Comments on: Lending Club Review – How to Become a Bank

By: Larry Ludwig

Larry Ludwig — Mon, 14 May 2012 22:57:04 +0000

Hi,

Lending Clubs NAR != APR. Possible defaults and cash not invested is not part of this calculation. A quick estimate of your ROI is usually 2% below NAR. For an accurate estimate of ROI there are a few online sites like Nickel Steamroller:

http://www.nickelsteamroller.com/portfolio

Hope this helps.

By: StandardRaiser

StandardRaiser — Mon, 14 May 2012 22:44:34 +0000

Okay Investor Junkie, question for you. Is the net interest rate the lending club annualized rate or is that factoring in the principal repaid per payment?

By: Dan

Dan — Fri, 11 May 2012 07:50:54 +0000

I opened an IRA prime account (minimum investment $20K) in August of 2011. My default rate has been about 3% which is what lending club claims. Net interest rate is over 11%. I initially let LC take control of the account as I opted for the “C” grade. After 6 months, I decided to take control using filters of my choice and am reinvesting EVERY penny that comes in. I currently have over 1,000 borrowers paying me on average about a buck per month. As I buy more notes (lend more money), every month, I receive MORE $ every month which allows me to lend (buy more notes) and it grows even more quickly. Pretty darn exciting. By the way, I opened this account by transferring the $20k from one of my existing IRA accounts. Obviously, I am very confident with Lending Club, their board of directors and because it’s a growing company. The market isnt paying squat right now as are CDs. Might as well stick your cash underneath your mattress. LOL

By: Starting Low...Staring Slow

Starting Low...Staring Slow — Sat, 24 Dec 2011 22:44:58 +0000

Well, VERY good review. I must say, since peer to peer lending is new, I have started low and started slow. Call me a chicken!!!! I have been putting $25/week into the account. Once I start seeing things getting paid then I will boost up the monies. I only have $200 in the account…and I use it as blow/play money so I don’t really care about one default. Once I am comfortable with the system and my picks, I will pour real money into it. Until then, as my name denotes, I am starting low and starting slow!!!! LOL!!!!

By: Investor Junkie

Investor Junkie — Sun, 04 Sep 2011 04:53:26 +0000

Hi Rick good question. I know Lending Club profit is taxed as ordinary income. I don’t know if you can take any tax losses.

I don’t know you will have to ask Lending Club about that question. If you get an answer please post back.

More than likely they will refer you to speak with an accountant.

By: High-Yield Investing In a Low-Yield Environment

High-Yield Investing In a Low-Yield Environment — Wed, 24 Aug 2011 23:49:24 +0000

[...] the peer-to-peer lending (P2P) service Lending Club for over two years. To see my process, read my Lending Club review for the details. So far I’m very happy with my 11.49% net annualized return. Peer-to-peer [...]

By: Rick

Rick — Wed, 24 Aug 2011 23:48:54 +0000

How are losses treated for tax purposes? Do you take short-term or long-term capital losses or do you use some other method?

By: July 3 Carnival of Wealth | Control Your Cash: Making Money Make Sense

July 3 Carnival of Wealth | Control Your Cash: Making Money Make Sense — Sun, 03 Jul 2011 19:52:44 +0000

[...] thought banking was one industry where it was impossible to eliminate the middleman, think again. Investor Junkie introduces us to Lending Club, a peer-to-peer service that lets you borrow from (and lend to) other [...]

By: Yakezie Carnival: Independence Day Edition — Narrow Bridge Finance

Yakezie Carnival: Independence Day Edition — Narrow Bridge Finance — Sun, 03 Jul 2011 11:03:29 +0000

[...] Investor Junkie has given Lending Club a shot. Learn how you can be a bank. [...]

By: Canadian Finance Carnival #43 – Canadian Finance Blog

Canadian Finance Carnival #43 – Canadian Finance Blog — Sun, 03 Jul 2011 09:02:39 +0000

[...] Junkie at Investor Junkie presents Lending Club Review: Be a Bank, saying “Did you ever wish when applying for a bank loan, that you were the loan officer [...]

By: Satisfied Investor

Satisfied Investor — Tue, 31 May 2011 11:13:53 +0000

I’m not a fan of the new pre-selected questions for investors to select for questions of the borrowers. Yes, I know that it is about PII and security. I thought, however, that we are lending to adults. These are people capable of determining for themselves what they should or should not divulge for their own privacy. The problem with the pre-determined questions is that they don’t cover all of the situations.

By: Lending Club Reviews: Read Reviews from Lending Club Borrowers and Lenders | Peer to Peer Lending News

Sun, 29 May 2011 19:25:39 +0000

[...] Investor Junkie provides an overview of the borrowing and lending processes on Lending Club and discusses some strategy for investing in Lending Club loans. He also provides regular updates about his investment performance at Lending Club. [...]

By: Investor Junkie

Investor Junkie — Tue, 21 Dec 2010 23:24:09 +0000

Hi Satisfied Investor. The 10% NW is a SEC requirement, not Lending Club. In addition, while you shouldn’t invest more than 10% of your net worth in theory no one would stop you unless you flat out told Lending Club your total net worth. With that said, I still wouldn’t invest more than that amount myself. Peer to peer lending, while so far is promising, is still an new type of investment. Based upon stats it is closer to junk bond investing, than corporate bonds. That’s not to say you can’t generate good and reliable income from junk bonds. IMHO both require a much more savvy investor than an index based “set it and forget” type.

By: Satisfied Investor

Satisfied Investor — Tue, 21 Dec 2010 22:22:37 +0000

I have been an investor with Lending Club for only 2 months, and already have earned more in interest than banks, cd’s, and bonds have paid me all year.

The banks hurt us all this past 1 to 2 years with the bailouts, etc. They continue to increase people’s charge card rates while paying nothing in interest.

LC levels the playing field.

One question: Why are we limited to investing up to 10% of our net worth? I believe in diversification, but don’t like others telling me “how much”.

By: Borrowing from Lending Club

Borrowing from Lending Club — Tue, 07 Dec 2010 13:01:11 +0000

[...] is a guest post from Investor Junkie, who invests in Lending Club loans, and wrote a Lending Club review as an [...]

By: Investor Junkie

Investor Junkie — Mon, 06 Dec 2010 12:29:25 +0000

Hi David,

You are correct about how Lending Club calculates return and aware of this. NAR != APR and is slightly lower. For sake of simplify and comparison of others I display NAR. My APR is approx 1% lower.

This web site discusses in slightly more detail at fivecentnickel.com – Lending Club Update – April 2010 Performance.

By: Daved

Daved — Mon, 06 Dec 2010 11:40:03 +0000

I used prosper.com starting about 3 years ago… About the worst time to get in. Many loans defaulted. All in all though I broke even. They since dropped my state, so I can’t get back in now.

The only thing in your article I don’t trust from your article is the rate of return. what you need to look at is projected effective rate. Effective in that it looks at what you’ll be making with the money not doing anything, after it’s paid back, and projected, guessing which % of the loans will default. ericscc.com calculated that for me.

By: Is Lending Club a Scam? « Lending Investor

Is Lending Club a Scam? « Lending Investor — Mon, 29 Nov 2010 18:38:51 +0000

[...] to invest with Lending Club? The author gives a detailed Lending Club review Compared to other fixed income investments at the moment Lending Club offers decent and stable [...]

By: Investor Junkie

Investor Junkie — Thu, 25 Nov 2010 03:26:44 +0000

HI Alberto,

Are you commenting to mention this info, or did I make a mistake in the post?

By: Alberto

Alberto — Thu, 25 Nov 2010 03:15:59 +0000

Borrowers make payments on a monthly basis and the money is usually taken out automatically out their checking account. After a 4 day processing period the money gets deposited into the lender’s account.

By: Yakezie Member Post – Investor Junkie | Yakezie.com

Yakezie Member Post – Investor Junkie | Yakezie.com — Wed, 06 Oct 2010 08:00:51 +0000

[...] my blog, hopefully we both will become a better investors in the process.Some Posts You Might LikeLending Club Review – How to Become a Bank – P2PLending seems to have taken off and so far I have gotten great results (12.38% APY as of [...]

By: Investor Junkie

Investor Junkie — Fri, 01 Oct 2010 10:36:07 +0000

Hi Marion. If I understand your question correctly, the money goes into your account at Lending Club. You can decide to transfer it out to say a checking account.

By: Marion

Marion — Fri, 01 Oct 2010 07:04:20 +0000

How are the investor's paid? Yearly? It would seem a monumental task to pay all the investors monthly? Thanks

By: Investor Junkie

Investor Junkie — Wed, 24 Mar 2010 07:19:02 +0000

Though it appears you can trade notes on the secondary market.

http://www.fivecentnickel.com/2010/03/22/alternat…

By: Investor Junkie

Investor Junkie — Wed, 24 Mar 2010 07:14:19 +0000

Hi, You would have to ask Lending Club. It's a review process with each state and I believe with the SEC. You can send them a tweet @lendingclub