Loan risks are the ways a loan can cost you gems or cosmetics: gems for one side and cosmetics for the other. This page lists exactly what can go wrong so you can decide whether a loan is worth it. The rules apply to every loan; none can be negotiated or reversed afterwards.
See The Loan Marketplace for the full mechanics, Borrowing Gems and Lending Gems for the flows.
Risks for borrowers#
| Risk | What happens |
|---|---|
| Cosmetics are locked | From the moment you create a proposal, the collateral leaves your collection. You cannot sell, gift, list, wear or re-use it, and placed furniture is taken down. It is locked even while the proposal is still unfunded, for up to 1 day |
| You lose them on default | If the loan is past its due date and you cannot pay, every collateral cosmetic moves to the lender. This cannot be undone |
| No grace period | After the due date the system checks every minute. If you have enough gems it takes them and repays the loan, then returns your cosmetics |
| No partial payments | You repay the whole amount at once or not at all; a balance short by a single gem at the due date means default |
| Fees reduce your proceeds | The 1% server fee (rounded up) is taken from the amount you receive. On a 100 gem loan you receive 99 |
| Interest always costs something | Even instant repayment costs 10% of the full-term interest |
| The rate is a share of the loan | A 100% rate means you repay double if you wait until the end of the term, whatever its length |
| Collateral may be worth more than the loan | There is no minimum coverage. Nothing stops you locking a rare cosmetic for a small loan, or the lender keeping it if you default |
| Credit score damage | A default lowers your score on your profile and on every future proposal. The score weighs amounts, so one large default outweighs several small repayments |
What a default looks like#
- The due date passes with the loan still ACTIVE. Your card shows OVERDUE and "Pay now".
- Within a minute the system tries to repay for you from your gems.
- If it cannot, the loan becomes DEFAULTED, the cosmetics are added to the lender's collection and a message announces it to players online in game chat and in the community Discord. Neither side gets a personal message.
Risks for lenders#
| Risk | What happens |
|---|---|
| You get cosmetics, not gems | On default you receive the collateral, never a cash refund. Its value is whatever it sells for |
| Value estimates are only estimates | The site prices collateral from the lowest current marketplace listing. A cosmetic nobody lists is Unpriced; one with few buyers may take a long time to sell |
| Your gems are tied up | The full amount leaves your balance when you fund and returns only on repayment or as collateral |
| Early repayment pays little | Interest scales with how much of the term has passed, with a 10% floor |
| Credit scores are history, not a promise | A first-time borrower has no score. A high score shows past repayments only |
| No choosing collateral later | The collateral is fixed when the proposal is created |
| Expired and cancelled proposals | If the borrower cancels or the proposal expires before you fund it, nothing is taken from you |
Risks for both sides#
- Finality. Funding, repaying and default transfers happen immediately and there is no undo.
- Trading restrictions. An active ban or blacklist blocks creating, cancelling, funding and repaying loans on the website. The automatic due-date check still settles running loans, so a banned borrower who cannot repay by hand can still default.
- Public record. Loan creation, funding, repayment and default are announced in game chat and on the Discord with the players' names, and every repayment and default counts toward the borrower's credit score on their profile (Player Profiles).
How to protect yourself#
- Borrow only what you can repay, with a margin of gems in your balance for the due date.
- Repay early when you can: interest is pro-rated by the share of the term used, so paying before the due date costs less.
- As a lender, check the collateral's coverage label, the borrower's Credit score and Defaulted count, and look at their profile before funding.
- Use Browsing the Marketplace to check what the collateral actually sells for.
See also#
- The Loan Marketplace for limits and fees.
- The Website Marketplace for selling collateral you receive.