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Investing via peer-2-peer lending is a fun hobby that I have been doing at Lending Club for six months. Previously, I spent over two years investing at Prosper.Over the last six months, I have made 37 loans at Lending Club. Lending Club states that my net annualized return has been 11.51%.
Two of my 37 loans have been paid off and now one is 16 days late in its FIRST payment. Here's my late loan.
I like how Lending Club provides a "collection history" on late loans. I found this collection history on my late loan:
Collection Log
6/11/09 (Thursday) Collections Agency contacted a borrowers relative
6/9/09 (Tuesday) Payment Failed
6/4/09 (Thursday) Attempted to collect payment
6/2/09 (Tuesday) Contacted a borrowers relative
6/2/09 (Tuesday) Contacted a borrowers relative
6/2/09 (Tuesday) Attempted to contact borrower (left voicemail)
6/2/09 (Tuesday) Contacted a borrowers coworker
6/1/09 (Monday) Attempted to contact borrower (left voicemail)
5/29/09 (Friday) Notified borrower of failed payment (e-mail)
5/29/09 (Friday) Attempted to contact borrower (left voicemail)
5/29/09 (Friday) Payment Failed
Was I just a victim of a Lending Club (Lendingclub) scam? The loan was for the maximum amount of $25k. If I was a Lending Club scammer, I would pursue a $25k loan.
I am now going on hiatus from investing in peer-2-peer loans at Lending Club. I will stay on hiatus until either:
(1.) The loan gets caught up on payments.
(2.) I accrue enough interest on my other loans to completely offset my initial $25 investment on the above delinquent loan.
(3.) I am able to sell the delinquent loan via the FolioFn Note Trading Platform. I have listed this loan for sale with an asking price of $19.09, a 25% discount to its face value of $25.45.
If the loan gets caught up on payments, I'm still going to attempt to sell the loan via the FolioFn Note Trading Platform. Pursuing the eventual sale allows me to clean up my Lending Club balance sheet of suspect loans and gain experience with using the FolioFn Note Trading Platform.
I'll keep you posted.
8 comments:
so a few things about your loan give me red flags.. i know hindsite is 20-20
1. He has such a good debt to income ratio, a great crdit score, and a great income, and it is verified, which is even more rare.. than why is he only getting a c rating loan? the quality of the loan seems to be a lot better.. something is fishy.. why the facts don't fit the results.
2. He had a deliqency a few years ago, and I never invest period.. in anyone who has a deliquency no matter what the excuse was.. and also I've never invested in C, because the risk there is too high.. Good luck to you!
I've had pretty "good luck" in my own lending club experiences. Also, in my own limited research, I've found mid-rated to be more risky. Believe it or not, I go A, B and RARE D's who look like they're making a consolidation. I believe they're committed to turning things around and it's been correct so far.
It's a shame one borrower can ruin something like this so easily. I'm sorry it's not working out currently and hope they turn it around.
I'm hoping to borrow in the near future to "refinance" my credit card debt that I've been trying to pay off for a year now. I've got no late payments and I pay more than the minimum whenever possible, but at 15% interest, I just can't seem to make much of a dent.
I am surprised that Lending Club is not trying harder to collect $25.000.
Is anyone aware of the collection process if an account becomes late/delinquent?
I did not find anything on their site .....
I'm on Prosper and Lending Club and one rule I have is don't lend to someone asking for the maximum. They may be looking to cash out before a bankruptcy.
I violated this rule once with a AA who had all the right numbers and he made about three payments.
I am lending club member. A couple of my loans have gone bad. But I am not alarmed. Such things have to be expected and lending club too informs by subtracting certain percentage from the interest earned towards bad loan. I have a few rules. 1. Max loan - $15000. 2. Limit your loans to people with certain credit score. 3. Dont go for category D and above. 4. Limit your amount to any loan to about half percentage of your investment. I am sure our return will be more than the paltry percentages offered by big bank CDs.
I have had several issues with Lending Club - fortunately I did this as an experiment and only started with $1,000 to invest - I spread this across 8 different loans with 1 A grade, 4 B grade, 2 C grade and 1 G grade - of these 3 have been (or soon will be) charged OFF!!!! - all 3 are B grade loans....I find it hard to believe that it is possible to have 3 of 4 B grade loans charged off! - needless to say my experiment failed...I will no longer be participating in the P2P loan business.
Good Luck with your "Loans"
It's a high risk investment. Just like the stock markets. If you read the terms it's no secret you are taking a risk with borrowers. Read all the facts and use your best judgement. Don't put all your eggs in one basket.
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