Can a company or trust invest through Harmoney?
Yes, companies and trusts can invest through Harmoney.
Yes, companies and trusts can invest through Harmoney.
No. Loans on the Harmoney platform are unsecured.
We expect that fees paid by Lenders to Harmoney will be tax deductible. As each Lenders' circumstances are different, we recommend that they seek independent tax advice that suits their objectives, financial situation and needs. Note: Resident Withholding Tax (RWT) is applied on gross interest with no deducting for Harmoney fees.
RAR is updated weekly with three-week lag. The specific date and time of the last update can be found beneath the actual figure on your dashboard.
Regulation requires that Borrowers are given 7 days to cancel their loan after the date of settlement. This is known as the cooling off period. If they cancel during that time, they repay the funds borrowed to Lenders and the loan is cancelled. Cancelled loans have a status of "cancelled" in the reports section of your dashboard.
When Borrowers make a repayment your share of the funds will be credited to your account the day after 3 banking days (the day the direct debit is requested is counted as a day 1).
For example, if the payment is due on Wednesday then the direct debit is requested that day (day 1). The three banking days will be Wednesday (day 1), Thursday (day 2) and Friday (day 3), which means you will receive the money on Saturday.
Please see the table below for general guidance around when to expect funds to be available in your account.
|Day the Borrower Payment is due*||Day Harmoney's banking partner receives the DD request||Day payment is credited to your lending account**|
|Saturday, Sunday, Monday||Monday||Thursday|
* This table assumes that each weekday is a business (banking) day. If, for example, Monday is not a business day (e.g. public holiday), then the Borrower's bank will not receive the direct debit request until Tuesday.
** This is the time payment can be expected. Payment could actually be received earlier or later.
When someone makes an application for credit, the institution they are applying to might run an enquiry on their credit history with the New Zealand Credit Bureaux. In the Borrower information in the Marketplace, we list the number of enquiries a Borrower has made for credit in the past 6 months. Enquiries are made not just by financial institutions but also by utility and mobile phone companies and property rental agencies amongst others.
For example, your account has $22 available funds and you receive a Borrower payment of $4, taking the balance to $26. You then lend $25 to a new Borrower, leaving a balance of $1. After this, there is a reversal of the $4 Borrower repayment (see reason below). This leaves your account with negative available cash of -$3.
If your account goes into negative, you will be unable to lend or withdraw funds until you either transfer money into your account or you receive loan repayments to bring your cash to a positive balance.
The most common reasons for reversed payments are:
Yes. The fractionalisation of small payments means that within the system, we round to eight decimal places, and for display purposes we round to two decimal places. Rounding is applied to the total sum of the eight decimal place numbers, and not each of the individual numbers.
This can result in some slight display variance, for example:
One area where this can cause confusion is when the rounded number appears to be zero, for example:
To reduce this confusion, in some cases we display these situations as <$0.01 - i.e. smaller than one cent.
A loan's Status updates before the loan transactions shown in the reports section updates. This means that the Status of a loan may not match the transactions for a short time. For example, the loan Status may show that loan/s are in arrears, but the arrears amount may be displayed as $0.00. When the loan transactions are updated, the arrears amount will update to show the actual amount in arrears.
The unfunded amount is the difference between the Protect Fee owned by a Borrower and the amount funded by Lenders. The Borrower Payment Protect Fee gets capitalised into the loan amount but is not a cash distribution to the Borrower, therefore does not require to be funded by lenders. Lenders only fund the lender fee component that is paid to Harmoney at settlement.
Take for example a loan that includes $1,000 borrower Payment Protect Fee, of which the lender fees are $350. The $1,000 gets capitalised into the loan amount but the Lender only funds the $350 of fees paid to Harmoney leaving $650 as unfunded but repayable over the life of the loan.
As the operator of the Marketplace, we take debt collections process very seriously. We follow a financial services industry process, whereby we proactively contact the Borrower whose repayment dishonours via SMS, email, and telephone to attempt to get them back on track. We manage these delinquent accounts based on Debt Collections guidelines prescribed by the Department of Fair Trading, though our own in-house collections team and our outsource partner, Dun & Bradstreet. If we are unable to collect from the Borrower within 120 days, the loan is considered defaulted and moves into a "charged off" status. In some cases, loans may not be charged off at 120 days if there is a reasonable likelihood of payments being made. If any payments are made after a loan becomes charged off, the funds are transferred to the lenders, as they still hold a beneficial interest in the Borrower's loan. You can find out more about our collections process here.
Realised Annual Return (RAR) is a measure of the actual rate of return on funds invested on the Harmoney Platform. As RAR is based on historic performance that may not be a good indicator of future returns.
In simple terms, RAR takes the income from lending (interest) and deducts the costs you have incurred (credit losses and Lender/Service fees) to provide the net return. The net return is then recalculated as an annual rate and divided by the daily principal outstanding to provide your Realised Annual Return. The RAR calculation does not currently include the complete impact of Payment Protect on your portfolio return. The formula will be updated soon to factor in all Payment Protect variables.
An arrears status indicates that a borrower has missed a repayment, so they’re behind on their scheduled repayments. Borrowers whose payments have been dishonoured are immediately contacted by Harmoney with the expectation that they’ll be able to bring their account up to date as soon as possible.
You will be repaid the outstanding principal and interest accrued and unpaid up to the date of the re-write. The repaid funds will be available in your account for withdrawal or reinvestment.
Please note that borrowers are required to make their loan repayments by direct debit, which take three working days to clear. As such, if, for example, a payment is made on Monday, then your share will appear in your Lender account on Wednesday night. The "Next Payment Date" will update to display the next payment due date before the funds have arrived in your account.
All loan applications undergo a thorough credit assessment process to determine the Borrower's creditworthiness. While we cannot disclose the full detail of the assessment process, it includes factors such as an assessment of income and financial records to determine a Borrower's ability to meet monthly payments without suffering substantial hardship; any previous failure to meet financial commitments; consistency between the information provided and that recovered from background checks; and checks for credit history issues including prior defaults or insolvencies. Harmoney then uses the result of this assessment to determine whether the loan application will be approved, and if so, which credit grade and interest rate will apply, based on the Borrower's individual circumstances.
While Harmoney has taken significant measures to minimise risks during the loan application and approval process, they do exist and should be considered. We recommend consulting a financial advisor before making any investment decisions.
The primary risk inherent in Peer-to-Peer Lending is that Lenders may not receive all of their monthly principal and interest payments due to loan defaults and Payment Protect Fees due to early repayments or repayment waiver claims.
Read our investment risks section for comprehensive information.
Some Borrowers will repay their loans ahead of schedule. In this case, the funds are returned to the Lender's account and will be available for re-investment or withdrawal. Borrowers are not penalised for early repayments of a loan.
We have set up a page about Payment Protect for Borrowers. Click here to view.
On the event of your death, ownership of your account will be transferred to your estate. Our service team will make the necessary arrangements to operate the account in conjunction with the executor of your estate.
In the event of a Borrower’s death, their estate will assume responsibility for the loan. This situation is typically managed by our collections team in conjunction with the executor of the estate. If the Borrower has Payment Protect and a claim is approved under Complete Cover, the remaining debt will be waived.
You can withdraw funds in your Lender account at any time, through your lender dashboard. You can withdraw up to the full amount of funds available in your account, however, funds that are currently invested and in funding cannot be withdrawn.
As well as manually withdrawing funds you can set up auto-withdraw function to automatically withdraw funds weekly. You can find out more about auto-withdraw here.
Harmoney has a proactive collections management process that is strongly structured and regimented. You do not have to manage collections personally. You can find out more about our collections process here.
We have set up a page about Payment Protect for Borrowers. Click here to view.
Yes, but we advise against it.
There is no interest accrued in any of the Trust accounts. Lender accounts also do not accrue interest.
Interest continues to accrue on the principal balance but does not compound.
Harmoney's license requires us to have a contingency plan in place. If Harmoney were to cease operations, a third party back up servicer would step in to oversee the completion of all existing loans. Any such appointment will not affect your rights and obligations under your loan contract, and the appointed back up servicer will have the same rights and responsibilities as Harmoney.
Practically, for you, nothing will change.
In short, it means that the borrower has requested to increase the amount they have borrowed.
Harmoney offers this option to creditworthy borrowers who have demonstrated a reliable repayment record for a minimum of three months, allowing borrowers to extend their loan amount up to a limit approved by Harmoney.
Manual Invest provides Lenders with full control over how their money is invested. It allows you to filter through available loans with specific criteria, carefully selecting notes for funding. Manual invest is well suited to ‘hands on’ Lenders.
Harmoney allows Borrowers to choose to take a personal loan for either a 36 or 60-month term, and lend for the duration of the loan term. However, as Borrowers are not penalised for early repayments, it is likely that many loans will be repaid earlier than indicated by their term. You will receive monthly repayments from Borrowers as they are received, for the term of the loan. The amount you receive per month will be proportionate to the percentage of the amount you have lent. As funds are transferred to your Lender account each month, you may choose to withdraw or re-lend them.
Harmoney doesn't have a set interest rate for Lenders, as we don't have a set interest rate for Borrowers. Every Borrower's interest rate is individually set based on their risk, and individual circumstances. As such, the interest rate you receive as a Lender will vary dependent on the loans you choose to invest in. Find out more about Harmoney's interest rates.
Borrowers are required to make their loan repayments by direct debit, which can take three working days to clear. As such, if, for example, a payment is made on Monday, then your funds will appear in your lender account on Wednesday night. The "Next Payment Date" will update to display the next payment due date before the funds have arrived in your account.
No. You will be provided with demographic information about borrowers, such as their residential and employment status, but you will not have access to any identifying information about them.
No. There is no insurance or government protection to compensate the Lender for loss in the event of a Borrower default. However, the impact of Borrower defaults on the overall performance of an investment can be mitigated by diversifying your investment across numerous fractionalised loans.
A charge off status indicates that a Borrower has defaulted on their loan, primarily due to bankruptcy, sickness, job loss, death, or other unforeseen circumstances. Typically, this means that we’ve exhausted our collections efforts and there’s a low statistical likelihood that we’ll be able to collect any funds from the borrower; resulting in a capital loss for lenders. We have forecast a 4% static loss across the portfolio over the life of the loan. This means that out of every $100 invested, you could expect $4 to charge off. Once the loan is charged off, there may still be some chance of recovery of the outstanding debt; you would see this as a loan payment against the existing loan. You can find out more about our collections process here.
We portion all loans into $25 “notes”. Fractionalisation ensures that Lenders do not have to carry the full risk of an individual loan by themselves, instead allowing Lenders to spread their risk over many individual loans.