Lending Club

[KPO89]

Has either of you physically seen the cash or is it just a number on the screen?

 

[dtmt]

As borrowers make payments each month, it shows up in your account under "available cash" which you can then transfer back to your bank account at any time. However I generally reinvest it, because otherwise I'm not earning any interest on it.

 

[imatlas]

Originally Posted by dtmt

As borrowers make payments each month, it shows up in your account under "available cash" which you can then transfer back to your bank account at any time. However I generally reinvest it, because otherwise I'm not earning any interest on it.

Have you ever sold notes? I worry that there is significant and poorly defined market risk associated with these notes if I need the capital in less than 36 months.

 

[dtmt]

Early on I tried selling a note just to see what would happen. It was an A-grade note and I priced it at 1% above face value (to make up the 1% selling fee). It sold pretty quickly, within a day or two. I think a lot of the demand comes from states in which LC has not yet received approval to operate its main site, so I don't know if that will decrease as they receive approval in these states. I'd expect there will always be a demand for A-grade notes though, as they often sell out on the main site fairly quickly. Having said that though, I personally wouldn't invest money in LC if I thought there was a good chance I would need it in less that 36 months.

 

[imatlas]

Originally Posted by dtmt

Early on I tried selling a note just to see what would happen. It was an A-grade note and I priced it at 1% above face value (to make up the 1% selling fee). It sold pretty quickly, within a day or two. I think a lot of the demand comes from states in which LC has not yet received approval to operate its main site, so I don't know if that will decrease as they receive approval in these states. I'd expect there will always be a demand for A-grade notes though, as they often sell out on the main site fairly quickly. Having said that though, I personally wouldn't invest money in LC if I thought there was a good chance I would need it in less that 36 months.

Which means you're also betting that bond yields won't rise significantly over the next few years, so that LC notes remain more attractive than bonds.

 

[DrCooke]

I put about 250-300 in it over the past year. Currently I've been receiving around 7.00 a month (big money) and put into my bank account. Not too bad. So it's definitely legit.

 

[coop86]

It does seem like a better place to put money than a savings account, but I'm pretty sure you're in for some trouble if the Fed raises rates. I'm surprised some investment bank isn't buying these up by the 1,000s and trying to sell them like MBSs.

 

[imatlas]

Originally Posted by coop86

It does seem like a better place to put money than a savings account, but I'm pretty sure you're in for some trouble if the Fed raises rates. I'm surprised some investment bank isn't buying these up by the 1,000s and trying to sell them like MBSs.

Apparently some private portfolio managers have been buying these by the millions (or so LC claims). I'm sure it's only a matter of time before somebody comes up with a way to securitize them.

If you're solely in it for the income, rising interest rates shouldn't hurt too badly, but it will make reselling of notes more difficult, lowering yield if you're actively trading them.