Lending Club: All My Deliquents

I'm back in the positive on Lending Club! That really isn't that exciting, given I had high hopes for my Lending Club loans. I have 20 loans out at $25 per loan. Thus far one of them has been "Charged off" and 1 is "31 to 120 days late."

So of $500, $50 or 10% of my original loan is gone, just due to two defaults (the late one is going to default, I'm not going to delude myself.)

The charged off note was a C rating, the only C rating I invested in on Lending Club because I wanted that 13.47% interest rate. The loan that's 31-120 days late was an "A" rating, though, with a 9.63% interest rate. It looks like on that one I'm still owed $20.70 which I will never see again.

I always liked the "idea" of P2P sites like Prosper and Lending Club but my experience on both of them has not been that great. I've pretty much lost money on both. I've been careful with my Lending Club account, only investing in "A" ratings except a random B or C when I feel inspired to lose my money. But as my A rated late account proves, even an A rating doesn't guarantee a return.

My net annualized return on Lending Club right now is a whopping .72%
That's beating my Prosper account which I've all but given up on.

Apparently I'm under performing on Lending Club:

Have you used Propser or Lending Club? What is your return rate these days?

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Watch Your Back Lending Club, Prosper is Back, at least in California

It felt like Prosper was in a quiet period longer than George Bush was in office, but the P2P lending site is now back online. I've invested with both Prosper and Lending Club, so I'm excited to continue my trial of both services to determine which is better.

The relaunch brings about some changes for Prosper. Most notably, the site has a new service that will help financial institutions take loans they've already made and resell them to Prosper investors.

Wait a minute... that kind of sounds like they're trying to sell US their toxic assets. Hopefully they're also offering up high-quality loans where personal lenders can get a piece of the action.

According to the Wall Street Journal, Prosper investors benefit with potentially higher interest rates on loans that have already been vetted by a financial institution, are current and have at least three months of payments that have already been made.

Still, risks are inevitable when you're lending to who knows who, regardless of their credit score (uh, speaking of that risk, an "A" rating loan that I had going on Prosper for a while just went late 4 of My Loans on Prosper are now Late (not counting the one that already defaulted) -- 3 of those 4 Loans are "A" rated and one is "B" rated -- they were fine before Prosper relaunched - wonder if they hadn't been updating defaults in their quiet period. Starting to think P2P lending is a bad idea!)

According to the WSJ, the average lender return since the company's inception in 2006 is 2.8%, after defaults. But since March 2007, when the company starting providing more information about borrowers' credit and employment histories, average lender returns have improved to 4.8%.

Since Prosper's Securities and Exchange Commission registration process is still going on, it is operating under an intra-state exemption from the California Department of Corporations. That means that, for now, only California residents and businesses will be able to lend or invest in Prosper loans, although borrowers nationwide can apply for a loan. Once the company completes its registration process, other financial institutions and lenders in other states will follow, says Chris Larsen, Prosper's chief executive.

Haven't read anything yet about that ridiculous $100k networth (beyond your home price) to be a lender, like the rules over at Lending Club. I wonder if Prosper has added that in the fine print. I'll let you know if I find out anything more.

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Lending Club: Thumbs Up

I'm liking Lending Club thus far. If you've been reading my blog for a while, you already know that I was pretty happy over at Prosper lending out money at good rates to borrowers, but then Propser went into a quiet period and I was left with no where to lend my money... or so I thought. Then I found Lending Club. I have $250 out right now at an average rate of 11% - which is way better than what the stock market is doing.

One thing I haven't focused on much is how great these P2P lending sites are for people who need to borrow cash. Apparently it's near impossible to get a loan these days, even if you have good credit. And even if you do get a loan, the rates suck. If I needed cash, I'd definitely look into borrowing through Lending Club. Actually, as a borrower I don't see a reason not to borrow through lending club if you have a decent credit rating. The risk in Lending Club comes from the lender, not the borrower. Just pay back the money on time and it's a good deal all around.

The latest deal I read about for those with good credit? Personal Loans at rates as low as 7.88%. Borrow up to $25,000.


Have any of you used Lending Club as a borrower? What have your experiences been?

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Lending Club: First Impressions Part III

So it's been a couple of days since I signed up for lending club, and put in my bid for two notes. The problem I'm having is that I can't seem to find where those bids live in this stage prior to funding the loan. I can search for new notes, and I see that I still have $50 in my account that hasn't been used - but I know I have two bids waiting to go through. I want to check the status on them, but can't find them. Do any of you know where I can do this on LendingClub.com?

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Lending Club: First Impressions Part II

I haven't made my first loan on Lending Club, but it seems I'm set up and ready to go as soon as the loan is funded. One very distinctly different thing about Lending Club versus Prosper is the lack of "person." That is, on Prosper you get photos of smiling people (often with cute little kids) to tug at your heart strings and make you want to "invest" in them, even when you shouldn't.

On one hand, I like that because it makes me feel ok about defaulting every once in a while... I feel like I've helped someone out, even if I lost my money. At Lending Club, I'll probably be a lot more upset if someone defaults... because there it really sets you up to be a bank, not a charity. Which is fine, it's how P2P lending should be, I'm just not used to it being that way.

So I've picked my "notes" -- which seem to be set at $25 each (I don't understand how to put more money into a note yet, or if I need to buy multiple notes at $25) and now I guess I just have to wait for them to be funded for the loan to begin.

Since I'm using "free" money I went for a little more risky loans... a C1 rating and a F3 or something... the rates average to 15% or thereabout. I'll give these loans a little while before deciding if I want to put any of my tax refund into P2P. I know P2P is going to be big in 2009 and surely Lending Club will profit from it... I'm just not so sure I feel comfortable with the risk, especially as everyone seems to be losing their jobs, houses, and ability to pay off debt.

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Lending Club: First Impressions

The Internet is a wonderful place. Thanks to a few tweets back and forth with the CEO Director of Product Strategy for Lending Club, I landed myself a few bucks in my account to test out the growing P2P site. I've invested about $500 into Prosper over the past two years, but it's in a silent period now and I've got a hankering for P2P lending, so it makes sense to try out the ever-popular lending club.

I haven't done much so far. Signing up was easy (then again, I remember signing up for Prosper was easy too. It's always easy to sign up when the company wants you to give them your money.) The interface is nicely designed and clean... at least from a noob perspective.

I'm about to make my first loan... I just need to figure out how to do that. It seems like the rates are set by credit scores and such, as opposed to somewhat randomly ala Prosper. I guess that's good? I failed at Prosper by lending $50 to a person with a B credit rating who was looking for money to study abroad. It was her second time posting the listing. Yea, that one defaulted. Everyone else has been paying on time. I'm not seeing the interest rates I'd like... even though the performance is still wayyyy beating all my stocks.

Ok, so I'll write more about Lending Club once I've figured out how to pick my loan(s). They first took me to a page that - similar to Prosper - would set up an investing plan for me based on my desired risk allocation. I never used that on Prosper... I like to hand-pick my loans. So that's what I'm going to try to do... I'll report back when I figured it out and get my first loan set up.

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