Last week, I talked about our initial experiences investing money with Lending Club (see also my Lending Club review). In short, I created two $500 portfolios, each of which contained twenty $25 notes. Our “Low Risk” portfolio had an average interest rate of 9.82%, whereas our “High Risk” portfolio had an average interest rate of 15.42%. Today, I thought I’d provide an update of how things have been going.
The loan funding process
For those that are unfamiliar with the way that Lending Club works, the funding of loans is more of a process than an event. Because loans are divided up into multiple “notes” that are sold to different investors, all of the notes have to be sold before a loan gets funded. Loans that don’t get funded within two weeks have to be re-listed, and any money that was committed to that loan is returned to the lender.
Progress to date
So… How have things worked out so far in terms of loans being successfully funded? Well, as you can see from the screenshot below, 21 of our 40 loans have been successfully funded thus far. Nine of our loans are still in progress, and ten loans have failed to fund, resulting in the $250 in available cash.
Of the ten loans that didn’t get funded, eight were in our “High Risk” portfolio, and two were in our “Low Risk” portfolio. I suspect that this disparity results from lenders being more willing to invest in lower vs. higher risk loans, though it’s hard to draw any firm conclusions based on such a small number of notes.
The good news from all of this is that it’s very easy to re-deploy funds that were previously committed to loans that didn’t get funded. To do this, I simply clicked on the “Invest” link and ordered two more “Low Risk” notes as well as eight more “High Risk” notes.
As far as actual loan performance goes, the first payments aren’t due until next month, so there’s not much to report. All I can really say is that I’ve accrued a total of $0.24 in interest thus far.
If you have any questions about how Lending Club works, please let me know and I’ll do my best to answer them.