Lending Club – September 2009 Performance

As September came to a close, I was enjoying an 11.98% net annualized return with Lending Club. Once again, I spent the month expanding my holdings beyond my original “High Risk” and “Low Risk” test portfolios. My overall rate of return has slipped a bit as the loans I’ve been investing in recently are, on average, higher quality than my original holdings.

At the end of the month, I had 133 notes outstanding, and all but one are performing as expected. That one exception is the same note that has been problematic from the start. In fact, that borrower has yet to make a single payment, and the loan has now been sent to collections. Thankfully that note is only worth $25, so it’s won’t hurt my overall portfolio too much.

Speaking of collections… Lending Club is hosting a “Credit and Collections” webinar tomorrow (Thursday) evening at 7PM Eastern. If you can’t listen in live, you should be able to access the archive at some point in the near future.

13 Responses to “Lending Club – September 2009 Performance”

  1. Anonymous

    I was thinking about using our IRA to fund a LC account, but it will cost $250 a year to do it, as they use a 3rd party for IRAs. Do you have any ideas to somehow avoid this cost?

  2. Brian: J. Money is correct. Most loans are on the order of thousands of dollars (up to $25k), but they are split up into notes of as little as $25 for investors to buy. This allows investors to spread their risk around, and also allows borrowers to get their money without LC having to find someone willing to lend out a few grand all in one shot.

  3. Anonymous

    I think it’s the minimum amount because the actual loan is “chunked” out. So if someone wanted to borrow $500, let’s say, it would mean 20 mini-loans of $25 scattered all over for investors to join in (like Nickel).

    At least that’s what I gather when I initially tried signing up. One of my friends has like 100 loans of $25 in his account, so I guess it’s a pretty popular #.

  4. Anonymous

    I find it surprising that the minimum amount that can be borrowed is $25. Who would go through all this trouble with making payments etc. on a principal of $25? Did the guy need the money to buy lunch or something?

    I don’t want to sound rich or anything, because I’m definitely not. But if I needed 25 bucks that badly, I could think of some easier ways to get it than to take out a loan.

  5. Eric: I think it’s too late to sell it. When it first showed up as late, I probably could’ve sold it at a discount, but at this point I think it’s pretty much a lost cause. It’s been sent to collections, so I can’t imagine anyone wanting to buy it.

    CCC: That’s actually a good idea for a dedicated post — how I choose loans, and how long it takes me. Keep an eye out…

    curious: They make their money by charging a fee to borrowers, and also taking a small slice (1%) of all amounts paid to lenders. There are no brokerage fees per se.

  6. Anonymous

    Hello Nickle,

    Can you advise on the best way to minimize brokerage fees? I.e., do they chart per note, based on your balance, based on the profit, etc …?

    Thank you

  7. Anonymous

    I have played around with the idea of putting some money into Lending Club. What is the time investment on your end so far? (i.e. is it necessary for you to spend a lot of time researching/analyzing things on the site or can you pretty much still get a good return by just doing some initial research and then leaving it be?)

  8. Anonymous

    Great Rate so far Nickle. I became an investor there last month. It is really quite interesting and I’m enjoying the learning process. So Far – so good. Next month, I’ll add an additional amount for investing. Slow and steady.

  9. Anonymous

    I got all excited to sign up and start investing last month when I realized the state of Maryland forbids it!! What a dissapointment…I had some free cash I wanted to play around with 🙂 if you ever create your own lending club, you better let me know.

  10. Gerry: The minimum investment is $25 per note, so you can work up from there. Obviously, the more notes that you have, the less that a bad note will hurt you.

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