Lending Club And Prosper Update (January 2013)

The new year welcomes another update for my P2P investments with Prosper.com and Lending Club. For those who don’t know, I’ve been with Lending Club since July 2009 and with Prosper since July 2012. I will perform these updates twice a year. I may do quarterly update if returns change drastically or major changes in the platforms occur. Otherwise it’s steady as she goes!

Latest Happenings

Lending Club passed the one billion mark in funding November 2012. This is a great milestone and brings more legitimacy to the industry. Another shot of legitimacy is former Treasury Secretary Lawrence Summers joined Lending Club’s board. Peter Renton of Lend Academy released a book aptly named “The Lending Club Story“. I haven’t had the chance to read it yet. If it’s anything similar to his online course, it should be a great way to learn about Lending Club.

Lending Club

Lending Club Returns (January 2013)

Since my last update, I’ve added an additional $1,100 to the account. My NAR has popped up to 10.93%. For the past 2 years, it’s still hovering just below 11%. Since the previous report, I’ve made $344.66 in interest; I now have 3 more defaults and just over 600 active notes. Nothing crazy to report. No news IS good news. Things seem steady both in terms of returns and finding new loans to invest. In the past six months, it appears Lending Club has improved their loan filtering process where the scoring of the loan more matches the credit risk. So there’s less of a chance of finding a diamond in the rough. In my opinion this is a great thing; Prosper, on the other hand, could use some improvement.

Prosper.com

Prosper.com Returns (January 2013)

Nothing really new to report with Prosper.com other than my rate of return has increased to 14.05%, from 11.45%. My return without question will decrease as the defaults come in and they are seasoned. During this period, I made $34.68 in interest payments. As stated last year, I will be adding more money to this account (Lending Club is also included). More than likely I will do this in the third or fourth quarter of 2013. I’m currently funding tax deferred accounts first and have some major expenses to take care of first.

Disclosure: I have over $11,000 invested with Lending Club and over $1,000 with Prosper.com.

Comments

  1. says

    My first go at Prosper was back in 2008 just before the quiet period. I invested $2000 and ended up negative (about -2%). I started my second go in April of 2012 and it seems to be going a bit smoother, but I have 3 loans already that are significantly late. Right now I have about $2600 invested and contribute $25 per week. I was able to make my initial investment by setting up automatic investing with some filters I chose based on now defunct http://www.lendstats.com. I have since began using http://www.prosper-stats.com to choose my filters. I have even dabbled a little bit in note trading on folio. Mostly to try and offload notes that have been late but since become current again as these notes tend to end up defaulting at a higher rate.

    Back in 2008 I also funded about $125 of notes on Lending Club just to try it out. Since Lending Club is appearing stronger now and more stable than Prosper I am trying to find a way to make the process of note selection a little more automated like I have it in Prosper. Unfortunately many of the filters that I like to use on Prosper are not available on Lending Club. This is the main factor keeping me from switching to Lending Club to any serious extent.

    How are others out there making their note selection process more automated and still getting the higher returns they want on Lending Club?

    • says

      I tried Prosper back when it first started in 2007 and loss a significant amount of money. Although recently I have heard nothing but great reviews about them as they have undergone significant regulation since 2007. However, my main concern is not being able to collect your initial investment back if someone defaults. I would like to send lenders be able to put liens on the individuals that are late instead of them just taking a hit on their credit score.

    • says

      Drew, It is very difficult to setup automated investing on Lending Club. I have traditionally downloaded the CSV file of in-funding loans and then used an Excel macro to filter the loans. Then it is a simple case of clicking on a link in the spreadsheet to invest in each note. Not automated but pretty easy.

      You should also check out Interest Radar: http://www.interestradar.com/. They have some pretty cool tools now that allow one-click investing as well. And the filtering is much better than on LendingClub.com.

  2. Satisfied Investor says

    After a couple of years in LC, I too am still quite satisfied with Lending Club. As I see (and read) more and more about how none of the Wall Street companies’ officials have been prosecuted for the sub-prime scandal, I am even more satisfied with my decision to invest in the “rank and file” countryman with a good credit score rather than increasing my risk in equities.
    My question now, as I plan to put more into LC, is how stable is the company? Since we investors have no equity interest in the company or in the loans, it appears that Lending Club’s stability is the largest potential risk to our investments. Is the company yet profitable?

    • says

      “My question now, as I plan to put more into LC, is how stable is the company? Since we investors have no equity interest in the company or in the loans, it appears that Lending Club’s stability is the largest potential risk to our investments. Is the company yet profitable?”

      Peter might be able to better speak on this point. I believe with LC the revenue is there, and could easily be profitable this year. I think the size the company failure is becoming less and less of an issue with each passing month.

    • says

      Lending Club just announced in November that they are now cash flow positive. I expect Q4 of 2012 was their first profitable quarter. we will know in a few weeks. They have $50+ million in the bank and are planning an IPO some time next year. I would say they are a very stable company for one of their size and age. As Larry says, I think a failure at LC is becoming a smaller possibility with each passing month.

      • Satisfied Investor says

        That sounds great! Thanks for the intel Peter. What are the chances that LC investors will get the chance to get in on the ground floor with the IPO before it hits the street?

  3. says

    I am slowly getting but surely moving away from Prosper.com
    I started in 2005 with Prosper while I’m above water using them, their platform is lacking and I find that Lending Club seems to have a better class of loans available, as the process they use to filter prospective individuals has a much higher threshold than Prosper.

    Prosper in my opinion needs to improve and they also need to allow lenders to sell their loans through FolioFN, even if they are late, which is exactly what Lending Club allows.

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