Just found this (when trying to google “accredited investor”): there’s a competitor coming:
http://www.sociallending.net/news/new-p2p-lender-to-take-on-lending-club-and-prosper/
And there’s a link in that article to the wiki article on accredited investors. I suspect most of us would not qualify!!
Zounds! A million excluding one’s residence?
I’m at the point where I’m able to purchase a new note with proceeds from the previous 5 weeks. I just purchased another one with no additional investment. I’m back up to 28 notes after the one that paid off early brought me down to 27.
I could get there, but I’m not about to release my financials to anybody.
Actually looks like you can setup an account in NC now, but it states the minimum is $250 for a PayPal transfer… What happened to the $25 minimum???
ETA - My mistake - I was able to sign up, but cannot use the standard site - have to use the note trading…
I use the trading platform exclusively. Let me know if you have any questions.
Just noticed something: Apparently they’ve locked down the questions you can ask the borrower, to a handful of canned ones (that seem to correlate with the loan’s stated purpose). Which is annoying; I wanted to ask the borrower to comment on a delinquency listed on the loan page.
I’m not one of those ones who won’t ever lend to someone with a delinquency - I figure a single goof is not a huge issue; bills get misplaced etc. More than one, I’d probably run away from.
Oooh - I do, I do!
Since I’m in a state where I can invest directly, I do so. But if I were to wish to liquidate some loans, what sort of things do you look at when deciding what to purchase?
For example I’ve got a couple that are good rates (B or C class) and the borrower’s credit score has improved since the initial loan, and stayed at the improved level. I’d assume those would be more appealing and I might sell them for a little more than the loan balance?
They have indeed locked down the questions:
http://steadfastfinances.com/blog/2011/04/22/shutting-down-my-lending-club-investments/
Pure bullshit, in my opinion. There’s no privacy issue. And the list of questions is not a comprehensive one. Nor is there a way to say “dude, you didn’t ANSWER THE QUESTION”… which was the case with one loan I looked at today (the person didn’t answer the canned question that another lender had already posted).
How exactly does it work? Do you have to buy out an entire note? If so, I’m not in any kind of position financially to do that… 
Personally I won’t buy anything marked up more than say 0.5%. If you pay a premium for a loan and it pays off early, you can end up with a negative return. And which borrowers are most likely to pay off early? Those whose credit has improved. If you wait you can always find an equally good loan at a discount instead, so there is no point in paying a premium.
What I, personally, look for first is the mark up/mark down. I try to purchase all notes at a mark down. The larger the mark down, the more attractive it is to me. I will purchase a note with up to a .75 mark up, but it has to be at a high interest rate to be attractive to me as in the short term I’ll be taking a loss.
If I were selling, yeah, I’d try to get a little mark up. You can’t go too crazy though, because the note will just sit there unsold if the mark up is too high.
Just like the main Lending Club, you’re purchasing fragments of loans, not entire loans.
You have a little more flexibility on the trading platform as notes are made available for just about any amount. For example, I paid $9.85 for one of my notes. It happened to have a pretty decent discount of (1.63%).
Missed the edit window.
I also purchased a note for $97.20, which also had a decent discount. It depends on what you want.
I also only purchase notes for which at least 5 payments have been made and all payments have been made on time. There’s a ‘Never Late’ filter in the search function. I don’t really pay attention to the credit scores, unless there was a precipitous drop in the last 30 days. I’ll purchase a note for someone who’s made 15 payments and has never paid late even if their credit rating isn’t the best.
Another advantage of the trading platform is because you’re purchasing existing loan notes, you don’t have to wait for the loan to fund. As soon as you plunk down your cash, the note is yours, and you begin earning interest on it from that day, although you may not see it in your list of notes for 24 hours or so. No waiting days for the loan you’re interested in ultimately gets funded, and no chance for it not to be, and therefore, no chance of your funding attempt to ultimately be a waste of time.
A big advantage of the trading platform is because any loan note you’ve just purchased has been accruing interest charges since the last payment was made to the previous note holder, on the next payment you receive all the interest accrued since the last payment, not just since you’ve owned the note. For example, say someone holds a loan note with payments due March 1 and April 1. March 1 comes and the holder receives his payment, including interest. He then decides he doesn’t want the note anymore and places it on the market on March 20. You then come along, see it on the market and decide to purchase it on March 25. Although the previous note holder owned it from March 1 to March 25, because you purchased it before the next scheduled payment on April 1, when the payment is made, all the accrued interest gets paid to you; none to the previous note holder.
Another advantage of course is you can ostensibly purchase a loan note that has a scheduled payment of 2 days from now, thereby allowing you to realize revenue almost immediately after purchasing the note. This happened to me on one of the first notes I purchased. I was surprised to see available cash and accrued interest in my account a few days after I ‘spent’ all my available funds.
The bolded, highlighted part above is incorrect. You actually begin earning interest from the last payment date, whether you owned it or not.
Monthly Journal Note
Join date: 10/15/2010
Investment to date: $750
Payments to date: $168.81
Interest to date: $29.47
Notes currently held: 28
Current Net Annualized Return: 11.41%
Well, the money has begun pouring in. Seven loans have made their first payment giving me a grand total of $4.41 in receipts so far. Two of these seven borrowers have had a reduction in their credit score, falling two bands. One has improved their score by one band. Does the very act of taking out a loan tend to cause a credit score reduction, or have I probably picked a couple of lemons?
There might well be a ding as a result of a hard credit inquiry. That shouldn’t cause a big enough drop to make it fall two bands, unless they’ve got other stuff going on.
I have a few that have dropped 3-4 bands total; I’m watching those pretty carefully! But unless it falls over multiple months in a row I figure that it’s mostly normal fluctuations.
Oh - and they’ve added a lot more “canned” questions to the list of questions you can ask borrowers.