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When I signed up originally, they listed a requirement that you have a total net worth of $70k I believe before being eligible to loan. They don't have a system to verify that you have this kind of money and I don't know the implications of signing up if you don't "qualify" but it was somewhere in the TOS agreement. Also you are not "allowed" to have more than 10% of your net worth in loans. I started with $1k in loans a little over a year ago. I've been adding slowly here and there and now I'm up to $3k in deposits. I have earned a total of $209.43 in interest, paid $9.75 in fees to Lending Club and had one load default with $19.01 remaining balance. I calculate a 13.22% return despite the defaulted loan, a rate I am happy with. I'm getting about $30 per month in interest at this point (not accounting for what I'll owe the IRS since this counts as normal taxable income). I only add money which I can afford to lose so I am not devastated if a loan goes bad. Most loans which will go bad do so within the first 12-18 months so I feel pretty good about the first batch of loans I made a year and a half ago. I've lately increased my monthly contributions and add loans as I find them that meet my criteria.
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Dec 2, 2012 09:12
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SubjectVerbObject posted:This sounds interesting. I have a few questions about borrowers.
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Dec 4, 2012 08:30
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Fork of Unknown Origins posted:It's just compound interest basically, right? If a bank took the interest that you savings account generated and put it in a non-interest generating account and you never moved it to the savings account then you would have a lower rate of return. Due to how a savings account is structured they don't do that, but the math (assuming no delinquent notes) works out the same, right?
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Dec 5, 2012 13:18
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Contra Duck posted:So you go to the effort of vetting these things for the possibility of making $5.60 in 3 years time? This sounds somewhat silly :/ My sole grade A note had a failed payment after 14 straight months of being on time. Just goes to show that the A/Bs aren't always as rock solid as they seem. (obviously tiny sample size just sayin).
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Dec 9, 2012 16:36
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Is LC down for anyone else?
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Dec 17, 2012 18:35
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It is annoying but just something to get used to. I constantly have between 7-12 loans in funding or under review
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Dec 29, 2012 05:58
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JulianD posted:How long does it typically take for a payment to be distributed to your account? The FAQ said it can take up to four business days to process, but it's been a little longer than that since my first payments were due. I have two notes I'm waiting on payment for, but the status says "Current" and "Processing...", which I took to mean the payment has been made and Lending Club is just dragging their feet on distributing the payment.
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Feb 22, 2013 02:39
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Did mine on TurboTax and the OID part was easy. I fortunately only had one loan go bad but I entered that in as a bad personal or business loan, something like that. This itself was a pain for the $19 capital loss but the biggest concern is if you are a big investor you can only realize $3,000 in capital losses per year. If you have a lot invested and have a high percentage of loans go bad (but still have a good return due to investing in a lot of D-E-F loans) you could be in the position of owing your marginal tax rate on your gains (good loans) and then not being able to deduct all of your losses resulting in a net loss from the operation. I'm not a tax expert but that seems to be the biggest draw back from investing too much in the platform. The IRS is yet to provide any guidance for P2P specifically but it seems like the general consensus is what I wrote above. Some people with big investments are pissed when they realize they can't just pay taxes on the sum of (gains-losses). e: You can carry your losses into future years but if you're a big investor you'll likely rack up losses over $3k every year going forward.
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Apr 11, 2013 09:34
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Again I'm no expert but that would mean you need to realize $3k in capital gains first right? I don't think the OID gains from the P2P notes can be considered capital gains.
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Apr 12, 2013 00:40
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OK I'm with you. This seems like a good reason not to get too heavily invested in this type of investment. For small timers like us, it likely doesn't matter but if you're up in the 5 or 6 figures and investing in low grade loans (which is a popular strategy since low grade notes with high borrower income seem to have consistently been the best performing loans), you are almost certainly going to have a lot of defaults. Sure you can carry the excess losses forward but you'd need equally large capital gains to avoid carrying over additional losses every year. As a long term investor, I do not expect to realize capital gains every year and so I have the incentive to keep defaults below the $3k threshold. I don't want to start carrying over more and more capital losses which I may never get to apply to realized capital gains, I guess until I retire or something. I suppose it's not worth worrying about when my total account is only $4k, just something I hadn't considered originally.
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Apr 12, 2013 06:16
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I think a lot of the institutional investors just run filters without reading the comments. It seems like monthly income is the most important stat for them despite not being verified. It's pretty common to find $35,000 loans funded to 80% with less than 10 lenders when the income is over $10k/mo.
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Apr 30, 2013 11:34
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I agree and basically do the same. I used to read the comments and if they were well written and seemed somewhat intelligent then I'd favor them over AOL speak. I guess I still do if I take the time to actually read the comments but more often than not I trust the filters. On the other hand, I just had my second default and looking back on the comments they were completely retarded and I definitely shouldn't have invested.
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May 1, 2013 04:17
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Yeah it's a big complaint among small investors because the institutionals come in and suck up all the "good" loans before small investors can get to them. They run algorithms to continuously check for new loans and invest in them automatically. It was a big enough issue that LendingClub made a rule that no single investor could invest more than something like 80% of a single loan. You still have $35k loans being completely funded by less than 10 investors though. Of course this assumes that they actually know what the "good" loans are. Still there is a general consensus on a few key filtering criteria which are most important. To be honest, I don't know why the rates are still as high as they are because it seems like lately there is more demand for loans to be funded than people applying for loans.
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May 4, 2013 11:05
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I only invest in about 1-3 notes per week with the filters I have set up. Don't be discouraged, it takes a while to get a lump sum deposit invested completely. Better to be patient since you'll be owning these notes for 3-5 years. No need to rush, that's when you start buying bad notes.
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May 9, 2013 01:20
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Some people call it blending (borrowing + lending) and it's basically just another form of leverage. The toughest part would be investing that big lump sum immediately without compromising on your lending standards/filters. I mentioned before but it takes me a while to invest relatively small amounts, I'd be stuck paying the monthlies on the borrowed loan while I wait for the interest on my lended notes to start trickling in.
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May 14, 2013 23:42
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April posted:I don't know much about bankruptcy AT ALL. Does that mean that they will pay back some or all of the loan, on some kind of modified plan? Or will it be written off? Have you used nickelsteamroller's portfolio analysis? It's kind of a better way to gauge how you're doing. You upload your "all notes" file from LendingClub and it spits out the following: code:code:
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Jun 5, 2013 23:57
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Yeah it really takes forever for things to happen with LC. The worst part is waiting for the loans to issue. They'll be fully funded and sometimes sit there a week before they are issued. It's worst right when you start since you only have a few loans anyway. I set up weekly $25 contributions so I always have some loans waiting to be issued, I never really look at the "in funding" notes anymore.
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Jun 9, 2013 14:14
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I feel pretty much the same. Lendingclub is about 2.5% of my portfolio and I only invest what I am comfortable losing. The best case scenario would be for it to continue on forever or at least until I reach retirement when I would stop adding new funds and then stop reinvesting the returns and begin withdrawing as the payments slowly peter out. Currently I can have ~2 loans go bad per month and still be making a profit so as long as I am in the green every month, I am happy. I do not plan on dumping my notes at loss on folio.fn so if things go tits up real quick and more than 2 notes default every month I'll be taking losses. As Alereon said, in this scenario, I would more than likely be losing money on other investments too so I wouldn't feel as bad about it. I can't honestly say what would stop me from investing more in P2P before retirement. I suppose if I'm consistently losing money and others in the P2P lending community are also losing money I might stop buying new notes. That or if I can no longer find enough notes that meet my lending criteria (if institutional investors soak up all the "good" loans).
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Jun 26, 2013 09:41
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I thought it was 70k in total net worth not yearly income. Wither way I've never heard of anything coming of it. I assume it's so people can't blame LC if they go broke investing in notes, sort of a CYA thing.
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Jul 27, 2013 10:47
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I'm just going to stick with my lending standards. If there aren't any loans available that meet them then I won't buy any notes, it's that simple. It seems like the interest rate being offered for the notes turning up in my filters has been slowly getting lower over the last year or so. I guess this shouldn't be that unexpected since more and more lenders have been hopping on the bandwagon. Gravy train is slowing down apparently.
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Aug 24, 2013 08:23
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Turns out the lack of notes on Friday was just a technical error at LC. But yeah still tilting toward borrowers right now either way.
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Aug 27, 2013 04:28
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It used to be that notes would take a few days to a week to get funded but now with so many new investors the "good" notes get funded within minutes of being posted. I used to wait for responses but now if you see a note that looks good to you and meets your filter criteria (you do filter perspective notes right?) you have to jump on it immediately. Over the last year especially there has been a huge increase in lenders and seemingly a not as huge increase in borrowers. To me it seems like this has resulted in generally lower yields on all notes. I'm now mostly buying B rated notes when I used to only get C or D notes. I keep investing though because I think there are still decent returns to be had, just not as good as it was when I started out.
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Oct 30, 2013 21:58
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My unscientific guess based on experience is that about one third to one half of the notes I order don't end up going through. I would guess that the rejection rate gets higher with higher rate loans since these borrowers are even less likely to meet LC's underwriting criteria.
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Oct 31, 2013 21:36
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Prosper went through a big wave of defaults in I think 2009 and scared a lot of the early inverters off. My understanding is that this a major reason why Prosper is so much smaller than LC now. LC and Prosper both took note and really buckled down on their underwriting to appease and attract the investors. You're right though, they could likely loosen their requirements and still have enough investors for to buy all of the notes. I think they actually may be slowly doing this due to the huge appetite for more loans. As a lender, I do appreciate that they do some background checking but to be completely honest, I haven't followed all of their changes in underwriting in great detail over the last 2.5 years. I'm guessing that management feels that it is still in their best interest to keep investors happy in the long run over filling more loans (and collecting their 1%) for the 1-2 years they'd get before the loose lending practices came back to bite them.
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Nov 1, 2013 08:48
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April posted:I have 878 notes, of which 47 paid off early. I just started doing this 2 years ago, though, so I haven't had ANY go the full term yet. e: started two and a half years ago
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Nov 14, 2013 03:22
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$25 for all loans.
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Nov 14, 2013 03:57
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Here's my update from Nickel Steamroller's analysis. I've had a bunch of notes go late in the last few months, not sure why. They're mostly 60 month notes though which I stopped buying early this year so hopefully it's just a temporary phenomenon. Still happy with the ROI. code:
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Dec 11, 2013 15:22
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Hey this is neat, Lending Club recently added a graphic representation of your portfolio relative to everyone else. Here's mine: Feeling a little better about my note selection now.
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Dec 11, 2013 22:05
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April posted:That IS cool, where is it?
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Dec 11, 2013 23:34
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I'm the same as baquerd. Last year they issued what seemed like legit 1099s and I expect them to do that again this year. The year before they were all messed up and the year before that they didn't issue anything. e: now that I think about it, I seem to recall the consensus was that LendingClub hadn't reported the losses correctly on the 1099s so I entered them all in individually as loans that had gone bad (essentially deducting them from my highest income bracket, since it was less than the $3k limit). There's always a ton of discussion at Lend Academy during tax time about the best way to file and it seems to change every year. I always spend a few hours reading the arguments between the accountants and go from there. spf3million fucked around with this message at 18:03 on Jan 9, 2014 |
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Jan 9, 2014 17:59
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If you're really afraid of it, you can always just not claim any losses and eat the few $~20 defaults you may or may not get in the first year. I did this my first year in LC when I had only one default with $19 of outstanding principle. I decided it just wasn't worth the hassle.
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Jan 10, 2014 12:08
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I did a bunch of analysis on all of the notes available at the time several years ago and set up filters with nickelsteamroller.com to alert me when notes meeting my filter become available. At the time I remember finding that there wasn't much correlation between number of lines of credit and default rate when the total lines were less than 17. I also found that, on average, larger loans were less likely to default than small loans all else being the same. I haven't revisited those filters for a long time, mainly because I've been happy with my returns since then, also  Another interesting discovery was that low income has a relatively higher correlation with default so high income (>$70k/yr) is a big part of my filter.
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Jan 23, 2014 03:16
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It took me forever to invest my first $1000. Now I can only find at most a few loans a week that meet my criteria.
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Jan 24, 2014 01:23
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New loans are added 4 times per day, I believe it is 6am, 10am, 2pm, and 6pm Pacific.
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Jan 24, 2014 02:37
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April posted:To date, I have put in $16,950. I have received payments for over half of that amount, and still have outstanding principal of $18,590. e: I'm sitting here Total Notes: 320 In Funding: 0 Issued & Current: 244 In Grace Period: 3 Fully Paid: 59 Late 16 - 30 Days: 0 Late 31 - 120 Days: 5 Default: 1 Charged Off: 8 Average age 13.6 months. I had been relying on NSR's email updates when loans matching my criteria became available but they recently discontinued their emails. I have yet to find time to sit down and set up the automatic note purchasing system through NSR. spf3million fucked around with this message at 20:52 on Feb 13, 2014 |
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Feb 13, 2014 20:47
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April posted:I recently started using interest radar's auto-invest tool, and I've been pretty happy with it. I have an emotional reaction to seeing available cash in my account, like "MUST BUY NOTES NOW NOW NOW". Knowing that the software will buy the notes as soon as they are available helps me to step back and not make hasty buys that I'll regret later (see my previous post).
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Feb 13, 2014 21:23
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I have never used prosper nor tried to sell notes, but you might as well try to sell them now if you're intent on dumping them. There are people in states who can't buy directly from Prosper/LC and rely on the secondary market. They might take them off your hands for face value. The other option is to just hold onto them and see how they do. How many notes are we talking here?
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Mar 7, 2014 21:42
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Ever since Nickelsteamroller stopped sending automated emails when notes hit the platform that match my filters, I've been lazy and let my cash pile up. I just discovered that LC now offers Prime autoinvesting for free if your account is over $5,000 so I'm going to give that a whirl. Has anyone else used Prime?
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Mar 12, 2014 14:07
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You can choose $25 min notes and apply filters saved in the usual LC browse notes section. It looks like most of the important categories are there, unfortunately you can't fine-tune the filters as much as you could on other sites. I'll give it a try for a month or so and let you all know my impressions.
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Mar 12, 2014 15:28
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What's your interest rate? The demand from lenders seems to be growing much faster than the supply, it isn't uncommon for a "desirable" note to be snapped up by a single or handful of investors. Most likely an institutional investor.
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Mar 21, 2014 19:03
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