Why is it worth waiting?
Chain Finance has recovered 100% of its loans issued to a Latvian forestry company, and thus all Debitum investors have been credited with full principal amount, interest, and, wait for it, penalty amount for being late.
So what’s the fuss?
This loan was late by 75 days, and we will tell you why it was a good thing in the end!
Why was the loan late?
This was a bridge loan for the forestry company while they were changing their bank to another one with better credit line conditions. Switching banks took so long because of unexpected bureaucracy at the banks and also bidding wars – the old bank wanted to keep them as clients and proposed a counter offer, so they took time to negotiate the best deal.
What’s the benefit?
Here at Debitum, we ensure you get rewarded for waiting longer than the initial maturity of the investment. Let us explain how.
There is a set limit of a grace period, which for product claim rights was usually 10-35 days, during which interest rate still is calculated. Please note that the currently available ABS grace period has been decreased to only 7 days. Once the investment gets past the due date, an additional penalty fee is charged from the loan originator, and you as an investor earn more money.
Let’s look at the case:
The initial maturity date was March 31st, a grace period of 15 days ended on April 15th, and final repayment to investors was made on June 14th. On top of the regular interest between April 15th and June 14th, investors received an additional penalty interest of 15%, making total income for the given period of 61 days a whopping 23% or 23.25%.