Common wisdom is to immediately list notes for sale on the secondary market when they go late. However, is there wisdom in selling performing notes?
Most notes that go delinquent do so only after a number of months. If you could get the value of accrued interest + principal + 1% markup for performing, why not sell performing notes after 6 months and then repurchase new notes?
Then by the same logic, if you ever find yourself in some debt, you should always move your debt to a different lender every 6 months which should minimize the chances of you getting behind regardless of your income situation. Neat trick.
This seems similar to gambler's fallacy.
Keep in mind there is a 1% fee for selling on FolioFN. I'm selling my portfolio of notes from my taxable account to close out that account. I started with a 3.5 percent markup, on Sunday, and so far have sold 3 of my ~50 notes. I figure Ill lower my mark up a little each month until they are all sold. When my Roth gets funded I might buy some of my own notes that go unsold and eat the fee.
One of the main problems with selling performing notes is that it will probably take you a couple of weeks, on average, before the money is reinvested and earning again, so your return takes a hit.
Rather than selling all your performing notes, I'd try a strategy of watching the FICO score for a big drop or general downtrend to pick the ones to sell preemptively
As I have seen on this board..many notes sell at much better premiums than 3% so YES you can sell performing notes, they seem to like NON $25 notes more than the $25 notes.....I have sold a bunch at a premium and put money right back to work.
Not sure if it is a general situation: I sold quite a few notes when switching from a non-IRA account to an IRA account; 36-mon notes sold much faster than 60-mon notes; notes with several month history sold faster than newly issued notes.