Any Lending Club experiences?

[Reefbreak]

I was looking for somewhere relatively safe to park money that I made from selling my old company's stock prior to it imploding. Not sure if I was smart or just lucky... :banana:

Since I think the stock market is a bit risky right now other than for perhaps very experienced day and/or short-term traders, I ended up putting quite a bit into a GNMA fund for now.

But during the process, I stumbled upon "The Lending Club"... a social lending network that boasts about a 9% average return. I spent some time looking at the pros and cons, and at the end of the day, decided it was not right the option for me. I was not comfortable investing maybe more than a few thousand dollars with them given the number of quality borrowers. It did seem perhaps worthwhile for someone who wanted to invest only a thousand or two and divided it up amongst many loans.

I was just curious if anyone else had looked at this investment option.

 

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[scottiek]

I've invested in both Lending Club and Prosper. Prosper is not taking new lenders right now while they work some stuff out with the SEC.

I have 6 loans that I've invested in through Lending Club. Just over 9% average interest rate. So far, no late payments.

If you are looking to raise money, you'll probably get a better rate at Prosper, but as a lender, Lending Club has much higher quality of borrowers and they set the interest rates better than Prosper which lets the market (aka, people who don't know jack about credit risk) set the rates.

 

[Margie Jerri]

• Easily build a portfolio based on your criteria. You decide where to direct your investment
• Most investors spread their investment across tens or hundreds of notes..

 

[GuyJeb]

Just bumping this because I am interested.

 

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[yahdmon]

Well, I signed up to lend on Prosper and they sent me a free credit score. :eusa_clap:

 

[GuyJeb]

OK, I guess I'll put in my two cents first

I have been a part of Lending club for a few years now. I started with $600 as a test for about a year and it was a good outcome (for slow lane). Because of this, we have gone ahead and stopped moving funds into an IRA (we had 1 IRA, 1 pension fund, and lending club going) and moved it to Lending club instead. Out of 240 'notes' invested at $25-$100 each, over the course of 2 years, we have had 1 default, and 4 late notes on a 'net annualized return' of 15% average. 15% is the "higher risk" side of Lending club.

Notes consist of 3 years or 5 year loans that you "contribute" to. If you need your money back sooner than that, they have a "trading" platform where you can sell your notes off to other buyers for same, lower, or higher price. They are FDIC insured up to the limit.



All in all, in my opinion, if you were considering Stock markets + Diversification, this seems waaay better, and waaay safer. I wish I had $600,000+ to invest in Lending club notes. The interest payments alone would match my current salary. But for Fastlane Forum people, this seems like a better place to invest part of your recently attained millions for a steady flow of income by interest. Not really a place to generate those millions though, as this seems like little faster than slowlane..

I'd love to hear what others think of these peer to peer lending sites.

-GuyJeb

 

[treinjapan]

A long time ago I was very interested in Prosper and Lending Club, but at the time there were just too many risks involved. Most people at the time were working quite hard to come up with a small return on Prosper because of all the defaults.

After being reminded of P2P lending by this thread I did a lot of research around the internet. Apparently there are a lot of personal finance bloggers that have given LC a shot, and come back with good results. It seems that it's actually not that risky as long as you're willing to spend some time and spread your money out over many borrowers.

Seems to me like most people are going in with $5-20K and pulling 8-14% returns, which sounds great to me right now. Some of the bigger lenders are doing very well for themselves too

I've gone ahead and moved some money into LC to set up an account. Will keep you updated!

All that being said, I don't think it's very fastlane, though it is fun to have that personal connection and know you're helping people out!

 

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[treinjapan]

Update for you guys:
I'm 3 months in to my Lending Club experience. I aimed for the lower side of the risk scale, with mostly B-grade loans, with a bunch of As and Cs as well, and a couple of Ds and Es. Though I'm only 3 months in, I'm average 13%+ on my investment, and I'm making enough each month to buy 3 or 4 more new notes each month, which adds another additional $2-3 of income each month. Looks like it's going well!!

 

[miabullitt]

I am currently invested in lending club. I have 52 notes outstanding with the oldest one being about 10 months old. My current yield is 14.72% and I have yet to experience and late payments.

It's pretty cool, but I may liquidate my portfolio and invest all that capital into something like a pharma stock (yielding around 5%). The reason is I sort of am uneasy about unsecured loans, and I do not like the manner in which to liquidate the notes is available.

but of course, higher risk = higher reward.

 

[treinjapan]

That's a great return! What kind of balance of notes do you hold?

Yeah, it's important to remember that this kind of investing should only be part of your portfolio....there's certainly a temptation to throw everything into it with returns like this, but the non-liquidity of it makes it a bad idea to do that. But it's fun to have a percentage in there, and see it growing in such a tangible way week by week.

 

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[miabullitt]

That's a great return! What kind of balance of notes do you hold?

 

[MJ DeMarco]

I just signed up for LC -- based on the responses here it's worth some further investigation. If you're a Fastlaner trying to build up your cash nest egg, this might be a worthy alternative vs a 5% bond fund.

Any other stories to report?

 

[Rerun]

I have 1800 notes at just under 10% net annualized return. From what I've seen other people perform, this is on the lower side... but still a pretty solid investment.

About 5% of my notes have been charged off or are in the 31-120 days late period, and even so still at about 10 percent.

Not a bad place to store some intermediate-term cash (beats the hell out of CD), but I hesitate to invest more because (correct me if I'm wrong) but interest received it's taxed as regular income even though profits are all reinvesting in new notes.

 

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[rc08234]

Whats the repercussions for someone that defaults?? Is their any collateral or anything?

 

[miabullitt]

Whats the repercussions for someone that defaults?? Is their any collateral or anything?

There is no collateral. It is an unsecured loan which is why I only put a small amount of my investable assets towards it.

 

[treinjapan]

When you hear the words "unsecured loan", it's easy to write off the whole LendingClub experience as "too risky", but in actuality, you're "diversifying" over numerous little notes. You're really only "risking" $25 at any one time on a single borrower. You can choose to risk more, but that also hurts you more if there's a default, and it also complicates doing your taxes, I've heard.

 

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[treinjapan]

Checking in with 13.02% return on investment so far since opening my account 5 months ago!

 

[cmartell1200020]

I wholeheartedly recommend Lending Club. I started in Nov. 2011 with $500, and the great results led me to eventually invest $10K. I then moved my $35K ROTH IRA over to Lending Club, and my returns jumped from about 5% to 13.5%. My wife then asked me to do the same thing with her IRA. On a near daily basis, I am seeing passive cashflow pour in and am then reinvesting that interest into even more loans. I have over 1,000 loans in my IRA, 400 in my wife's, and 400 in my first Lending Club account. Some of the tips I've learned to minimize risk:

1) Don't invest more than $25 into a single loan - better diversification this way.
2) Start a FoiloFN trading account off of the Lending Club website - its the online market place where you can buy and sell notes from other investors. When you notice a loan go into the "grace period" that precedes the "16-30 days late" and "30-90 days late" phases, immediately put that note up for sale at a price slightly higher than the remaining balance. Other investors out there will probably buy it since many grace date loans catch up and become current. This is how I keep my loans now from reaching the default phase.
3) Look up Peter Renton's blog - he's up there as being one of the Lending Club/Prosper investor experts.
4) Look for borrowers with a credit score of 680 and up. Ask them what their current monthly expenses are, why they carry a large revolving credit balance if it is over 10K, and ask after any delinquencies they have had in the last two years - those are my standard three questions - everything else doesn't matter as much to me, except if they are starting a business.

Note: I manually invest in my Lending Club accounts nearly every day and have opted not to leave things on automatic, simply because I don't want any bad loans that I don't know about mixed in with the good ones. A lot of people may choose not to do this.

As for liquidity, since I've had some good luck selling notes that were headed south, I'm sure it would be even easier to sell current notes to liquidate your funds.

 

[treinjapan]

Checking in once again!
I'm about 9 months into my Lending Club experience, and I've doubled my investment twice already. I'm currently at 382 notes and 13.55% return thus far.

I was at first very picky with who I chose, but recently I'm starting to be a bit less so. Mainly aiming to invest $25 per note, with verified income, and mainly aiming to fund "credit consolidations" because those are the ones where people are actually "making" money as I help them (since their monthly payments are decreasing). I feel like that helps me make sure they will be able to pay.

I was at first aiming for B-grade-ish levels, with a sprinkling of Cs and As, but the website is so much more busy now. Loans are getting funded FAST, and if you're not on there frequently to look for new loans right after they post them, you can't even spend all the money you've funded your account with. So now I'm branching out into the As and Ds, Es, Fs, etc. In a few months I'll be able to see how this is paying off.

 

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[dday97]

Those are some very nice returns to park some money for diversification. I'm just curious, are you working your way to becoming an accredited investor and switch to secured loans?

 

[cmartell1200020]

Re: becoming an accredited investor and switch to secured loans

Those are some very nice returns to park some money for diversification. I'm just curious, are working you're way to becoming an accredited investor and switch to secured loans?

Don't know if Lending Club works that way; they only deal in unsecured loans from what I've seen, and there's no accredidation beyond the point of investing your first amount. But this sounds interesting. What company/website is this through? And what kind of returns are available?

 

[cmartell1200020]

Is it through one of the banner ad companies here on the forum?

 

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[dday97]

It wasn't through a banner ad but to be honest, I hardly notice those. I'd imagine LC has an Accredited Investor (AI) program for Secured Loans if you called them. The ROR is usually lower for secured loans (maybe 9%) but the loans are usually backed by real estate or something of that nature. For the most part you won't see deals offered to AI's on public domains since those investments are not allowed to be offered to the general public. I do know that another crowdfunding site, Realty Mogul, is geared towards Accredited Investors and I'm thinking of signing up with them to see what it's all about. They are new to crowdfunding so I have to do some DD on them first.

 

[CommonCents]

are these rates quoted annual? or over shorter term loans?

 

[tchandy]

I took out a loan from lending club last year as a down payment for a rental. No complaints so far and I pay about $230 a month for three years.

 

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[mrhahn]

I'm about to start investing in some LC loans. I was more skeptical about it until just recently, after many online reviews have had good experiences with LC and Prosper. Also, LC loan interest now qualifies as capital gains, as opposed to regular income per the April 2013 Prospectus!

 

[cmartell1200020]

Re: Lending Club Great so far

Lending Club's been great so far. I've earned $4000 in interest in the last year through my IRA, and I am repeating the process with a regular account since IRAs only allow limited contributions. One of the best things I've learned in the past year to reduce your risk and keep your return percentage high is to use the FolioFN function to sell off loans that look like they will default. If you do this early enough when a loan first enters its grace period, you get to sell it for more than anytime later and make a profit or break even on it. Sometimes the borrower will become current again, and you can keep the loan or keep selling it and apply the funds toward other loans. Just price the sale of your loan to take into account that FolioFN takes a 1% fee from the sale, so do your math to try to prevent coming out with a loss. If the loan continues onto the 16-30 days late phase and beyond, you will certainly need to price the loan lower and take a loss, before the borrower defaults altogether and you get nothing - better to get some money than none. But like I said before, catch a loan early enough and you minimize this.

 

[Alex Barboza]

Is this service available only in the USA?

 

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[Ikke]

As far as I could figure out, yes.

 

[RElifestyle21]

This sounds interesting and possibly slightly fun to try out. I'll check it out. What is the highest interest possible to earn?