There are some small details that you might want to understand if you invest in short-term loans, especially in loans for few days only. Understanding how interest rate is accrued and when will help you to invest money where and WHEN it makes sense.
Issues with Issue Date
I invested in loan 3889894-11. The interest rate I received from Varks was only for two days, when I expected interest for three days. So I obviously asked for explanation and this is the answer:
Please be reminded if the loan is issued and placed on our platform the same day, then there is not accrued interest for the first day of the investment. It is specific for our platform as we don’t accrue interest for the first day of the investment.Uldis (Mintos)
From this, you can easily see that investing into 7-days short-term loan on the date when it was issued will give you only 6 days of interest. While it might seem to be small rounding error, the interest you lose adds up quickly. The recommendation is obviously to invest only in loans that are at least one day on Mintos, so that you get interest for the entire period of your investment. While this is perfectly possible for manual investments, for auto invest this currently does not have any solution.
Accruals for Partial Days
Do you wonder how Mintos accounts for partial days in interest calculation? I was curious as I invest in short term loans a lot. Here, even half day of interest makes a difference for the profitability of entire investment. I asked Mintos: Given the investments are often entered/exited not exactly at midnight, how do you account for that in interest calculation? Can you provide more details on this?
And Mintos answered:
If you enter/exit an investment before 23:30 (Latvian time), the day is included in the calculation. At 23:30 we start day closing operations. Investments made after 23:30 are accounted for the next day.Elmars (Mintos)
When you should enter investment then? As late as possible, what means before 23:30 local Latvian time. This way you will still get accrued interest for the entire day.