The Bondora Penalty Payments Mystery
Here’s a chart showing how important the penalty payments were compared to interest payments on Bondora. Every bar is one month since 2009.
As you can see, there seems to be an increase up to month 47 (December 2012) and then the penalty payments decrease in importance compared to interest payments. Before 2013, penalty payments were about the same size as 5% of interest payments. Since the beginning of 2013 to now (November 2014), they only represent about 2% of the size of the interest payments.
This leads us to two possible explanations. Either borrowers suddenly collectively reduced their penalty payments (very unlikely), or Bondora changed the way it accounts for penalty payments.
How is that possible? When a borrower sees that he has for example 50€ to pay, he just sees this one number, and pays it. Whether 40€ of that are for principal, interest or penalty payment is none of his concern – Bondora decides how to allocate the payment he makes to the three different categories, and this has an impact on the statistics that they provide.
Why would they change their accounting system? One possible explanation could be to reduce the amount of penalty payments to make them look smaller, because a lot of penalties means there are payment problems and delays, which could cast a negative light on the quality of borrowers on Bondora.
I do not, however, know whether Bondora in fact did change their acocunting system, and if they did, whether it was to reduce the size of penalty payments or for some other reason. This is all conjecture, but it’s interesting to look at data like that, which is only possible because Bondora openly share their data with everyone in the DATA EXPORT section. So they try to be transparent.
What do you think? Let’s hear your opinion in the comments.