Lender FAQs

Can a company or trust invest through Harmoney?

Yes, companies and trusts can invest through Harmoney.

Is security required on loans?

No. Loans on the Harmoney platform are unsecured.

Are the fees I pay Harmoney tax deductible?

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.

How often is my personal Realised Annual Return (RAR) figure updated?

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.

Why have loans I have invested in been cancelled?

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.

How long does it take for a Borrower payment to show up in my account?

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.

* 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.

What does ‘No. of Enquiries’ refer to?

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.

Why is my account showing a negative cash balance?

Your account balance can go negative in certain scenarios when Borrower payments to you are reversed and there is insufficient available funds in your account to cover them.

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:

• Late Borrower dishonours after the 3 business day clearing period.
• Loans cancelled in the 7 day cooling off period required by regulation.
• Borrower initiated payment clawback after the 3 business day clearing period.

Does Harmoney use rounding when displaying payments?

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:

• $0.31456122 = $0.31, but;
• $0.31456122 + $0.31456122 = $0.62912244 = $0.63 (as opposed to $0.31456122 + $0.31456122 = $0.31 + $0.31 = $0.62)

One area where this can cause confusion is when the rounded number appears to be zero, for example: 

• $0.00003145 = $0.00

To reduce this confusion, in some cases we display these situations as <$0.01 - i.e. smaller than one cent. 

Why does the arrears amount shown in the reports section not match the loan status?

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. 

What is the unfunded amount on Payment Protect loans?

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.

What is Realised Annual Return?

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.

You can find out more about RAR here.

What does it mean when I have a loan in “Arrears”?

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.

What happens when a loan I have invested in is rewritten?

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.

I have not received the money on the due date?

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.

How does Harmoney assess the credit risk of Borrowers?

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.

What are the risks?

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.

What happens if a borrower repays early?

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.

Where can I learn more about payment protect?

We have set up a page about Payment Protect for Borrowers. Click here to view.

What happens in the event of my death?

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.

What happens in the event of a Borrower's death?

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.

How do I withdraw funds from my account?

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.

Does Harmoney collect on my behalf or do I have to do my own collections?

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.

Where can I learn more about Payment Protect?

We have set up a page about Payment Protect for Borrowers. Click here to view.

Can I be both a Borrower and a Lender?

Yes, but we advise against it.

Do funds in Harmoney's trust account earn interest?

There is no interest accrued in any of the Trust accounts. Lender accounts also do not accrue interest.

Do Lenders earn the compound interest charged on overdue loan repayments?

Interest continues to accrue on the principal balance but does not compound. 

What happens if Harmoney goes bankrupt?

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.

What is a loan rewrite?

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.

What is Manual Invest?

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.

What's the minimum lending term?

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.

What interest rate will I receive?

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.

The Borrower payment date is due, but I have not received the funds into my Lender account.

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.

Will I know who the borrowers are?

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.

Is my lending insured?

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.

What is a charged off loan? – Collections Process

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.

A charged off status indicates that a Borrower has defaulted on their loan, usually 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.

Once the loan is charged off, there may still be some chance of recovery of the outstanding debt via Debt Recovery; you would see this as a loan payment against the existing loan.

How does fractionalisation work?

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.