Lending Club Investing: Good Passive Income Source? (Answer: NO)

[Mineralogic]

Thought all would like to see this , Lending Club reported earnings

http://www.prnewswire.com/news-rele...nces-150-million-share-buyback-300218747.html

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Greg R]

From my research on lending clubs and other private loan sites, the loans are not backed by collateral. To me, this suggests that my principle would be at risk from loss without recourse. It is for this reason "I'M OUT."

 

[MJ DeMarco]

From my research on lending clubs and other private loan sites, the loans are not backed by collateral. To me, this suggests that my principle would be at risk from loss without recourse. It is for this reason "I'M OUT."

Yup, they are unsecured which is why it's best to have 100's of loans as opposed to 2 or 3.

My predicated return is now up to 8.8%.

 

[ilrein]

What do you guys think about this European version of Lending Club?

https://www.twino.eu/

Apparently they promise to payback loans for full price and interest, if they default. Too good to be true or...?

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Mineralogic]

Yup, they are unsecured which is why it's best to have 100's of loans as opposed to 2 or 3.

My predicated return is now up to 8.8%.

its also why the rates can be very tasty vs 3.99% , etc LOL

people will still get hit big with credit issues if they don't pay their Lending Club P2P funded loan. It's not like there is an incentive to get the money and run. Again like most things in life, the laws don't apply to criminals.

 

[Greg R]

Yup, they are unsecured which is why it's best to have 100's of loans as opposed to 2 or 3.

My predicated return is now up to 8.8%.

Yea I have heard that spreading the risk out over many loan is the best way to go. Good thinking.

 

[iAmTrade]

Yup, they are unsecured which is why it's best to have 100's of loans as opposed to 2 or 3.

My predicated return is now up to 8.8%.

I'm .1% more in predicted returns : / and I've been doing this longer than you have. Sigh, newcomers...better than I already...

As to @Greg Rutkowski ...yea so what, there is no collateral. What do credit card companies do?

...they offer $$ to people without any collateral. And still profit incredibly, even after they write off a few hundred thousand accounts yearly due to defaults. They're still in business.

In some sense...

Investing in Lending Club= Being a credit card company. Without all the hassle of actually running one. I like it.

You need to remove emotion from this and view it in a mathematical sense. I'm a very analytical person when it comes to money and business.

My motto...Don't oust it until you try it.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Greg R]

I'm .1% more in predicted returns : / and I've been doing this longer than you have. Sigh, newcomers...better than I already...

As to @Greg Rutkowski ...yea so what, there is no collateral. What do credit card companies do?

...they offer $$ to people without any collateral. And still profit incredibly, even after they write off a few hundred thousand accounts yearly due to defaults. They're still in business.

In some sense...

Investing in Lending Club= Being a credit card company. Without all the hassle of actually running one. I like it.

You need to remove emotion from this and view it in a mathematical sense. I'm a very analytical person when it comes to money and business.

My motto...Don't oust it until you try it.

There should always be collateral when lending. It does not have to be monetary. I would be okay with it if an unpaid loan would go against the person credit score and Lending Club would have collectors trying to get the money. That to me is also considered collateral (collateral damage). It just wouldn't make sense if there were no consequences for the borrower to pay it back. If this is true, then "I'm IN."

Not here to pass judgement but here to learn. I've been interested in this topic for a while and am excited to debate it. I'm glad it got brought up.

 

[Mineralogic]

There should always be collateral when lending. It does not have to be monetary. I would be okay with it if an unpaid loan would go against the person credit score and Lending Club would have collectors trying to get the money. That to me is also considered collateral (collateral damage). It just wouldn't make sense if there were no consequences for the borrower to pay it back. If this is true, then "I'm IN."

Not here to pass judgement but here to learn. I've been interested in this topic for a while and am excited to debate it. I'm glad it got brought up.

um....that's part of what Lending Club does for investors. Sheesh

 

[mosdef]

ive just made a account on twino. Going to dip my toes into it. Small money, see how it goes.

Is there any way to get more info regarding the loans?

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Greg R]

Question. If you have to spread your risk out over a ton of loans, doesn't it take a lot of time to vet each loan? Just curious.

 

[iAmTrade]

You dont vet anything. And yes, lending club reports on credit scores and yes it does send accounts to collections if they aren't paid.

When I posted above- all in all- w/o the details of it all- you are the bank/cc company, you collect payment on your dues. Sometimes you get paid, sometimes you don't.

You would be surprised, how much money you can make, even if you don't get paid on a portion of your loans. If the banks get bigger/richer by this same concept, LendingClub offers you the same exact results w/o most of the hassle.




Sent from my iPhone using Tapatalk

 

[MTF]

To people who invest on Twino (@GlobalWealth, @Phones):

Over the last six months, TWINO went through an unprecedented growth path. The monthly investment volume grew from less than EUR 500,000 in September, 2015 to EUR 2,500,000 in January, 2016, and thanks to the support of TWINO investors, we expect to become one of the top 5 consumer marketplace lenders in Europe already this spring.



Monthly origination volume of our group lenders still considerably surpasses current TWINO volumes, and we will be able to provide enough investment opportunities for the months to come. However, we have to think proactively to ensure that our origination volumes can accommodate the increasing investor demand over the coming years.



Therefore, in the beginning of the year, we started working on the new loan products in our key markets, Poland, Russia and Georgia. An example of such products are unsecured consumer loans targeted at the prime borrower segment in Poland that we plan to launch this spring. Polish banks have over EUR 32 billion in unsecured personal and credit card debt on their books, and they charge 15-25% p.a. in the interest, origination and servicing fees.



We see a great potential in the prime segment, and we have the experience (we’ve operated in Poland since early 2011) and the team (the group employs over 300 people) to successfully launch and scale this product. For the investors, the prime product means availability of longer duration loans that have a considerably lower risk profile.



However, in order to successfully compete in the prime borrower segment, we need to reduce the rates offered to investors on TWINO. Therefore, starting from February 19, 2016, all new loans on TWINO will be offered with a flat rate of 10.0% p.a. irrespectively of the country of origination or loan duration. The change is applicable only to the newly listed loans and will not affect the loans listed or sold on TWINO prior to February 19, 2016.



The new interest rates on TWINO will remain to be some of the most competitive in Europe, and, in combination with the BuyBack Guarantee and currency risk coverage, will provide premium returns to investors at even lower risk.



We sincerely appreciate your contribution to TWINO development to date, and hope to see you among our investors in our future journey.



Sincerely,

Jevgenijs Kazanins
CEO

It sucks BIG time. Previously it was 12.9% for 1-month loans and 14.9% for 2-year loans, and now 10% for everything. Their explanation sounds like complete BS to me.

I guess it's time to consider leaving this platform as it's super suspicious they've made this change overnight and cite such a BS reason for lowering the rates by 30-50% just like that, with no prior notification whatsoever.

It's also worrying not only because of the decrease in the interest rates, but also because of the way they did it. It's an overnight change announced in an e-mail with a subject line "Building foundation for the future growth of TWINO." I opened it out of a habit not expecting anything important inside. Most investors will probably skip it until they see it on the page.

Way to be trustworthy, Twino.

@GlobalWealth, what do you make of it? Is Mintos any better?

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[GuestUser140]

To people who invest on Twino (@GlobalWealth, @Phones):



It sucks BIG time. Previously it was 12.9% for 1-month loans and 14.9% for 2-year loans, and now 10% for everything. Their explanation sounds like complete BS to me.

I guess it's time to consider leaving this platform as it's super suspicious they've made this change overnight and cite such a BS reason for lowering the rates by 30-50% just like that, with no prior notification whatsoever.

It's also worrying not only because of the decrease in the interest rates, but also because of the way they did it. It's an overnight change announced in an e-mail with a subject line "Building foundation for the future growth of TWINO." I opened it out of a habit not expecting anything important inside. Most investors will probably skip it until they see it on the page.

Way to be trustworthy, Twino.

@GlobalWealth, what do you make of it? Is Mintos any better?

Thanks for adding this.

On the other hand, how much does Lending Club offer? If you owned the platform and you'd have more investors than borrowers, how would you keep people from signing up in droves?

 

[MTF]

@MichaelGrey, LendingClub operates in the US with lower interest rates so you can't really compare these two options. Twino offers loans originating from Georgia where interest rate is 8% and loans from Poland where interest rate is 1.5%.

Moreover, if euro isn't your local currency or you spend more money in USD than EUR (like most people operating internationally), there's an additional currency risk for you.

Lower interest rates from LendingClub (but in USD) may be actually safer than higher interest rates (which I believe will keep going down as Twino invents new reasons to lower them) in euro.

I myself am getting out of P2P lending and focusing on hard assets that are much better for storing wealth. I liked the idea of P2P lending, but the situation with Twino has made me realize they can't be trusted. Moreover, I don't have much faith in euro as a currency.

 

[GuestUser140]

Just a small update from my side: I looked at all p2p lending platforms and researched eligibility for EU citizens. Here's the list (and a few hours worth of work):

I messaged this to someone already, it might save you some time.

Estate Guru (EE) few new investment opportunities
Mintos (EE)
Twino (EE)
Fixura (FI)
SavingStream (UK)
Fellow Finance (FI)
Bondora (EE) has gotten a bad rep lately
Viventor (ES)
Loanbook (ES)
Thin Cats (UK)
Rebuilding Society (UK)
Investly (EE)
Comunitae (ES)
Zlty Melon (SK)
Lendico (NL)
Lendix (FR)
Pret D'union (FR)

When I look at reputation and Google reviews and people's experiences, these are left:

Mintos
Twino
Fellow finance (small platform, can’t deploy as much capital)
Pret d’union (lower return)

Any additions or extra information someone picked up?

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[MJ DeMarco]

My LC return is up to 9.5% -- still no lates yet as I imagine I'm still too early in the game.

 

[illmasterj]

Bondora (EE) has gotten a bad rep lately

These guys were on my shortlist. What have you read that is bad about them?

 

[TJH]

My LC return is up to 9.5% -- still no lates yet as I imagine I'm still too early in the game.

I've used LC since 2012, and I've fully automated my buying process. In addition to the return displayed on LC, I also use XIRR as an alternative return calculation. I like knowing the ratios of "Fully Paid" and "Charged Off" to the total number of notes I've bought. If those ratios are still close to zero, then that means I haven't been investing in LC long enough.

Overall, I like LC, and the return is attractive, compared to what savings and CDs currently offer. I've kept my default + charge off ratio below 5%, and this is for someone that at one time had a -25% return... I'm above +7.75% currently.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Bananas]

If anyone has any Lending Club experiences please share with us your experiences.

I've just created an account and am looking to report my experience to determine if this is a viable passive income source.

My experiences will be reported in this thread. Please read on...

I joined Lending Club in September 2015 with a super modest starting investment of $2,500. Because I was unsure of how much time I wanted to spend doing this, I went ahead and made my account a TI so I don't have to worry about paying taxes on it. I figure if it's something I want to get into, I'll open a second, regular account at a later time.

I chose $2,500 as an initial investment because my research indicated that an investor with half a brain can't lose if they have at least 100 different loans and the lowest amount one can invest in a loan is $25.

I immediately started trying to buy a bunch of loans that fit a set of criteria, somewhat conservative, that I read about on Lend Academy. It was slow going so I went and signed up with Blue Vestment for automatic investing. I'd say signing up and setting up my filters with BV took less than 30 minutes and then I started picking up a few loans every time LC dumped some. Blue Vestment will automatically invest up to $1,000/month for free, after that there is a small fee. Because the amount I was trying to deploy was so small, I never paid a fee.

Blue Vestment is still running, and when I get loan payments, eventually they accumulate up to $25 and BV automatically picks up a new loan for me when that happens.

That being all settled, I started doing another strategy where I'm aiming to grab another 100 notes. Read about it here: http://www.lendacademy.com/innovative-strategy-lending-club-foliofn-investors/

I will say I like LC so much, that last week I wrote a check (because yes, I HAD to write a check) for another $3,000 maxing out my IRA contribution for 2015, to LC. Which means I'll be picking up quite a few more notes as soon as it gets deposited.

Here is where I am at so far:



You'll notice that since October (it takes about a month after you buy a loan to get any action) I've had 5 of my notes fully pay off. That means you make less interest.

I have 5 notes in various stages of late. There's a few more that have went Grace or Late, but then a payment came in. Apparently one should expect about 5% of their loans to go bad, so I seem to be on track for that. Nothing's Default yet, but one will be. I've got notes on one of my Lates that say the buyer filed for bankruptcy.

 

[WestCoast]

I don't do any P2P lending, nor do I have much interest in it. Seems like you guys make a good % return... (better than the bank)...

but I'm missing something.
Unless you're investing $100,000 or more at a time.... is any of this really worth the time hassle to manage it?
Someone mentioned they had 'automated' the process, so I'd love to hear more about that.

But the thought of some high net work individuals, sitting on LC and trying to find 100x $50 investments just strikes me as a fools errand.
Personally, I keep the money locked down, all cash, in a large bank.
That way, when an opportunity strikes in business, or real estate, or whatever.... I write a check and job done.

--
Warren Buffett calls cash in the bank the Call Option with no expiration date.
http://www.investopedia.com/articles/investing/042613/cash-call-option-no-expiration-date.asp


So, are you guys just spending 30 minutes a month on this, and it's sort of play money?
Even if you earn $500 a month on it, I just can't see it being worth the hassle unless it's fully automated, no?


Show me what I don't see.

 

[GlobalWealth]

I don't do any P2P lending, nor do I have much interest in it. Seems like you guys make a good % return... (better than the bank)...

but I'm missing something.
Unless you're investing $100,000 or more at a time.... is any of this really worth the time hassle to manage it?
Someone mentioned they had 'automated' the process, so I'd love to hear more about that.

But the thought of some high net work individuals, sitting on LC and trying to find 100x $50 investments just strikes me as a fools errand.
Personally, I keep the money locked down, all cash, in a large bank.
That way, when an opportunity strikes in business, or real estate, or whatever.... I write a check and job done.

--
Warren Buffett calls cash in the bank the Call Option with no expiration date.
http://www.investopedia.com/articles/investing/042613/cash-call-option-no-expiration-date.asp


So, are you guys just spending 30 minutes a month on this, and it's sort of play money?
Even if you earn $500 a month on it, I just can't see it being worth the hassle unless it's fully automated, no?


Show me what I don't see.

I know a few guys doing mid 6 and 7 figures in p2p. In fact there is a lot of institutional money invested in the big ones like prosper and lc.

Sent from my SM-G900FD using Tapatalk

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[MJ DeMarco]

Unless you're investing $100,000 or more at a time.... is any of this really worth the time hassle to manage it?

The whole point of taking time NOW w/a small investment is to investigate if it is worth a six-figure investment LATER.

I don't just dump six-figures into an investment without having a great feeling for how it works, how it needs to be managed, etc. Time spent on due diligence is not time wasted.

 

[Bananas]

Someone mentioned they had 'automated' the process, so I'd love to hear more about that.

I automated using Blue Vestment which is very easy to set up. It's also free for the first $1,000 per month so anyone who wants to dip their toes in the water and see if P2P is right for them can get started with automated investing for free. It's a very simple process to get started.

Sign up for BV and link your LC account
Set filters for loans based on your personal criteria
Add automation instructions: total dollar amount to be automatically invested each month, and loan size

LC dumps loans 4 times a day. BV bought loans for me until my account was empty of cash. When I get payments and my total cash goes above $25, as soon as that happens and a loan is available that fits my criteria, BV picks it up for me. I have had no problems with BV during the six months I have used the service.

What I learned:

I can automate the loan buying process so my cash deploys faster than if I deployed it myself
The BV automation process is solid and runs without being babysat
It is possible to deploy a large amount of money
Were I to deploy a large amount of money, automation would be pretty mandatory

 

[Bananas]

But the thought of some high net work individuals, sitting on LC and trying to find 100x $50 investments just strikes me as a fools errand.

High net worth individuals who are deploying or want to deploy six figures or more into LC or a similar platform aren't going to be interested in $25 or $50 loans.

A person with $250,000 to invest is going to be looking for $1,000 notes (for a total of 250) or $2,000 notes (for a total of 125), etc.

An investor needs diversity so that a few bad loans don't ruin their total return, the note size is dependent on the total amount invested.

These lower value notes are for those testing the waters or those with not much capital to invest.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[GuestUser140]

These guys were on my shortlist. What have you read that is bad about them?

http://p2pindependentforum.com/board/47/bondora

 

[GuestUser140]

I'm not from the Netherlands, but is this true?

Can foreign investors lend on Lending Club by depositing 100k?

https://www.quora.com/How-can-somebody-from-the-Netherlands-invest-in-lendingclub-notes

 

[TJH]

Unless you're investing $100,000 or more at a time.... is any of this really worth the time hassle to manage it?
Someone mentioned they had 'automated' the process, so I'd love to hear more about that.

This is an excellent point. If the amount of cash you transfer into a P2P system is a significant percent of the total available value of the primary and secondary markets, then you risk having your cash sitting there doing nothing. It's not uncommon for my cash balance to stick around $600 - $1,000, just because there's nothing to buy. I'm being conservative right now, due to my current risk strategy, which is to invest no more than 1% of my account value in any single loan. Once I get below that, I want to implement a secondary market strategy that will buy notes that are "In Grace Period", and then put more cash in.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[WestCoast]

The whole point of taking time NOW w/a small investment is to investigate if it is worth a six-figure investment LATER.

I don't just dump six-figures into an investment without having a great feeling for how it works, how it needs to be managed, etc. Time spent on due diligence is not time wasted.

I wasn't specifically asking you MJ, but since you responded

Listen, I still think it makes little sense. I don't believe the dynamics of you learning a $25-$50 loan are going to carry over to a $1000-$5000 loan on a P2P site. (yes, I understand we aren't discussing the total loan amount, but just your portion).

The guy looking to borrow $500 to pay for some medical bill is a different debtor than the person wanting $50k to remodel their rental.
They are different customers with unique backgrounds and goals - and I'm not sure the small scale investments teach you about the bigger ones.
Now, it's been at least a year since I poured into any of this myself, so, maybe the game has changed....

Maybe my more simple point is - I guess as wealth preservation, on a large scale at $100k+, sure, it's better than the bank, and it's probably a bit more fun than truly passive income. I get that.

But, I looked at it, and just couldn't justify the time spent, even if it was to learn.
By the time real capital is deployed, it's like fishing with dynamite. I just didn't see the return justifying the energy inputed. Even at 9.5%+.....

--
Also, on a much more simple note. You, MJ, are a very smart guy. You are the reason behind all of us being here.
I will be rather honest and say I'd much rather be reading about you doing the next *amazing* business thing, than you playing in P2P lending with the rest of us.

Maybe that's just giving you a hero complex, and I shouldn't do that, but, I think a lot of us look up to you, and what you've done.
It motivates us (me at least).

I think of you as going to mixers and meetings and networking with the next wave of internet professionals, hustlers, grinders.... the people working to make the next awesome internet things....

Not you sitting at home chasing 9.5% by lending to Joe Broke in Oklahoma.
You're amazing and you're an inspiration, maybe this thread is one of the first that doesn't inspire me (well, that float tank one was pretty weird too...) - and that's coming off here.

I just hope you're out crushing it today, keeping the beacon shining strong for the rest of us trying to emulate what you did.

 

[Mineralogic]

The whole point of taking time NOW w/a small investment is to investigate if it is worth a six-figure investment LATER.

I don't just dump six-figures into an investment without having a great feeling for how it works, how it needs to be managed, etc. Time spent on due diligence is not time wasted.

it's also extremely worth the time to look into anything outside the current bankster paradigm, endless 0% rates, rigged markets, etc.

lastly I will say this, p2p lending is on the radar of the big credit cards as I recently saw them mentioning Lending Club in marketing literature trying to get people to take personal/refi loans.