I have been originating (peer-2-peer) loans at Lending Club since Dec 2008. Since starting, I have issued 371 loans, of which:
56 loans fully paid off
0 loans late, default or charged off
In 2009, I made a net 7.7% return on my investment (after fees and note sales). During 2009, I only had one losing month where I had a monthly annualized return of negative 5.24%.
In 2010, I made a net 9.5%. My worst month had a monthly annualized return of 0.89%.
In 2011, I made a net 11.0%. My worst month had a monthly annualized return of
Lending Club says my account has a net annualized return of 13.87% and total interest earned of $905.74. Each of these are way off my actual return. My net earnings are actually some $200.65 less than what Lending Club advertises. The problem with Lending Club is that it doesn't fully factor in all fees and losses incurred in the sale of notes.
Overall, with exception to Lending Club not having "net earnings" and "net annual yield" displayed on its account dashboard, I am satisfied with Lending Club.
I attribute my greater success in 2011 to increasing my risk tolerance in notes that i'm willing to fund. Since 2009, I have been aggressive to sell notes before they hit 16 days late. By doing this, I book small monthly losses on some notes vice periodic large losses on defaults. Additionally, it is best to do small loans of
$25 since more people have funds available and are willing to risk buying small late loans. I will continue to execute this strategy and pursue lending club notes above 14%.
My note filter is:
Interest rate: Excludes A and B rated notes
Term: 36 and 60 month
Funding progress: 10% or more
Max loan amount: $25k
Exclude loans invested in: Yes
Max debt-to-income: 20%
Months since last delinquency: 12 months or more
Inquiries in the last 6 months: 3 max
Min length of employment: 1
In addition to this, I am reluctant to fund notes where the monthly income is less than 1/3 of total revolving credit balance. I exceed this sometimes when I believe that the individual is truly going to use the money for debt consolidation.