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I've had an unfounded account for some time and am thinking about dabbling in it now, any advice for a newbie? What criteria do you look for in a loan?
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retired in 2009 at the age of 39 with less than 300K total net worth -
Have you had one default?retired in 2009 at the age of 39 with less than 300K total net worth -
I have 200 notes with Lending club at 25 dollars each
Out of almost 200 notes, I have 2 defaults and 2 about to default...more to come. Also more will default as time goes on. So far I have made a %9.15 return. This number fluctuates wildly. Drops by a percentage if someone goes into grace period. Goes up by a percentage if there's a month with no defaults.
It took almost 3 weeks to fully invest 2.5k@25/note based on my filters...so there's definitely an issue with cash drag with lending club. If you have say 20k to invest, I probably would increase the $ per note or it'll take you forever.Comment
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wanted to try investing, not available in my stateGunga galunga...gunga -- gunga galunga.Comment
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Pre-tax return, so that your effective rate is about 5.4%?Originally posted by Singuy View PostComment
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here's an older thread ... discussing this matter.. you might find some answers there
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I used to invest in lending club, but am in the process of drawing down my account.
I was making maybe 8-10% a year before taxes for the past few years, but it's kind of more management than I would like to do both reinvesting in loans I wanted and trying to sell of crappier loans. I usually went for the higher interest rates, as it made more sense to me to chase the % return over getting "higher quality" loans that can default as well, and makes much less return. Note that most of these P2P loans are by borrowers that couldnt' qualify for a traditional loan from a bank.
My criteria were
no delinquencies
no major delinquency
Interest rates D-G
2 years employmentComment
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I have been on Lending club now for close to 4 years and have consistent returns of between 6.5 and 7% (and I am ok with that!!). I have slightly over 1200 notes and at this point have exactly 24 notes either in default or in various stages of late.
I have not automated the investment and pick my notes myself. I spend about 15 minutes every second day to buy new notes. Almost 70% of my notes are now from the secondary market (folio investment). Things I look for are credit score, job title, purpose of loan, re-payment history, # of delinquencies, bankruptcies, collection amount etc.Comment
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I've been with lending club for years. I'm getting 6-7% return. I do have defaults...the first time, it was like someone kicked me in the stomach. How dare they not repay their loan? Then, I realized that I'm still making money from the interest on the other loans and that more than makes up for the defaults. I think my advice is to invest consistently...maybe $200 a month or something like that especially with a small amount. If you only invest $1000 and that is it, the defaults may rack up quicker than the interest. Also, it takes a while to get fully invested and see the returns. Also, people start defaulting at about 12-18 months.Comment
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The worst are the people who default immediately without a single payment. I tend to stay away from the max 35k loans for this reason. Some people take the loan without ever intending to pay it back, so from their point of view, it pays off to maximize the loan amount.Comment
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When they default on one of these loans, does it effect their credit rating? Are they sent to collections or something?Comment
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It does, but these are unsecured loans. From my experience, defaulting and/or going into bankruptcy or collections normally results in a total loss of the loan principal.Comment
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I am very interested in Lending Club, but I don't make 70k/year. I do, however, have $250k in retirement savings. How do you prove that to them?
I would start out with a very very small amount and see how it goes.Comment
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