Lending Club – July 2009 Performance

Written by Nickel - 9 Comments

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Time for another Lending Club performance update…

As of today, I’m enjoying a 12.50% net annualized return on my investments. In addition to my “High Risk” and “Low Risk” test portfolios, I’ve been investing additional funds in a “catchall” portfolio. This portfolio primarily contains a mix of Grade A and Grade B loans, though I have a few Grade C loans in there, as well.

While I made it through the month of June with all loans intact, July saw my first loan go late. It’s currently listed as being 31-120 days late, so there’s still hope. In fact, it appears that there’s a payment currently being processed, so it might flip back into the “Current” category before to long.

The loan in question is a Grade E loan from my “High Risk” portfolio. As I’ve noted in the past, loans in this range have a 15-20% likelihood of going bad based on historical data, so this isn’t terribly surprising.

On the bright side, 95% of the loans in my “High Risk” portfolio (19 of 20) are still paying on time, as are 100% of my other loans. As I’ve said before, only time will tell how things turn out. As of right now, however, I’m still quite happy with my Lending Club experience.

Published on August 13th, 2009 - 9 Comments
Filed under: Saving & Investing
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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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Comments (scroll down to add your own):

  1. Any idea why half the states don’t allow their citizens to participate in the exchange of these notes?

    Comment by Ryan — Aug 13th 2009 @ 5:32 pm

  2. As I understand it, they have to get approval from each to sell notes to their residents. FWIW, many of the states that don’t allow direct investment in notes *do* allow you to buy on the secondary market.

    Comment by Nickel — Aug 13th 2009 @ 5:34 pm

  3. Mine is still going strong too :)

    Comment by Eric — Aug 13th 2009 @ 6:29 pm

  4. I’m one of those that can only buy on the secondary market, but most of those loans are being sold at a markup, which really cuts back on the ROI. The few that weren’t were already considerably overdue. Plus I can’t get any information on the original loan other than the title.

    Comment by carole — Aug 13th 2009 @ 9:22 pm

  5. Carole: I think that part of the reason that they’re being sold at a markup is that they’re “proven” (i.e., the borrowers have already made a few payments so you know they’re not total deadbeats). Yes, it cuts into the return, but it also (arguably) reduces the risk.

    The ones being sold at a discount are for the opposite reason. There’s evidence of trouble, so they’re no longer worth face value.

    Comment by Nickel — Aug 13th 2009 @ 9:37 pm

  6. As with any investing, there are certain risks with lending clubs. Spreading your risk is always the best tip.

    Comment by Harry — Aug 15th 2009 @ 10:55 am

  7. I signed up this month and shifted my cds getting less than 5% to the a and b risk so hope to see over 8% after their cut. I also signed up for the prime account and hope to see a 10% after their cut return.

    Comment by almost there — Aug 17th 2009 @ 10:25 am

  8. Don’t know if you saw this, but this is an article about a UK business rather similar to Lending Club.

    http://www.guardian.co.uk/comm.....redit-zopa

    Comment by Daniel Lieberman — Aug 18th 2009 @ 9:28 pm

  9. I’m a lender with LendingClub and have had very good results so far. In the few instances where loans go into “Grace Period” (less than 15 days late), I’ve been able to sell them in the secondary market, usually for a 10-15% discount. Despite selling these loans, I’ve made a 12% annual return thus far.

    But for the first time, a Grace Period loan of mine has failed to sell and is now in the 15-30 days late period. I’ve reduce the price some more (about 25% off face value) and am still trying to sell it.

    As I try to figure out how much further to reduce the price now (before waiting until it is more than 30 days late), I wonder whether other lenders have had loans go into collection and (if so) whether they ever got any money back from LendingClub.

    If someone declares bankruptcy, what are the odds you’ll get anything back on an (unsecured) LendingClub loan?

    Sincerely,
    Aaron

    Comment by Aaron — Aug 19th 2009 @ 3:35 pm

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