5 Year Notes
Since my last update, Lending Club introduced 5 year notes. So far, I’m not impressed with them and do not see the advantage as a investor. In my opinion, the average additional 2% interest (for at least the notes I invest in) for 2 more years is not worth it. You are taking on more risk, for an unsecured loan mind you, and not getting that much return. As a borrower, I think 5 year loans are a much better deal. What’s not to like as a borrower? You get a lower rate over a longer period. So as an investor I’ve been sticking to only 36 month notes.
One Late Note
The current late note is on the borrower’s first payment to Lending Club. This, of course, isn’t a good sign. They previously never had any delinquencies, nor any public records on file, and have a credit history going back to 1994. The other ironic thing is their FICO credit rating went up the past month from 679-713 to 714-749. I have put the loan on the block through Lending Club’s FOLIOfn. So far I do not have any takers and may reduce the sale amount. The takeaway from this is you never know who’ll become a late payer or default.
Some highlights in my investing for the past three months:
- I now have 89 notes total. Another one paid early. No defaults and one late payment.
- I added an additional $500 and plan on investing in more notes
Update: As of July 6th 2010, I’ve now reached 12.00% return with my Lending Club investment.
Sign up as a Lending Club Investor!