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.

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

We are updating RAR once a month. 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 back 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).

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 requestDay payment is credited to your lending account**
Saturday, Sunday, Monday Monday Thursday
Tuesday Tuesday Friday
Wednesday Wednesday Saturday
Thursday Thursday Tuesday
Friday Friday Wednesday

* 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 Bureaus.​  In the Borrower information within 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. ​

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.

Why is my account showing a negative cash balance?

Your account balance can go negative in certain scenario's when Borrower payments to you are reversed and there are not enough available ​funds in your account to cover them. The most common reasons for this are:

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

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.

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 number.

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 update. This means that the Status of a loan may not match the transactions for a short time. For example, the loan Status may show arrears but the arrears amount shows $0.00. When the loan transactions then update the arrears amount will update to shown the amount in arrears. 

What is the unfunded amount on Payment Protect loans?

The unfunded amount is the difference between the loan amount owned by a borrower and the amount funded by lenders. Take for example a $11,000 loan that includes $1,000 Payment Protect Fee. The unfunded amount on this loan is $11,000 - $10,350 = $650. The lender only funds $10,350 ($10,000 paid to the borrower on settlement + $350 Payment Lender Protect Fees paid to Harmoney) of a total loan amount of $11,000.

How does Harmoney handle collections?

As the operator of the marketplace, we take debt collections process very seriously. We follow a defined 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 through 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.

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.

Has Payment Protect launched for Lenders yet?

We beta-launched Payment Protect with our some of our Institutional Lenders. We want to ensure everything is running smoothly and accurately before you launch it to our full Lender market.

When will Payment Protect be open to retail Lenders?

We expect this product to be available by approximately mid-to-late 2016. But don't worry; we will notify you as soon as we can with an exact date.

Where can I learn more about Payment Protect?

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

How does Harmoney assess the credit risk of borrowers?

All loan applications undergo a thorough assessment to discern 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 their ability to meet monthly payments; 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 successful, and if so, which credit grade and interest rate will apply.

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. 
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.

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 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.

How do I withdraw funds from my account?

You can withdraw funds sitting 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.

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.

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.

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?

Yes, interest will compound on unpaid amounts.

How is forecast annual return (FAR) calculated?

This is the forecast annual return of the notes in each order. It is calculated by taking forecast net return and dividing it by the outstanding principal, and annualising it. Forecast net return is calculated as interest less losses due to default and service fess. Defaults are calculated as the percentage of outstanding principal that is forecast to be written off over a 12 month period. 

The calculation assumes that the loan goes to full term and does not rewrite.

It is important to note that FAR is a forecast based on expected performance of your order, not the actual performance. This means that actual return may be different from the return forecast.

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.

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 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.

What's the minimum investment term?

Harmoney allows borrowers to choose to take a personal loan for either a 36 or 60-month term, and investments are made for the duration of the loan. 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 made, for the term of the loan. The amount you receive per month will be proportionate to the percentage of the loan you have invested in. As funds are transferred to your Lender account each month, you may choose to withdraw or re-invest 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, 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.

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.

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 investment 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 does it mean when I have a “Charged off” loan?

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.