According to a recent press release, Lending Club has increased the upper limit on loan requests from $25, 000 to $35, 000. According to Lending Club CEO Renaud Laplanche, this change was “prompted by customer demand.”
This is the second major change in their lending policy over the past year or so. The first was when they introduced five year (60 month) loans to complement the original three year (36 month) term.
As for me, I have little interest in five year loans, and I’m also not interested in funding mega-loans. In fact, I don’t typically invest in loans over $20k – partly because they rarely meet my note selection criteria, and partly because it seems like fraudsters are more likely to go for the big score.
Despite my trepidation about larger loans, Lending Club claims that loans in excess of $20k actually perform better than smaller loans, returning 10.30% annualized vs. an overall average of 9.68%.
Yeah, I am slowly starting to pull my money back out of Lending Club. I was doing well for a bit, but I’m about to have 2 more defaults, and I’ve been pretty careful with my selections… even use your criteria.
Really, I am still doing better than I could with a CD, but with the increased risk, that might not be the case in the next 3 months.
I wish I could have gotten either 10.30% or 9.68% on my investments. I thought I was so careful about my selections and I never put more than $50 into any of the dozens of loans I invested in, yet still got several defaults. The 6.5% I have made so far is still better than any bank, but it makes me uncomfortable given the 11% average rate I started at.
I’ve just had my third default after people making only 2 or 3 payments on all different levels (B,C,D) – none so far for A. And, I selected verified income…with half-decent credit scores.
I think we need to hold Lending Club more responsible to check out information on potential borrowers, just like a bank would do, so we can make better decisions and try to uncover some of these fraudsters.
I never invest more than $25 in each, and no 60-month loans for me. No “home improvements” for me either. A person who defaults after 2 or 3 payments KNOWS they’re going to do it (going to get laid off, etc., got to pay off their meth/coke suppliers -haha). Also, when you do an employment verification, the only info they’re allowed “comfortably” to tell you is that “yes…the person works here”…they may not tomorrow, but today they work here. They could lie about the length of the employment…etc.
Getting to be not really worth it anymore – would have been a better game if we weren’t in this big unemployment atmosphere.
I don’t like the 5 year loans either, if you look at the fine print, Lending Club won’t collect after the 5 years for late payment. On the 3 year loans, they will collect after the three years.
I’m not going for the large dollar amount loans either.
I saw that press release as well. I only invest in some of the smaller, short term loans – usually under $10k, for various selection reasons.
I think one reason the large ones would have overall returns could be because they have higher interest rates because the borrowers have worse credit. Kind of goes along with your “fraudsters go for the big score.”