Auto Purchase is a lending assistant to help you lend your fund based on the instructions or filters you have determined. Through this feature, Lenders can determine loan preferences based on Loan Type, Grade, Tenor, Return Method, Funding Amount and the feature will automatically distribute the fund.
In order for the Auto Purchase to run smoothly, the Lenders must have an Available Funds (KOIN or transferred funds) beforehand.
Later, whenever a loan is in accordance with the preference issued to the KoinWorks platform, the predetermined amount of funding will be automatically distributed.
RoboLending is an automatic lending feature powered by innovative machine learning technology that was developed specifically for Lenders to automate their funding activities so that the predicted interest rate can be achieved in a predetermined tenor.
Through RoboLending, KoinWorks’ technology will spread the fund transferred by the Lenders into various products on KoinWorks so that the predicted interest can be achieved. Lenders can also enjoy a very practical lending experience. Distribute your funding through RoboLending and let machine learning automatically manage your fund for you.
The Provision Fund will continue to apply in loans funded through RoboLending so that their security can still be maintained and losses can be minimized.
Yields from RoboLending will be received at the end of the non-tax tenor (lump sum), including service fee deduction and other fees excluding taxes.
The Comparison Between Auto Purchase & RoboLending
|Return||Depends on products||Lump sum|
|Interest Rate||Combination of loan lnterests||Predicted|
|Lending Value||IDR 100,000 and its multiplies||IDR 100,000 and its multiplies|
(*) must determine the amount of fund and loan preferences beforehand
Earning through Interest
The concept of charging interest rates is as old as the history of banks, and is now a common concept. Banks earn their income from the interest rate spread they get from their borrowers and their savers. Banks essentially borrow money from savers to lend to borrowers.
Savers earn interest for the money they keep in the bank. However, because of the effect of inflation, savers usually lose money because the interest rates are often too low. Thus savers often have to fund their funds in assets that are higher yielding.
Risk & Return
A common concept, higher perceived risk usually requires a higher return. While it is not always the case, this is usually the norm. While saving deposits and government bonds are one of the safest assets, they also offer the lowest potential returns.
Stocks or equities are then the next level of risk/reward lever, with complex financial products such as derivatives with the highest level of risk/reward.
Peer-to-peer lending would fall in between risk/reward level of deposit / bonds and stocks. It offers higher interest rates than deposits but with less volatility than stocks.
Why does KoinWorks Display Effective Interest Rate on the Browse Page?
On the Browse page, the effective interest is seen immediately when you open the page.
The interest percentage rate is the indication of how much interest a Lender who lent in a product with a certain Grade/interest rate and then revested the return into other products with similar Grade/interest rate will gain.
In short, like this:
A Lender lent his/her fund in a Grade B1 loan with an annual effective interest rate of 18.52%. A month later, the Lender earned the yield.
If the Lender re-lends the return into similar loan i.e. Grade B1 loan with an annual effective interest rate of 18.52%, then the Lender would potentially earn the increment in his/her funding value as much as 18.52% in just 1 year.
Because every Lender can make use of compounding effect on a monthly basis (KoinWorks' compounding period is monthly) with relatively small starting amount i.e. IDR100,000, so what's shown is the effective interest rate because every Lender has the potential to earn that effective interest rate percentage.
How to See the Flat Interest Rate?
KoinWorks also includes the flat interest stated on the profile / details of each loan with the monthly repayment method. Click (tap on the mobile screen) on a particular loan and Lenders will find out how much the flat interest rate of a loan.
Please keep in mind that both effective and flat interests shown are annual interest rates.
As for loans with lump sum repayment method, the interest stated is always flat interest.