First Lending Club Loan Payments Received
Tip It!This is just a quick update to say that I’ve received the initial payment on four of the forty Lending Club loans in which I’ve invested. Because these loans funded over a period of weeks, the repayment dates are somewhat staggered, and have just started coming due.
Thus far, everything has been paid on time, though it seems to take a few days beyond the due date for the payments to post to my account. While this is a very promising start, it’ll be awhile before I have a good sense for how things are going.
I’ve included a screenshot below of my current account status. This is actually summary that averages across my two portfolios. As a reminder, I have two $500 portfolios. One is a “low risk” portfolio that pays an average of 9.85%, and the other is a “high risk” portfolio that pays an average of 15.05%.
Of the $3.39 that I’ve received thus far, $2.25 has been principal and 1.14 has been interest. Thus, the total value of my outstanding loans now stands at $997.75. Assuming that things goes as planned, I should receive a little over $33 per month in total payments.
My current plan is to reinvest payments into additional Lending Club loans on an ongoing basis. After crunching the numbers on Lending Club’s historical repayment rates as a function of loan quality, however, I’ll most likely focus shift my focus to higher quality loans going forward.
Published on June 22nd, 2009 - 13 Comments
Filed under: Saving & Investing
About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!
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13 Responses to “First Lending Club Loan Payments Received”
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June 22nd, 2009 at 10:05 am
Good going!
The trick for me has been to reinvest as soon as I have enough in my cash balance. That keeps the risk down and the return more stable. You seem to have enough in payments to pick one extra loan per month.
June 22nd, 2009 at 11:34 am
Hey!
what is the repayment terms on your loans? is it 3 years or 5?
i’m curious because if the $33.23 a payment is correct, for the 36 month payment period, you will get $1,196.28 with comes to 196.28 in interest = 20% Interest for 3 Years.
20% / 3 years = 6.5% annual interest rate; not the weighted average of 12.45% as Lending club suggested.
Thoughts?
June 22nd, 2009 at 12:00 pm
It’s a three year repayment schedule. Here is how they calculate annualized returns:
https://www.lendingclub.com/info/lendersPerformanceHelp.action
I haven’t run the numbers myself, but perhaps I should.
June 22nd, 2009 at 12:04 pm
phung: After thinking about your comment some more, it seems that you’ve neglected to account for that fact that I’m getting a bit of principal back every month. That total monthly payment includes principal plus interest. Because the loan is paid back gradually over time, the principal dwindles (unless you reinvest). Thus, it’s not like I’ll have $1k invested for 36 months. Note that my outstanding principal is already down to $997.75 and I’ve only recv’d payments on the first four loans.
June 22nd, 2009 at 7:50 pm
Awesome-simply awesome.
I’ll be watching this post.
I have a question though. If you need the cash flow what do you do? How do you liquidate?
June 22nd, 2009 at 8:02 pm
Ray: You can sell notes on the secondary market using the LC Note Trading platform. Pricing is based on supply and demand, however, so you’re not necessarily guaranteed to get your money back out in short order.
June 22nd, 2009 at 11:04 pm
I’ve been very happy with lendingclub. I only have a couple hundred invested, but am getting 15.47% since I started February. Glad to hear you’re also enjoying it as another investing tool. I’ll be adding more funds as they become available.
June 24th, 2009 at 1:32 am
keep the updates coming! thanks!
June 24th, 2009 at 11:12 am
that makes sense, nickel.
But I still think the 12.45% return is a bit misleading, you will need to reinvest the principal constantly to get the 12.45% return.
There’s a required level of involvement to get to the 12.45% return on the short term.
I am still under the opinion that long term diversified stock investment is probably better.
June 24th, 2009 at 11:21 am
No, the dollar amount of your returns will fall because they’re being calculated on less principal, but the percentages still hold.
June 24th, 2009 at 1:56 pm
Nice, I’ll definitely look into this. I’ve heard bad things about Prosper but Lending Club seems to have less risk. I’m considering putting $1,000 into various loans there.
June 24th, 2009 at 10:57 pm
Keep the updates coming. I’m planning to invest, but can only buy notes on the trading platform at this time as New Jersey residents can’t invest in the loans initially.
July 22nd, 2009 at 1:12 pm
They don;t have it for texas yet.