I've blogged extensively about Prosper peer-2-peer lending in 2006 and have learned a lot from my experiences with the lending site. With Prosper in its quiet period, I have already funded four loans with LendingClub. My first impression with LendingClub was tainted by my unfamiliarity with it. Prosper has a far better search mechanism and better presentation of listings, but i'm beginning to think that this is all the PROS associated with Prosper. I'm beginning to warm up to LendingClub.
I'm using LendingClub to reinvest earnings from my blog. Later this week, I will roll another $25 of blog earnings into LendingClub. At Prosper, my loan portfolio has had horrible performance. According to LendingStats, only 73% of my loans are / were performing loans and my estimated ROI is 6.4%. At such a low rate, I might have been better off just paying off my highest interest rate mortgage (5.875%) and reinvesting my previously used Prosper Loan searching / funding time in some other area.
I must admit, I was pretty aggressive with Prosper lending. At sometimes, I was down right careless. Since 2007, I have regrouped into a more conservative lending style. I'm now implementing my more conservative lending strategy from scratch at LendingClub. I believe I will do better at this site. My initial two reasons to believe this reside in the fact that I can minimize risk at LendingClub by risking only $25 per loan vice the Prosper minimum of $50. Also, it appears that the LendingClub's vetting of applicants is better than at Prosper's site.
Now to the point referenced in the subject line... I was reviewing CNBC and found a great story about Capital One delinquency rates (article). LendingClub lenders should keep their eyes and ears open to all credit card company news on delinquency / write-off rates. At Capital One, the company is reporting a write-off percentage rate of 6.98% and a 30 day delinquent rate of 4.7%. At first, one might say it makes great sense to use these numbers as a yard stick to measure their own LendingClub account performance. Don't rely on this early on. Wait until your loan portfolio matures before you start measuring up to this.
I plan on using the Capital One write-off rate as a yard stick going forward. If I don't beat Capital One after one year at lending, i'll likely quit. My next goal after beating Capital One will be to have a net return of 8.4%. We'll see how things work out.
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