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Lending Club

imatlas

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Originally Posted by texas_jack
Without reading it, it sounds like a ponzi scheme

LOL definitely my first, second and third thoughts, which is why I'm posting this and googling it like crazy. Not seeing any major red flags so far, so I thought I'd throw it out here and see if anybody has direct experience.

I'm looking at it as an investor, not a borrower, but I'm interested in hearing from either.
 

Harold falcon

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imatlas

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Originally Posted by harvey_birdman
I mean...

There's a little more to it than that!

Borrowers are assigned a creditworthiness grade, and the interest rate they pay depends on their grade. Low grade borrowers pay close to 21%, high grade borrowers pay under 7. Investors buy a portfolio of loans paying different interest rates, so the average return works out to 9.65%.

It's an interesting model, and I'm looking for the holes. So far so good...but I don't want to wind up the Javyn of peer-to-peer lending.
devil.gif
 

bringusingoodale

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Can't speak on the trustworthiness of that particular site, but these types of person-to-person lending sites are becoming more popular. From an article on these:

Prosper and several other "person-to-person lending" sites operated like an eBay for credit: Prospective borrowers put up requests for loans, disclosed their credit rating and the reason they needed the money, and tried to make a case for lenders to take a chance on their dream"”at attractive premiums...

By putting lenders directly in touch with borrowers"”rather than through the banking system"”person-to-person lending sites claim that they can cut down on overhead costs, thereby making it cheaper to lend to people with poor credit.
The SEC cracked down on some for some technicalities, but there is money to be had from these it seems. Take note all you financial wonks posting on here trying to get rich quick!
 

Reborn

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The main issue I've seen with these lending sites has been a lack of liquidity/long lockups.
 

imatlas

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Originally Posted by Reborn
The main issue I've seen with these lending sites has been a lack of liquidity/long lockups.

Exactly. They claim that any note can be sold in less than 5 business days, but they also encourage buying hundreds of notes to diversify. Selling out of that many notes sounds...complicated.
 

bringusingoodale

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Originally Posted by imatlas
Exactly. They claim that any note can be sold in less than 5 business days, but they also encourage buying hundreds of notes to diversify. Selling out of that many notes sounds...complicated.

This is all I need to hear to be sure this is a goldmine. All things arcane and complicated yield money, at least this is what Wall Street teaches us.
 

mintyfresh

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I've put in only a small amount ($3k) in this the past two years and haven't had a default on any of the accounts I've lent to. I only invest in A and B grade borrowers with background checks. I get about a 6% return after commission. Not bad considering a 2 year CD at local banks are just above 1%.

As previously mentioned, the illiquid aspect of these 'investments' are the biggest downside for me.
 

imatlas

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Originally Posted by mintyfresh
I've put in only a small amount ($3k) in this the past two years and haven't had a default on any of the accounts I've lent to. I only invest in A and B grade borrowers with background checks. I get about a 6% return after commission. Not bad considering a 2 year CD at local banks are just above 1%.

As previously mentioned, the illiquid aspect of these 'investments' are the biggest downside for me.


Thanks Minty!

How do you get out? Do you have to wait for all of your investments to come to term?

Do you use the automatic purchasing tool, or do you go through and hand pick the loans that you fund?
 

dtmt

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Been using LC for about 2 years, I am currently earning just under 9% after fees/defaults on a portfolio of >700 loans. Overall pretty happy with it so far.
 

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