I decided to take a minute or two today to look at my Lending Club (Lending Club Reviewed) account today. For the most part, I don’t log in too often. I have to admit that I made some poor choices on loans on Prosper in the past and I’ve been waiting for the shoe to drop on Lending Club. Here’s the interesting thing… Lending Club has outperformed all my other investments this year. Check out my Lending Club portfolio:
So you are probably asking yourself this, “What makes LendingClub different?” I’m not 100% sure, but it could be because I took loans with relatively low risk. I erred on the side of caution after realizing that I took too much risk with Prosper. I also think that Lending Club typically has stricter standards for getting a loan. Maybe I just got lucky with the loans it put me in.
In any event, 59 loans paid off or in good standing out of 60 is pretty good. Even the outstanding loan paid me for a couple of months, so it’s not total loss from that person (just close to it). Perhaps P2P Lending has some legs to it after all.
As far as “what makes lendingclub different” – probably the fact that they only allow prime borrowers. What would be HR, E, or I believe even most D borrowers at Prosper likely do not qualify to borrow at Lendingclub.
I am not as surprised as you and my performance is similar.
I decided to lend at Lending Club instead of Prosper a year ago for 2 reasons: first, borrowers are fewer but better in quality (similar to AAs, As, Bs and Cs in Prosper) and second they do lots of screening after the loans gets posted (I get many of the loans I pick “removed”).
So far, their collection is far better than Prosper as well.
I have some loans at Lending Club but I won’t be able to lend there anymore. They don’t allow lenders from half the states-including mine. Even if they did allow lenders from my state I couldn’t make a loan now because I don’t meet the income and net worth requirements. They seem crazily high for a $25 investment.
I have seen similar performance on my loans with Lending Club. A few are late, but overall I am very happy with the performance. I still can’t lend there in my state, but I hope that it is available again soon.
ZimpleMoney.com recently launched catering to people who want to make loans within their existing “naturally” occurring social networks. It is not a marketplace site – it is more similar to VirginMoney than Lending Club. I hope your readers will take a look. Zimpley, Steve Rabago, ZEO, ZimpleMoney.com
My A and AA lenders in prosper are doing similarly well. It’s the B, C, and D that are killing me. Strangely, my E is behaving as well as my A. I think I just got lucky or picked the right groups of E borrowers.