Comments on: Tips for Lending Club Investors

By: hrantnyc

hrantnyc — Tue, 19 Jul 2011 19:24:17 +0000

Thanks Craig-
Just a note…just found out that there is a prime act, BUT need to invest 50G min, OR 100G min for another act w/ just a little lower fees. Like a hedge fund. LC runs couple of these and Scott runs one w/100G min…BUT odn’t feel comfortable w/them not trying to sell the slow loans, as I try to do…11% return is where I am at w/about 8G in…Good investment but, as said earlier, just takes too much time to deploy larger amounts, keeping 25.maximum investment, and having enough to invest in. Wish there was a better way, w/large min 50-100G ok, but w/more hands on to sell slow loans:)/ Maybe someone can do this:)

By: Craig

Craig — Tue, 19 Jul 2011 19:04:08 +0000

Hrantnyc, I invested $7,500 at once and found the choosing excruciating. Initially I boosted my investment in each loan from $100 to $200 just to reduce the number of loans I’d have to find. But I found myself forced to choose loans I might not otherwise choose, just because I wanted to get the whole portfolio invested. Now, whenever I notice any sign of trouble on these loans, I sell it and invest in $25 loans. I am slowly weaning the portfolio to more smaller loans and feeling more peace of mind about it. I also reinvest religiously as soon as I have $25 in my account in order to maximize my overall gain. It’s much easier when you only have to find one to four investments at a time. And I’ve developed criteria to make the process more selective and easier.

By: Paul Buck

Paul Buck — Tue, 15 Feb 2011 13:31:15 +0000

Hmm I have a 630 score and LendingClub left me in the door, Hopefully they don’t kick. Anyways I just started lending at 250$ and I’m going to work my way up but right now trying it out and getting the hang of it. So I’ve been searching sites to see how to start this, and I’m happy to have came to this site. The insight I took in will help me succeed.

By: Hrantnyc

Hrantnyc — Thu, 11 Nov 2010 23:00:30 +0000

Very interesting as I also have approx. few hundred loans, w/a default here and there some late pays, and some on the way to becoming defaults.
-Does everyone spend a lot of time to pick loans as I do? Takes a lot of time to choose.
-Return percentages listed…how accurate may they be-taking defaults, below par sells on trading platform, fees, etc…?, yet I am certainly NOT complaining having averaging over 10pct and am in this for approx. a year or two.
Just wish had more of the info for the borrowers on their credit records-more transparency.
Everyone should open a LendingClub account, for their small allocation of alternative portfolio.
Just another vehicle to diversify, w/good returns.

By: Michael

Michael — Mon, 26 Oct 2009 02:19:17 +0000

right now in the present moment I’m one broke indivisaul with very little money to save or invest at the end of the month. I’ve spooke with investors and brokers looking forward to investing with them but dont have enough money so I would like to open an investment account starting with very little money for one reason my money is short not long and I’m new to this so I would like to take baby steps $500.00 or more are not baby steps. What can an investment of $10.00 bring me in 3-6 months. Who can I turn to, what banks with high yields would welcome me.

By: BuffetFan

BuffetFan — Mon, 24 Aug 2009 05:50:29 +0000

Lending Club’s a great idea in the beginning but as it gets more attention I suspect the number of dishonest borrowers will increase. I’m seeing a lot more scary borrowers now then earlier this summer. So you have to search a lot harder.

By: katie

katie — Sat, 22 Aug 2009 20:03:56 +0000

if you want to sound really smart (and perhaps snooty), the chance that 2-3 of your 20 loans might default has to do with sampling error. whenever you have a small sample that could be adversely affected by one or two events, blame sampling error (and/or yourself ).

By: Lina

Lina — Sat, 22 Aug 2009 12:26:02 +0000

Wow, 400 loans recommended for diversification? Very good to know. I’m at 230 loans right now, and I felt I was in good shape re: diversification. I will build up to 400 though, pretty soon. It makes sense to invest $5k+ in this, less than that, you are kinda gambling.

By: Eric

Eric — Sat, 22 Aug 2009 08:44:50 +0000

I always like reading your LC updates. Thanks!

By: GaelicWench

GaelicWench — Fri, 21 Aug 2009 19:48:59 +0000

Nickel, thanks for your response. I guess I tend to take on a cynical approach to causation, resulting in stigmas. Or perhaps it’s because I’m getting older? I do understand your approach, however, and it does make sense.

I suppose over the course of time ever since my ex’s and my bankruptcy (due to loss of job), it’s been a bit of a sensitive issue because we were deemed risky. Then, in the past couple of years many with perfect scores have had to face foreclosure and bankruptcies as well. So long perfect score. I know how they feel, too.

And now, the only reason why my score has once again dipped is due to having purchased a much-needed used vehicle. My other clunker finally drove its last lap after 15 years and 180k.

Borrowing for many has now become extremely difficult; speaking for many as well as myself, we’re all very thankful that you’re here to help us get the loans we need for whatever viable reasons. Have a good weekend.

By: Sam

Sam — Fri, 21 Aug 2009 19:02:38 +0000

Very interesting write-up Nickel. For those interested, here’s the link to the replay: https://lendingclub.webex.com/lendingclub/lsr.php?AT=pb&SP=EC&rID=1520972&rKey=91de70ef60910cc6

By: mr gee

mr gee — Fri, 21 Aug 2009 18:02:13 +0000

I’m surprised the wedding loans and vacations have such a low default rate. I stay away from those because I view them as such unnecessary loans. I much prefer credit card consolidation loans.

I only have 15 or so loans, but i’m hovering around 12% so far. There have been a few late payments but all are current as of now.

By: Nickel

Nickel — Fri, 21 Aug 2009 13:21:23 +0000

GaelicWench: It’s all about the averages. History has shown that the average default rate for those with a credit score below 660 is too low to allow them in the door. Are there reliable folks below that cutoff? Sure. Just like there are potential deadbeats above that cutoff. It’s very hard to predict on a case-by-case basis, but the overall default rate becomes very predictable when you start talking about really large numbers of borrowers.

I should also note that my own personal deadbeat had a relatively low credit score (albeit over the minimum). It was a Grade E loan. Not the worst, but far from the best. I’m fully expecting some of these loans to go bad. Those borrowers actually pay a significantly higher interest rate to help mitigate some of that risk.

By: My Journey

My Journey — Fri, 21 Aug 2009 13:06:51 +0000

I am a prosper guy here (mainly cause that is what I started with), but I never understood the auto fund/invest option. Why would you let a computer decide who you are going to lend to?

By: GaelicWench

GaelicWench — Fri, 21 Aug 2009 13:05:25 +0000

I just find it kind of ironic that when I tried to borrow at Lending Club, before I even had my foot in the door, I was dismissed based upon my credit score. I was never even given a chance to explain anything. No excuses, mind you, but a truthful synopsis of my financial background and goals.

In essence, by submitting the truth, it cost me dearly, because I am considered a “risk.” Then you have this individual mentioned by Nickel, who obviously had a great score, otherwise he wouldn’t have gone past the “door”; thusly resulting in default.

Just some thoughts, and apologies in advance if I took anything out of context. Good article, however!

By: Lara

Lara — Fri, 21 Aug 2009 12:21:33 +0000

I’m calling LendingClub to see if they’ll host me next. I have similar strategy, but my wedding loans are doing BAD BAD BAD. So I’m skipping of those plus anything related with proposing (vacation, buying the ring, etc).

Overall, I’m still making a good 9.5%. Great tips here. Lending Club rocks

By: lrgche

lrgche — Fri, 21 Aug 2009 11:51:40 +0000

Great tips and very timely advice, just getting into Lending Club myself, but being in TN, I am forced to buy loans instead, this has it’s own list of pros/cons.

Maybe another post to look at that side for those of us in states that don’t allow us to invest directly into a loan.