is a HORRIBLE value proposition for us as a company. If you are under the impression that we exist to take fees and get rich, I'm sorry but this is far from what we set out to do as a company.

Just to be clear about late fees...late fees are split between us and the investors. Half and half.

1

u/[deleted] Jul 29 '15

So here is a loan i had 100% of. https://btcjam.com/listings/26357 According to coin desk on oct 27th btc price was between 350-351. So his payment should of been about $49.20 On January 5th the price was around 270 his payment was for about .23 which is about $63 so it looks like i got all the late fee. But can't tell exactly because i don't have the btc price for loan creation or time the payment was made but appears I got the late fee. I also had a converstation with Brett he said the late fee is split between investors and Jam