Lending Club Update – March 2010 Performance

Lending ClubAs of April 1st, I’m enjoying a 10.66% net annualized return on a Lending Club portfolio composed of 270 notes. As you can see from the graphic below, my performance is somewhere near the middle of the pack. I’m okay with that, however, as I’ve been focused on building a relatively low risk portfolio. In fact, 70% of my current portfolio is composed of Grade A and Grade B loans.

Having recently sold off two late loans at a small loss, I’m currently holding just one loan that is overdue. That loan is currently up for sale on the secondary market, but I’m not willing to take a huge loss on it as I’ve seen loans that are much later than this come back from the dead.

Most of my problematic loans stem from my initial “High Risk vs. Low Risk” experiment. In the time since I’ve started, I’ve developed a number of loan selection criteria that seem to be working quite well (knock on wood).

As always, if you’ve been investing with Lending Club, I’d love to hear the details. How long have you been doing it? How many notes do you have? How do you select them? And how has your performance been?

10 Responses to “Lending Club Update – March 2010 Performance”

  1. Anonymous

    I was researching the LC website and noticed the investor requirements. How stringent are these requirements? I can say, I do not currently meet the min gross annual income of $70k, or net worth of $70k, but I just came into an inheritance and after paying off all of my own debt, I’ll still have a nice chunk of change left over, which I would like to invest a portion of into LC. Like many of your posters, I would start with about $1000. Any thoughts or comments?

  2. Anonymous

    Been with LC a little over 4 months now. Have 87 notes about 40% “A”, 55% “B’ and the balance are “C”

    So far so good, no late payments. I look mostly for credit card consolidation loans, steer mostly clear of any delinquencies, and factor in gross income and length (and source) of employment. Weighted average rate is 10.05%. LC does seem to be gaining momentum slowly based on the number of funded loans and the average number of notes available to review.

  3. Anonymous

    I have a 40 notes at $25 each, the oldest of which was purchased around 8 months ago.

    I’ve had several loans go late, but all but one have eventually come back to current after falling behind.

    I’ve had one loan — a B grade — that made exactly one payment and then stopped. Reading the collection attempt report from Lending Club is depressing because it’s just “Attempted to contact Borrower. Left voicemail” with no reason to be optimistic at all. At this point it’s hard not to assume that the borrower just intentionally defrauded Lending Club (and me). The loan was supposedly for a new roof on the guy’s house, so you would think he’d be easy to find. I’m not sure what my expected rate of return will change to once the loan is charged off, which I think should happen soon as it’s now around 120 days past due. Unfortunately, a borrower who fails to repay over $24.00 of principal on a $25.00 note can really steal a big piece of what you were hoping to earn through peer lending in the first place.

  4. Anonymous

    I didn’t realize, but in a few weeks I’ll have been on LC for a year! I only have 6 notes, but I’ve only invested $100 of my own money, the rest has been re-invested from payments and bonus monies from starting the account. I’ve started using my swagbucks for $5 paypal cards and investing those into the account so I never will lose much “real” money. I’ve been quite happy with the whole set-up. I choose my notes based on what people are going to do with the money. Most of them are people who are using them for medical expenses. I really don’t go for the debt consolidation, wedding stuff or helping out family members.

  5. Anonymous

    i’m one of the slow starters. I started in December 2009 and I now have 7 notes for $25 each. If I have any go bad I’ll try not to let it put a bad taste in my mouth but I have pretty good idea how the system works by now. I am trying to figure out the fee structure to improve my earnings a little bit. My plan is to ramp up my contributions as money becomes more available. So far I have invested 80% of every note, while the other 20% was provided by payments on other notes and the $25 sign-on bonus.

    My NAR is at 11.25% according to the site.

  6. Anonymous

    I love this blog by the way.

    I am only 2 months into Lending Club, with just 40 notes as I wanted to get a real-world understanding before really jumping in. I went pretty conservative, with 80% As and Bs because even a relatively “low” 8-10% return is a great return compared to cash options (albeit with more risk). That said my Cs and even down to a couple of Fs have made the two payments, and I have a B who was late but paid within the grace period and another who has seen their credit score plunge. So very interested in refining the screening for notes similar to how you have built your criteria as I get more into it.

  7. Nickel

    Plim: I’ve been doing this for almost a year. I think that I bought my first notes in May of 2009, though I’d have to double-check for

    I agree about people who buy 1-5 notes and then draw conclusions a few months later. Not very meaningful. It’s far too early to know anything at that point, and with such a small sample size you can also get very lucky or very unlucky.

  8. Anonymous

    Excellent! I’ve been following your experiment, because other bloggers only invest in a few loans thinking it is a meaningful “trial”. Your approach makes more sense: diversification and selection. How mature is your investment so far? when did you start?

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