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Old 10-24-2009, 02:00 PM
drachillix is offline
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Lending Club Experiences


I stumbled across a place called www.lendingclub.com I was just curious if anyone had any experiences they would be willing to share WRT investing with them.

I thought it looked kinda neat and figured it would be a neat little retirement vehicle and opened an account with $25, added my money to a couple financing an adoption and figured I will start tossing in $25 every paycheck towards other loans if I like what I see and hear.

Thank you

Drach
  #2  
Old 10-26-2009, 12:46 PM
Mama Zappa is offline
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Originally Posted by drachillix View Post
I stumbled across a place called www.lendingclub.com I was just curious if anyone had any experiences they would be willing to share WRT investing with them.

I thought it looked kinda neat and figured it would be a neat little retirement vehicle and opened an account with $25, added my money to a couple financing an adoption and figured I will start tossing in $25 every paycheck towards other loans if I like what I see and hear.

Thank you

Drach
I'll be interested to hear what people say. Washington Post had an article a month or so ago about this:
http://www.washingtonpost.com/wp-dyn...1900124_2.html

and I was reminded of it when I saw the Kiva thread. Can you actually put in as little as 25 dollars?
  #3  
Old 10-29-2009, 07:08 PM
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and I was reminded of it when I saw the Kiva thread. Can you actually put in as little as 25 dollars?
Yup, thats all I have in, get paid tomorrow, should be tossing in another $25.

If the loan does not fully fund they kick the money back to your account to try again. My first attempt has not fully funded yet. I figure once a 5-6 months have passed it will fairly quickly get to a point where there is $25 in payments coming in that can be immediately invested in a new loan.
  #4  
Old 11-27-2009, 10:40 AM
Mama Zappa is offline
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I signed up and have now funded 125.00 in loans (the last 50 just funded today). In a month, I've accrued a whopping 48 cents, woohoo which is certainly better than the same 75 dollars would have done in a savings account.

Haven't received any payments yet - the first payment comes some time early next week. So that 48 cents is just "on paper" right now.

It's amusing watching those pennies rack up. As I have additional bits to invest in the future, they'll rack up faster hopefully. Obviously someone could default and then I'd be out my cash; the nice thing is that on any one loan I'd never be at risk for much money. Anyway, it's entertaining.

It can be annoying though, at least 3 times now I've pledged money toward a loan and had the loan disappear after all the money is available - guess the people decided not to borrow after all. At least the money gets returned and is available to put toward another loan.
  #5  
Old 11-27-2009, 07:05 PM
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It can be annoying though, at least 3 times now I've pledged money toward a loan and had the loan disappear after all the money is available - guess the people decided not to borrow after all. At least the money gets returned and is available to put toward another loan.
Most of those are not fully approved when you pledged your money. If they fail income verification or LC fails to approve them, the loan gets punted and money comes back. If you set the filters for approved and income verified there are often only a handful available because they close out almost instantly when they do from people looking to invest who know its pretty much guarenteed to finish out and be issued.

I really like it in a "playing the stock market" kinda way, you are just playing with loans. My first payments are due in a few days, I'm pretty stoked.

FYI anyone else who is interested Mama Zappa or myself can send you an invite thet will get you $25 credit to start, (wish they gave US something for a signup)
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Old 12-04-2009, 10:43 AM
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Most of those are not fully approved when you pledged your money. If they...My first payments are due in a few days, I'm pretty stoked....
Have your first payment(s) been credited to your account yet?

My first one - 84 cents, woohoo! - was due on Monday (11/30). For a day, it showed all my accrued interest (all 27 cents) as having disappeared, but no payments on my principal. Then the accrued interest came back, but still no payments on the principal. When I look at the specific loan, it shows as "current", but the payment is "processing".

Dunno what that means - whether it's normal for them to take this long, or whether the very first payment on the very first loan I funded has defaulted already. If so, oh well, that's the beauty of funding such small amounts (25 bucks). It won't hurt too much to lose it.

My next 2 loans have payments due on the 13th and 14th, we'll see how they work out.

All in all, it'll turn out to be worthwhile from an entertainment standpoint at the least.

Last edited by Mama Zappa; 12-04-2009 at 10:44 AM.
  #7  
Old 04-19-2011, 09:42 PM
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FYI anyone else who is interested Mama Zappa or myself can send you an invite thet will get you $25 credit to start, (wish they gave US something for a signup)
Hey guys, do they still do those $25 invites? If so, somebody PM me (in fact, the SO wants to do it too, so two people PM me )
  #8  
Old 11-27-2009, 07:15 PM
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It's amusing watching those pennies rack up. As I have additional bits to invest in the future, they'll rack up faster hopefully. Obviously someone could default and then I'd be out my cash; the nice thing is that on any one loan I'd never be at risk for much money. Anyway, it's entertaining.
Nice thing is, most of these folks have scary good credit, defaulting on the loan would bludgeon their credit mercilessly. So its a pretty good bet. Even the worst candidates they approve statistically only have something like a 5.5% default rate.


dunno if this requires a login

https://www.lendingclub.com/info/how...t-rates.action
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Old 11-29-2009, 08:49 PM
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Nice thing is, most of these folks have scary good credit, defaulting on the loan would bludgeon their credit mercilessly. So its a pretty good bet. Even the worst candidates they approve statistically only have something like a 5.5% default rate.
In real life, it is actually higher than that:
https://www.lendingclub.com/info/sta...ormance.action
https://www.lendingclub.com/info/dem...profile.action

This shows that as you get to the higher rate, higher risk, higher rate loans, the estimated payback drops precipitously. Of 169 category G loans, 45 are late or in default. The average return for category F is actually substantially worse than category E, despite a higher loan interest rate.

So, it's definitely NOT risk-free.

I've been sticking to category C and D for the handful of loans I've funded.

Somewhere in the info about the rate-setting process, they list an "assumed default rate" which is indeed no more than 5ish percent. Not sure where that figure comes from but it doesn't mesh with their real-world results.
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Old 10-26-2009, 08:19 PM
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I'm very interested in trying it, but I'm in a state where it's not available.
  #11  
Old 10-28-2009, 08:49 PM
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I'm very interested in trying it, but I'm in a state where it's not available.
I think you can buy notes on the secondary market (look around their website). That would appear to be the way a current loan-holder could liquidate his investment and get some / most of his/her remaining principle.

Just for yucks, I signed up today. Sent my spare 25 bucks via Paypal and added it to someone's bill consolidation loan. I figure I'll throw in 25 bucks every month or so as I have it in my small-change bank account.

In three years, I'll have about 32.50, woohoo - which won't make me rich but is better than a regular savings account.

I picked the lend-ee based on a combination of fairly decent credit score (low 700s), relatively low amount (3,000), mostly funded already (what happens if you pledge money toward a loan and they don't get funding for the whole thing?), and moderate interest rate (11ish percent).

Now here's hoping I don't screw up the accounting in Quicken. Drachiilix. how do they report the income and repayment? And how to you track it on your side (if at all)? I'm guessing we'd want fairly careful bookkeeping in case a loan goes bad and it gets written off as a worthless debt, like stock that gets cancelled can be written off as a loss?

Last edited by Mama Zappa; 10-28-2009 at 08:50 PM.
  #12  
Old 10-28-2009, 10:55 PM
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I signed up to buy notes on the used market. I think this will be even more fun.
  #13  
Old 11-30-2009, 03:45 AM
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Credit only reflects what you've done in the past, not what will happen in the future.

The thing that bugs me about this are the rates. OK I have very good credit and I'm getting credit card adverts for 1.9% interest rates. I still get offers for loans of up to $20,000 at no interest for a year, from my credit cards.

My bank will give me a small business loan for 3%.

So much cheaper credit IS available to people with good credit. So why go here, if you're credit is all that great. Seems like a bank would still give you better rates. At least my banks would do so.

I'm sure there's something I'm not getting but till then
  #14  
Old 12-01-2009, 08:41 PM
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Credit only reflects what you've done in the past, not what will happen in the future.

The thing that bugs me about this are the rates. OK I have very good credit and I'm getting credit card adverts for 1.9% interest rates. I still get offers for loans of up to $20,000 at no interest for a year, from my credit cards.

My bank will give me a small business loan for 3%.

So much cheaper credit IS available to people with good credit. So why go here, if you're credit is all that great. Seems like a bank would still give you better rates. At least my banks would do so.

I'm sure there's something I'm not getting but till then
I looked at the rates from my credit union for unsecured loans - and after making allowances for different loan periods etc., Lending Club's top of the line rates for those with stellar scores are not out of line with the credit union.

It's interesting to read how they set the rates though. You're initially slotted for a grade (A1 through G6 or some such) depending on your credit score... then they move you down a notch or four depending on things like loan amount, number of existing accounts, length of credit history, etc. It'd be nearly impossible to get their absolute best loan rate.

The credit card rates you mention are for limited periods of time, and you make one payment one day late and they go waaaay up, I suspect, so those aren't necessarily the best.

I don't know what banks' signature loan rates usually are for folks with less-perfect credit (700 for example may be good for most stuff but it's not top-notch).

Anyway - I agree that many folks *could* do better elsewhere. But for some, it's probably competitive and certainly an improvement on the credit cards' usurious rates. The majority of loans seem to be slated for that, anyhow.

For me, it's a chance to make a *small* amount of money, and have a little fun watching the numbers inch up. I don't see this being a major investment but it's got some entertainment value.
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Old 11-30-2009, 12:02 PM
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Very interesting. Looks like I can't do it in Ohio, though I'm poking around at the Note Trading Platform.
  #16  
Old 02-12-2010, 10:15 AM
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Boo! This is a great idea for me, both on the lending and borrowing side - but I'm in Indiana! I'm not allowed to participate!

Does anyone know of a group like this that is available in all (my) state? Does anyone know why/who I can talk to make this change in my state?

I'm bummed...
  #17  
Old 02-12-2010, 10:23 AM
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Boo! This is a great idea for me, both on the lending and borrowing side - but I'm in Indiana! I'm not allowed to participate!

Does anyone know of a group like this that is available in all (my) state? Does anyone know why/who I can talk to make this change in my state?

I'm bummed...
Check to see if Prosper.com takes lenders from your state. Though it's worth reading up on the issues mentioned in the article linked above.

So LC won't even *lend* to you? Interesting.

I don't completely understand why they have it limited to some states. Dunno if it's something LC can fix in time, or the state has to approve something.

On my own portfolio: I still don't know why that one loan has some collection activity already even though the payment isn't scheduled for another week. The borrower's credit score has also dropped - which may be due to this loan (increased debt), or something else entirely. I'll post once I know more about that.

On the plus side, I've got just over 4 bucks in available cash due to 5 loans paying in the last week or so, and I have 4-5 more that should be credited within the week. So I'll just need to throw another 15ish bucks to LC to fund my next loan.
  #18  
Old 02-24-2010, 09:59 AM
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...
On my own portfolio: I still don't know why that one loan has some collection activity already even though the payment isn't scheduled for another week. The borrower's credit score has also dropped - which may be due to this loan (increased debt), or something else entirely. I'll post once I know more about that. ...
Looks like this one is going south. The first payment was due on 2/19. While it always takes 4 business days to get a payment credited, right now I see several additional lines of collections activity:
2/24/10 (Wednesday) Contacted a 3rd party or borrowers acquaintance
2/23/10 (Tuesday) Collections Agency contacted a 3rd party or borrowers acquaintance
2/23/10 (Tuesday) Contacted a 3rd party or borrowers acquaintance
2/4/10 (Thursday) Contacted a 3rd party or borrowers acquaintance
2/3/10 (Wednesday) Contacted a 3rd party or borrowers acquaintance

I remember picking this particular loan because the borrower is active-duty military and I seem to recall their CO's can get in their face if they have issues in managing their personal lives.

Oh well...
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Old 02-24-2010, 01:02 PM
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Where other sites have failed, Lending Club has succeeded. See, on Prosper and that other one I can't think of right now, people bid down loans too low. People were so anxious to put their money in the pot that, like a Vegas casino, they didn't care that the odds were against them. Lending Club solved that, though. They set the interest rate and they keep it at a level that's still going to turn a profit even at historical default rates.

The tools really help too. I can break down the loans not only by credit score, but also by type. And stats are kept on each of those categories so that I can look up how much and how often these loans go bad.

I'm making money so far. It's nothing fantastic- something like 5%- but it beats a savings account and it's more fun. ::shrug::

ETA: I started in Aug 08 with $2,000. I now have $2,157, $2007 of which is still outstanding. I'll probably toss the $150 back into circulation soon.

Last edited by Chessic Sense; 02-24-2010 at 01:05 PM.
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Old 03-03-2010, 08:41 PM
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To my surprise, that loan that seems to be in trouble actually completed the first payment during the grace period. It was due on the 19th (a Friday). Typically, a payment has been crediting to my account 4 business days later, which would be Thursday the 25th in this case. It actually completed yesterday, the 2nd. There were numerous "collection actions" listed against it.
  #21  
Old 02-12-2010, 12:04 PM
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I lent on prosper for awhile. My experience was even with those with really high credit scores there was more defaults than what I was expecting (and seemingly more than what prospers statistics showed). I would get paid for several months or more, but quite a few defaulted soon after that. Many of course did pay the whole length of the loan, but overall I think I only made about 2 or 3% out of it, which just wasn't worth the risk compared to what I could make out of CDs.

Because of this relatively high risk of default, it is important to spread out your money as much as possible.
  #22  
Old 05-13-2010, 10:10 PM
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Thanks for keeping us updated on this. I am really interested in reading how it pans out, including the ups and downs!
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Old 05-14-2010, 10:11 PM
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23 loans $747, have one about to go 30 days late. To avoid mama zappas unpleasant waits for funds I set up a regular weekly draw from my checking account.

Still loving it despite worries that one loan is gonna take $45 to the great beyond...

I figure it's gonna be a waiting game, and as my portfolio grows, the occasional default will be annoying but not worrisome.
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Old 05-16-2010, 08:31 PM
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23 loans $747, have one about to go 30 days late. To avoid mama zappas unpleasant waits for funds I set up a regular weekly draw from my checking account.

Still loving it despite worries that one loan is gonna take $45 to the great beyond...

I figure it's gonna be a waiting game, and as my portfolio grows, the occasional default will be annoying but not worrisome.
Ouch - with a principal similar to what I've got invested, that'll more than wipe out your earnings to date!

It's always possible the loan will get caught up at some point. Did the loan pay on time until now? or were there any "in grace period" payments?

What sort of loan was it? A/B/C/whatever class? What was the stated loan purpose? In hindsight, does anything about it look like it should have sent up warning signals?
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Old 05-17-2010, 12:07 PM
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Ouch - with a principal similar to what I've got invested, that'll more than wipe out your earnings to date!

It's always possible the loan will get caught up at some point. Did the loan pay on time until now? or were there any "in grace period" payments?

What sort of loan was it? A/B/C/whatever class? What was the stated loan purpose? In hindsight, does anything about it look like it should have sent up warning signals?
Its a D4, business loan. It was for an expansion of an existing business, good verified income (which was like 15x what the loan payment would be), no huge flares otherwise.

It was one of my earlier investments and they made payments fine for a while, yup I will actually go about $20 in the hole overall if they default. Right now...not much I can do but wait.
  #26  
Old 07-05-2010, 11:45 AM
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How'd things work out with that D-class loan?

My very first loan, a C-1 class loan for medical expenses, is almost certainly going south - I've watched the borrower's credit rating plummet over the last few months from the upper 600s to the mid 500s. The borrower contacted Lending Club in late April (that's the notation, doesn't say what was said). And the payment that was initialized a week ago bounced on Friday. I'll be down 20ish bucks on that one if it isn't brought current.
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Old 07-05-2010, 12:00 PM
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Well I have 3 loans that I funded $25.00 in each

C Grade @14.22 has been current with no problems
B Grade @10.25 has been current with no problems

But my 3rd loan is a D Grade and they are now 31-120 days late. I expect this one to be a total loss

The funny thing is they were asking for the smallest loan compared to the others I'm invested in. 16K for consolidation.
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Old 07-05-2010, 01:21 PM
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I've spent the past two weeks doing data analysis on the loans thus far. Here's what I've learned:

* Credit Refis are among the most solid investments, along with debt consols. Those have both low default rates (approx 9%) and a robust sample size (several thousand). But there are two sneaky categories that pan out well- Weddings and vacations. Why? Who knows? My theory is that a wedding isn't just a big expenditure- it's the consolidation of two households into one. When people get married, they tend not to have kids, they tend to have jobs, and most importantly, they move in together. They only pay one rent and utility set per month instead of two.
Why vacations? I think it's because the amounts are small. It's easy to pay back a $1,000 loan. And people that take expensive vacations tend to be older and more secure in their jobs. After all, if you have no job, what's there to take a vacation from?
I still recommend sticking with the credit cards and refis, though, as they've proven themselves while the other two are two...nascent.

*Business loans and medical expenses are poison. They have defaults of over 14%!

* All the profit is in the A and B categories. You can get lucky with the C1 and maybe C2 categories if you're careful, but don't go any lower than that. The lower grades (D-G) have default rates that absolutely eclipse the profit- something like 35%! A grade loans almost never default, especially if you stick to debt sonsols and CC refis.

* The graphs of profit vs. grade looks like an ocean wave. The peaks are at the x1 and x5 grades. So if you want, say, a B loan, go with B1 and B5. For some reason, the x4 grades tend to do well too.

* Almost no one defaults in the first year. Most defaulters quit paying around month 14. The highest "default months" are 20-24. I have to look at these numbers more, because I'm not sure I did them right.

Disclosures: My portfolio has 219 loans totaling $5,800 in outstanding principle. I'm waiting on another $2,000 to go through funding. I've collected $414 and lost $201 for a net of $213 since I began investing. Right now I'm earning 10.03%


When I get back to the office tomorrow where I have the data spreadsheet, I'll post some specific numbers instead of trying to do it from memory. Good luck, everyone.

Last edited by Chessic Sense; 07-05-2010 at 01:23 PM.
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Old 07-05-2010, 01:39 PM
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The lower grades (D-G) have default rates that absolutely eclipse the profit- something like 35%! A grade loans almost never default, especially if you stick to debt sonsols and CC refis.
Maybe I am wrong to think this way but wouldn't this start to sound like a failure of lending clubs systems? If it is a viable system and I buy say 10,000 $25 loan buyins of G Class, I should still be making some money long haul if they have built their system correctly.
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Old 07-05-2010, 01:57 PM
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Maybe I am wrong to think this way but wouldn't this start to sound like a failure of lending clubs systems? If it is a viable system and I buy say 10,000 $25 loan buyins of G Class, I should still be making some money long haul if they have built their system correctly.
Depends on what you think the objective of their system is. If you think it's to make you money, you're wrong. It's to make them money. Every time they originate a loan, they get 3% in origination fees. And when the money rolls back in, they get 1% off the top of that. So that's 4% (plus the fraction of interest) that they get for every loan that goes out.

If they make the E, F, and G loans to pay 35% or higher, then they're not going to make any money. Who would borrow at that rate? Only crazy people would take that kind of rate, which means that the default rate would probably rise, causing the cycle to repeat.

The fact of the matter is, if you're borrowing at 25%, you're not going to pay it back. Period. The only way to make junk loans profitable is to not offer them at all. At least then investors are getting a whopping 0% on their money instead of the more common -9% return.
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Old 07-05-2010, 03:09 PM
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Depends on what you think the objective of their system is. If you think it's to make you money, you're wrong. It's to make them money. Every time they originate a loan, they get 3% in origination fees. And when the money rolls back in, they get 1% off the top of that. So that's 4% (plus the fraction of interest) that they get for every loan that goes out.....
Preach it!

LC's business model guarantees their profit, not the investors'. Which is fine - it's all stated right up front. They're not going to lose money - once a loan goes out the door, their profit is assured. They could in theory refrain from collections activity - it's not like their coffers are at risk anyway!

However, it's in their best interest to NOT misrepresent loans, or they wouldn't get investors, therefore no origination fees or monthly payment fees.

Chessic Sense, I'd be interested in how you arrived at the 35% default rate. LC's own figures here show that out of 210 G-class loans, 58 are late or in default (more like 28%). I guess that's not such a huge difference overall.

Something I've noticed since they started offering 60 month loans: they seem to not get fully funded. Or at least when you look at them close to their expiration date, they're often at far less than 50% funding. I wonder how that'll all work out for them.
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Old 07-16-2010, 08:12 AM
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I'm having great fun just following this thread. But then my partner is an accountant.
I have a sad life
  #33  
Old 10-12-2010, 01:53 PM
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I find this thread fascinating. Right now I'm just stashing my cash in a savings account (with as high an interest as I can find, from this link someone posted earlier) but once I have 4-6 months of reserve built up, I'll certainly be doing the Lending Club.
  #34  
Old 10-12-2010, 02:48 PM
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I think it is a neat idea. I am glad it has worked out for everyone here. Even if working out means it is fun to watch how the payments have come in, and not necessari as huge investment returns. And, for sure it has been a great read. I am glad you keep coming back to update, Mamma Zappa.

lindsaybluth, aren't you in Pittsburgh (forgive me if I have you confused with someone else)? I don't think PA residents are eligible to be Lending Club investors. I know in California they have some income rules for eligibility. I am pretty sure in Pennsylvania it is just not an option.
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Old 10-12-2010, 04:09 PM
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Blerg, I am in PA pricciar . But the website list here doesn't list PA. Do I need to join to find out if I qualify? I used the site's search function and it didn't turn up PA, but google results from a year ago say that PA is disqualified.
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Old 10-12-2010, 04:56 PM
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What are the current “State and Financial Suitability” conditions?

That link from their FAQ gives a list of allowed states and PA isn't listed.
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Old 10-12-2010, 05:16 PM
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Ah, there it is. Damn. Pennsylvania is riddled with idiotic laws, so I'm not surprised in the slightest.
  #38  
Old 10-13-2010, 01:27 PM
Chessic Sense is offline
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Originally Posted by lindsaybluth View Post
Ah, there it is. Damn. Pennsylvania is riddled with idiotic laws, so I'm not surprised in the slightest.
*cough* No one checks *cough* where you live *cough*.

Chessic Sense
Former Pittsburgh resident
  #39  
Old 10-13-2010, 01:54 PM
Chessic Sense is offline
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Figured I should give an update:

Funding 1
Issued & Current 448
Fully Paid 11
Late 16 - 30 Days 0
Late 31 - 120 Days 4
Default 0
Charged Off 1


Of those 4 late loans, 3 are still paying something, mostly interest. Overall, I guess that's a good thing for me, so long as it keeps up. I strictly do Debt Consols and CC Refis in the A and B classes. I've occasionally funded a C1 loan but anything more than that scares me.

For those just now dropping in on the thread, I caution you: earlier analysis and testimony by account managers says that most people don't defaul in their first year, and I funded most of my loans in June. Therefore, beware false confidence in my numbers. I'm sure that over the next 3 years, more than just these 4 loans will go bad, so 1% is NOT the expected default rate!
  #40  
Old 10-13-2010, 02:50 PM
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Originally Posted by Chessic Sense View Post
Quote:
Originally Posted by lindsaybluth View Post
Ah, there it is. Damn. Pennsylvania is riddled with idiotic laws, so I'm not surprised in the slightest.
*cough* No one checks *cough* where you live *cough*.

Chessic Sense
Former Pittsburgh resident
Duly noted .

Chessic, were your chargeoffs/really late stuff/defaults all in the C category? Or was there no specific pattern? Are you still keeping that 10% profit margin you listed earlier?
  #41  
Old 10-13-2010, 10:32 PM
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30 loans out right now...

After my first default charged off I went like .9% negative, that has come back to 1.9% to the good. Of course I have another $25 D Class that is probably gonna charge off too.

Over the last 6 mo or so I have bought nothing but A and B Loans and all of them are paying in a timely manner.
  #42  
Old 10-13-2010, 10:44 PM
Mama Zappa is offline
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Ouch! Sorry to hear you've got another one going south.

Is the loan officially charged off? or just way late.

My one loan that's gone bad is now 4ish months overdue (hasn't paid since May). Nothing else is running late.... yet. One loan made a large prepayment a few months ago and a smaller prepayment last month; it should be fully paid off in a couple more months if they just make their schedule pyaments.

I do have one D-class loan that's OK so far. Total of about 26 loans.

I'm not really adding new cash to the pot at this point, just letting things accrue and funding a new loan when it adds up to 25 dollars. Right now that takes just over a month.
  #43  
Old 10-14-2010, 12:20 PM
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A question for the experienced LC lenders here.

Is there a maximum I can invest across all loans? For example, can I lend $10,000 across, say, 80 to 100 loans, or is there a limit?
  #44  
Old 10-14-2010, 12:26 PM
Mama Zappa is offline
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Originally Posted by Onomatopoeia View Post
A question for the experienced LC lenders here.

Is there a maximum I can invest across all loans? For example, can I lend $10,000 across, say, 80 to 100 loans, or is there a limit?
I'm quite certain you can lend 100 or more on a single loan (which would fit the 10K/100 loan scenario).

They have people with quite large portfolios - Chessic Sense mentions someone with 7 million.

And they can take quite large deposits e.g. 100,000 at once, per some emails I've gotten. This hasn't been an issue for me nor will it be any time soon .
  #45  
Old 10-14-2010, 12:31 PM
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Quote:
Originally Posted by Onomatopoeia View Post
A question for the experienced LC lenders here.

Is there a maximum I can invest across all loans? For example, can I lend $10,000 across, say, 80 to 100 loans, or is there a limit?
I'm quite certain you can lend 100 or more on a single loan (which would fit the 10K/100 loan scenario).

They have people with quite large portfolios - Chessic Sense mentions someone with 7 million.

And they can take quite large deposits e.g. 100,000 at once, per some emails I've gotten. This hasn't been an issue for me nor will it be any time soon .
Thank you. That's good information, which, for me, begs the question, why aren't more people using LC as an investment vehicle? Even if all you could expect is, say, a 4% ROI, that's much more than you're going to get at any bank, and the more diversified you are, the less risk you take. Or am I missing something?

I'm seriously considering dumping some cash into LC. I've read the info on their website, and it seems a little too good to be true, so I want to temper my expectations with facts from the real world.

Last edited by Onomatopoeia; 10-14-2010 at 12:34 PM.
  #46  
Old 10-14-2010, 01:43 PM
Chessic Sense is offline
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Originally Posted by Onomatopoeia View Post
A question for the experienced LC lenders here.

Is there a maximum I can invest across all loans? For example, can I lend $10,000 across, say, 80 to 100 loans, or is there a limit?
Are you asking if there's a max you can have in your account or a max you can put into one loan? The answer to both is "no", unless you're a millionaire or incredibly bad at this.

LISTEN UP, though: Learn from my mistake. Only put in $25 per loan. If you feel really, really confident about a loan, you can put $50 towards it. Don't start doing that until you get at least 100 loans, though. You need to be aware of the fact that you can be one of those unlucky people that just happens to pick bad loans. Therefore, your main objective early on should be to get as many loans as possible. FORGET ABOUT PROFIT for now. Focus on getting established and diversified. Buy some A-class loans to protect yourself against loss. Then, when you get more money in play, you can start with the $50 and B4-B-5 loans.

Quote:
Originally Posted by lindsaybluth View Post
Chessic, were your chargeoffs/really late stuff/defaults all in the C category? Or was there no specific pattern? Are you still keeping that 10% profit margin you listed earlier?
The defaults/lates were C2, C1, C1, B3, and B2. The C2 one is the one that's completely late and the B2 filed for chapter 7 bankruptcy. The rest are paying lowered payments. My portfolio is perhaps 35% A-grade, and you'll notice that not a single one of them has been late yet.

As far as my current rate, I'm just quoting the number on the front of my portfolio. It's just an average of my loan's rates. It doesn't reflect losses or anything. Since I've been putting money in here and there at different rates, I can't even begin to calculate how much money I've been making. I'd guess I actually get maybe 7.5 or 8%. But it's one of those things where it spends a lot of time making a little bit more than 8% and all of a sudden, a loan goes bad and for that month, you're making -8%. It's really hard to calculate.

Quote:
Originally Posted by Onomatopoeia View Post
Even if all you could expect is, say, a 4% ROI, that's much more than you're going to get at any bank, and the more diversified you are, the less risk you take. Or am I missing something?

I'm seriously considering dumping some cash into LC. I've read the info on their website, and it seems a little too good to be true, so I want to temper my expectations with facts from the real world.
Well, for one thing, the stock market just went up by, what, 7% this summer? That's more than LC. Plus, stocks are a proven, commonly advised investment vehicle. Social lending has a reputation for huge risk.

Personally, I think LC got it worked out. They have the right process. It's succeeded where Prosper failed because they have experts setting interest rates instead of the user. That means we're all more likely to benefit. Prosper went south because the winners couldn't get their money into the market because the losers were underbidding them. The only ones making out on that deal are the borrowers.

LC also keeps adjusting their rates to reflect the situation. For example, in 2008, the rate on an A3 was 8% and a B1 was something like 9.8%. Now, it's 7.14% and 10.38%. So they're keeping the balance and making sure that those of us that are diversified are still making a profit while keeping rates down to attract more money.
  #47  
Old 10-14-2010, 02:31 PM
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Any reason not to have just class A stuff? Or would that barely pull a profit in, I suppose.

Chessic, that's all very interesting stuff, thank you! I won't be investing till I have that 6 mo cash stash, but it's all very informative. Aside from my IRA, I own a few hundred shares of Apple, so I have a ways to go at diversification. Much better listening to a wise doper than LC's website testimonials .
  #48  
Old 10-14-2010, 02:46 PM
Mama Zappa is offline
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Originally Posted by lindsaybluth View Post
Any reason not to have just class A stuff? Or would that barely pull a profit in, I suppose.

Chessic, that's all very interesting stuff, thank you! I won't be investing till I have that 6 mo cash stash, but it's all very informative. Aside from my IRA, I own a few hundred shares of Apple, so I have a ways to go at diversification. Much better listening to a wise doper than LC's website testimonials .
If you're well-enough diversified, the more risky classes can be profitable, I'd guess. But as CS mentions, older loans are far more likely to go bad, and the risk seems to be high enough to possibly wipe out profits even with a broad base of loans.

I initially did mostly B and C class loans; I have one D class and I'm sticking with A at the moment (with my one loan a month) but if I have more cash, I might adopt a scheme similar to what someone above (drachillix?): For every 4 As, fund 2 Bs and 1 C etc.

Even by LCs figures, the return plummets when you get into the riskier classes. Book interest rate soars, but returns drop. Something ain't right in the screening or pricing or whatever; I'd expect to have at least somewhat higher returns as you move down the ladder, even with higher risk. Otherwise who's going to bother?

Last edited by Mama Zappa; 10-14-2010 at 02:50 PM.
  #49  
Old 12-02-2010, 08:06 PM
curious11 is offline
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They might pay off too early


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Originally Posted by lindsaybluth View Post
Any reason not to have just class A stuff? Or would that barely pull a profit in, I suppose.
The risk with all A1 loans is that they may pay off too early. If a loan pays off early, then you will not make any money in interest.

I currently have 131 loans, 124 current, 6 paid off (3 A5, 1 B1, 1 B3, and 1 E1), and 1 late (B4 headed toward default).

Things to watch out for... Some loans have stated they own their home when in fact they were children of the owners living rent free.

My default claimed to be a chef at a 5 star restaurant.

Tip: Read the application carefully. It takes time, and it's your money.
Also, open a trading account and read some of the loans that are in default to see what those loan applications look like. It seems to me that some of those applications respond with very short answers...

Good Luck and Have Fun!

Last edited by curious11; 12-02-2010 at 08:06 PM. Reason: quote was messed up and fixed!
  #50  
Old 12-03-2010, 07:13 AM
Mama Zappa is offline
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curious11 - very good suggestion to read the info on loans being offered on the trading platform!!

How did you find out about the children of owners? did someone confess to that later on when questions were asked?
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