Earlier this week I decided to try my hand at selling a small number of Lending Club loans. These are loans that have either entered the grace period, or that have gone late (but not too far late). I figure that taking a small loss now beats taking a big loss later.
In deciding to sell these loans, I looked at both their repayment history and their recent credit score history. All four of these loans been paid on time for 4-6 months, but when I looked at the credit score trends I didn’t like what I saw.
Here’s one example:
And here’s another:
Neither of these graphs gives me much confidence, so I’ve decided to bail out. Of course, I’m not sure I’ll be able to find any willing buyers, and I’m also not sure how to price them. For now, I’ve discounted these notes 14-22% below face value, with the two loans pictured above falling at the high end of that discount range.
The only other expense associated with selling notes through the Lending Club trading platform (which is powered by FOLIOfn) is a 1% service charge applied to the total sale price. If the loans remain unsold for thirty days they’re automatically taken off the market. You can, however, re-price them at any time, and you can also re-list them in the future.
In the long run, I suspect it will take some experimenting to figure out the best pricing strategy, but there’s no time like the present to start figuring it out.
Leave a Reply