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.
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.
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!
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?
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.
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.
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 :D.
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.
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.
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.
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.
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?
Wow - that’s definitely changed. When I first signed up, you could transfer any amount via Paypal. Maybe that was because I signed up “cold” without such a transfer. They only wanted you to do Paypal for a limited time, however. I hated having to set up the bank account because Paypal was instant gratification, but the bank account takes 3-4 business days to add money.
If you had to link a bank account to take the hundred bucks, you should be able to transfer any amount that way (I just transferred 15 dollars and have done less than 5 when it was what I needed to top off some accrued payments).
I’m considering signing up as well. So if someone wants to send a link to me I’ll use it to give this a shot. I’ve got some extra money from eBay sales and would be willing to invest $250 to try this out.