Sorry it's been so long since my last update but I've been really busy and my portfolio showed, $165 was sitting around waiting for me to invest so I did that tonight. So you guys know, I'm going to try to be doing my final paper in my Scope and Methods class on analysis of Lending Club notes in SPSS to see if I can find what notes perform best and basically beat Lending Club's algorithm.
In Lending Club news you can follow @lendingclub on twitter and retweet their contest to win a free shirt and $50 to your account, a pretty slick deal, in my opinion. While you're doing the twitter thing remember check out @thepeertopick to get updates whenever the blog is updated as well as any other P2P news that I put out there because I'm too lazy to blog it. You might also want to check out @thelittlevc who also has a P2P lending blog.
Top Pick: "Business Buy-off Loan"
This borrower has a great credit score, no record/delinquencies, and is looking to buy out a business. The borrower says they'll keep their regular job for now which earns $70k a year so this seems stable even if the business is a flop.
I don't have time to write up my other 2 picks but here they are:
"Son in College"
"Piano Purchase for Music School"
Sunday, November 8, 2009
Thursday, October 29, 2009
Lending Club Note Picks for 10/28/09
Sorry it's been so long since the last update, I'm going to make a post tomorrow (hopefully) that has info about the Lending Club no-fee IRA, the new stats page, and the new lender's interface which should be live to everyone by then.
This week's pick has no clear front runner, here they are in no particular order:
Worth Considering: "COnsolidate and Breathe"
The borrower on this note is a school principal and, in my experience, this is a position that basically never gets fired, they cut teachers first. This job stability means that there is a good chance the borrower will have a steady stream of income to pay the loan off with. The credit profile tells me this borrower has a tendency to get into debt and even missed a payment about 5 years ago but because of the job they manage to stay afloat so I think it's worth a shot, I recommend you invest whatever your normal base amount is.
$22,000@20.86%
Approved/Unverified

Most Worth Considering: "my dream wedding"
I like this note because, for some reason, weddings have a low default rate on lending club, although I haven't had time to run crosstabs and see if this holds true with isolated for credit grade within this group. The borrower has a short credit history but a good one with a comparatively high score. If I were forced to pick a best note this week it would probably be this one. The amount on the loan is also pretty small compared to what we're used to in this high-interest category, this means the payment is more manageable so I think it is very likely that this will stay current. I invested triple my base of $25, so $75.
$5,000@17.39%
Under Review/Unverified

Worth Considering: "Credit Card payoff and deck addition."
No records or delinquencies, 16 year history, and low inquiries are all positives, the only negative is the high credit usage but this is just the lender's fault for not getting more credit available because the revolving debt isn't that large compared to what we usually see here.
$18,000@17.39%
Approved/Unverified

This week's pick has no clear front runner, here they are in no particular order:
Worth Considering: "COnsolidate and Breathe"
The borrower on this note is a school principal and, in my experience, this is a position that basically never gets fired, they cut teachers first. This job stability means that there is a good chance the borrower will have a steady stream of income to pay the loan off with. The credit profile tells me this borrower has a tendency to get into debt and even missed a payment about 5 years ago but because of the job they manage to stay afloat so I think it's worth a shot, I recommend you invest whatever your normal base amount is.
$22,000@20.86%
Approved/Unverified

Most Worth Considering: "my dream wedding"
I like this note because, for some reason, weddings have a low default rate on lending club, although I haven't had time to run crosstabs and see if this holds true with isolated for credit grade within this group. The borrower has a short credit history but a good one with a comparatively high score. If I were forced to pick a best note this week it would probably be this one. The amount on the loan is also pretty small compared to what we're used to in this high-interest category, this means the payment is more manageable so I think it is very likely that this will stay current. I invested triple my base of $25, so $75.
$5,000@17.39%
Under Review/Unverified

Worth Considering: "Credit Card payoff and deck addition."
No records or delinquencies, 16 year history, and low inquiries are all positives, the only negative is the high credit usage but this is just the lender's fault for not getting more credit available because the revolving debt isn't that large compared to what we usually see here.
$18,000@17.39%
Approved/Unverified

Labels:
debt consolidation,
home improvement,
lending club,
note picks
Tuesday, October 20, 2009
Lending Club Note Picks for 10/20/09
Top Pick: Credit Card Loan
This borrower has been employed at the same place for 10 years, which generally means job security. The purpose of the loan is to consolidate credit cards, the borrower's rate wouldn't actually drop that much but he says he cares more about having only one payment. The borrower's utilization is high and the credit history is short (4 years) but there is no delinquency and only 1 inquiry on file.
$15,000@19.82%
Approved/Unverified

Runner Up: Blessings Cottage
This borrower is looking to buy an established business. As you know, I don't like to invest in new businesses but the purchase of an established business has a little less risk and the rate on this loan is pretty good. The borrower has a high utilization but that's because they haven't worked on building their available credit, they've only used $2,139 of credit.
$25,000@20.17%
Under Review/Unverified

This borrower has been employed at the same place for 10 years, which generally means job security. The purpose of the loan is to consolidate credit cards, the borrower's rate wouldn't actually drop that much but he says he cares more about having only one payment. The borrower's utilization is high and the credit history is short (4 years) but there is no delinquency and only 1 inquiry on file.
$15,000@19.82%
Approved/Unverified

Runner Up: Blessings Cottage
This borrower is looking to buy an established business. As you know, I don't like to invest in new businesses but the purchase of an established business has a little less risk and the rate on this loan is pretty good. The borrower has a high utilization but that's because they haven't worked on building their available credit, they've only used $2,139 of credit.
$25,000@20.17%
Under Review/Unverified

Friday, October 16, 2009
Lending Club Notes Picks for 10/16/09
As your may have seen in my comment on my earlier picks this week, Lending Club pulled my top pick before it was funded, I guess some things are too good to be true. Hopefully these picks will all fund without a problem.
I should also give a quick performance update; my net return is 12.46% right now, up .03% from the beginning of the month:
I've been selling my lower interest rate notes on the secondary market at cost (present value + accrued interest + 1% to cover selling costs) and investing in higher-return notes to boost my rate. Here are some of those very notes I'm using to bump up my average:
Top Pick: Utility Footwear Business
The reason this is my top pick is because this is one of the few times I like the story behind the loan better than the interest rate, although 17.74% isn't bad at all. This is a rare case in which the borrower gave up anonymity to post her blog which has a video of her demonstrating her invention. To summarize, the shoe is a small flat of the variety that is evidently called a "Mary Jane," the Mary Jane I've always known is not a shoe, but then again, I don't wear heels, either. Basically this shoe folds in on itself to form a kind of pocket. The idea is that heels, I've been told, are uncomfortable to wear for extended periods of time, like what would happen if you took public transit and walked somewhere formal. You could wear these shoes until you got to the event, then put on your heels and keep these "Flip Slips" in your purse. I consulted with some people that do wear heels that think this is a good idea so I'm taking their word for it. Financially, this loan looks pretty good. There is a delinquency on record 82 months ago but the revolving credit is below 20% so it looks pretty good.
$11,200@17.74%
Under Review/Unverified

Runner-Up: Extremely High Returns
This is another business loan but it's the kind I like, and the kind you should like to. The borrower already has an established business with stores in California and Colorado that sell fragrances and needs money to secure Christmas inventory. This all sounds logical to me, the only bad thing on the report is the right revolving credit, $151,202/87% but you kind of expect this with a small business owner that finances on personal credit. The listing isn't income-verified but I requested the borrower do that because this looks like a solid listing.
$24,000@18.09%
Under Review/Unverified

Final Thoughts
If you have any comments about these listings then feel free to contact me, either by leaving a comment here or by emailing me. I do have one final listing for you to look at.
If you're a borrower, especially looking for a business loan, you can learn a lot about what not to do from this listing.
The borrower refuses to give any information about his company, which is understandable because of the desire for anonymity, but he also refuses to give any details about his personal finances.
The thing to remember when getting a business loan on lending club is that the debt is in your name, not the company's, which means that we definitely need to know your financial situation (ie mortgage).
retiredUSMCinvestor, who is probably the best known investor on Lending Club, asked some very fair questions that the borrower basically refused to answer. It's not smart to be hostile to the folks that are lending you money,
The moral of the story is to be as open as possible, lenders can respect your desire to be anonymous but we need to know what your monthly bills look like. The other moral is to be nice to retiredUSMCinvestor because he is the hero of every lender on lending club.
I should also give a quick performance update; my net return is 12.46% right now, up .03% from the beginning of the month:
I've been selling my lower interest rate notes on the secondary market at cost (present value + accrued interest + 1% to cover selling costs) and investing in higher-return notes to boost my rate. Here are some of those very notes I'm using to bump up my average:
Top Pick: Utility Footwear Business
The reason this is my top pick is because this is one of the few times I like the story behind the loan better than the interest rate, although 17.74% isn't bad at all. This is a rare case in which the borrower gave up anonymity to post her blog which has a video of her demonstrating her invention. To summarize, the shoe is a small flat of the variety that is evidently called a "Mary Jane," the Mary Jane I've always known is not a shoe, but then again, I don't wear heels, either. Basically this shoe folds in on itself to form a kind of pocket. The idea is that heels, I've been told, are uncomfortable to wear for extended periods of time, like what would happen if you took public transit and walked somewhere formal. You could wear these shoes until you got to the event, then put on your heels and keep these "Flip Slips" in your purse. I consulted with some people that do wear heels that think this is a good idea so I'm taking their word for it. Financially, this loan looks pretty good. There is a delinquency on record 82 months ago but the revolving credit is below 20% so it looks pretty good.
$11,200@17.74%
Under Review/Unverified

Runner-Up: Extremely High Returns
This is another business loan but it's the kind I like, and the kind you should like to. The borrower already has an established business with stores in California and Colorado that sell fragrances and needs money to secure Christmas inventory. This all sounds logical to me, the only bad thing on the report is the right revolving credit, $151,202/87% but you kind of expect this with a small business owner that finances on personal credit. The listing isn't income-verified but I requested the borrower do that because this looks like a solid listing.
$24,000@18.09%
Under Review/Unverified

Final Thoughts
If you have any comments about these listings then feel free to contact me, either by leaving a comment here or by emailing me. I do have one final listing for you to look at.
If you're a borrower, especially looking for a business loan, you can learn a lot about what not to do from this listing.
The borrower refuses to give any information about his company, which is understandable because of the desire for anonymity, but he also refuses to give any details about his personal finances.
The thing to remember when getting a business loan on lending club is that the debt is in your name, not the company's, which means that we definitely need to know your financial situation (ie mortgage).
retiredUSMCinvestor, who is probably the best known investor on Lending Club, asked some very fair questions that the borrower basically refused to answer. It's not smart to be hostile to the folks that are lending you money,
The moral of the story is to be as open as possible, lenders can respect your desire to be anonymous but we need to know what your monthly bills look like. The other moral is to be nice to retiredUSMCinvestor because he is the hero of every lender on lending club.
Labels:
inventor,
lending club,
note picks,
small business
Thursday, October 15, 2009
Some Administrative Notes
This is just a short post to let you know about some technical changes to the blog.
Firstly, I made a twitter account for the blog, it's @thePeertoPick this account will automatically tweet the title and some text whenever there is a new blog post, I'll also RT anything good I see from the P2P Lending-related accounts I follow like @robgarciasj, @lendingclub, @prosperloans, @tiffanykfox, and from the reader's whose twitters I know, like @fanafi_fund. You may also want to follow all these people as well, lots of good lending news comes out through them.
If you're not into twitter that's ok, I made a gmail account for the blog, it's thepeertopick@gmail.com and because gmail manager checks all my accounts your emails should be answered in under 12 hours, if they're good I might even post an answer publicly, if you give me permission.
Another, final, administrative note is that the fine folks at lending club added me to their affiliates program. This works out nicely as most of the content so far is focused on them as well. As full disclosure, the 2 links of note in the upper-right reward me based on readers taking action.
I get $100 if you apply, receive, and make payment on a loan (feel free to email me if you join through this link, although it's highly unlikely I'll post your loan as a loan pick given the exclusive nature of the loans I pick for that, I might invest in you personally as a way of saying thanks).
If you go through the lender link then we both get $25 which I think is a pretty sweet deal if you plan on joining anyway.
Tomorrow I'll either post note picks or a guide on how to weight a borrower's job and loan purpose. If you have a preference then comment it, email it, or twitter it!
Firstly, I made a twitter account for the blog, it's @thePeertoPick this account will automatically tweet the title and some text whenever there is a new blog post, I'll also RT anything good I see from the P2P Lending-related accounts I follow like @robgarciasj, @lendingclub, @prosperloans, @tiffanykfox, and from the reader's whose twitters I know, like @fanafi_fund. You may also want to follow all these people as well, lots of good lending news comes out through them.
If you're not into twitter that's ok, I made a gmail account for the blog, it's thepeertopick@gmail.com and because gmail manager checks all my accounts your emails should be answered in under 12 hours, if they're good I might even post an answer publicly, if you give me permission.
Another, final, administrative note is that the fine folks at lending club added me to their affiliates program. This works out nicely as most of the content so far is focused on them as well. As full disclosure, the 2 links of note in the upper-right reward me based on readers taking action.
I get $100 if you apply, receive, and make payment on a loan (feel free to email me if you join through this link, although it's highly unlikely I'll post your loan as a loan pick given the exclusive nature of the loans I pick for that, I might invest in you personally as a way of saying thanks).
If you go through the lender link then we both get $25 which I think is a pretty sweet deal if you plan on joining anyway.
Tomorrow I'll either post note picks or a guide on how to weight a borrower's job and loan purpose. If you have a preference then comment it, email it, or twitter it!
Wednesday, October 14, 2009
New October Lending Club Events
Lending club just sent out this email to lenders:
The seminar should be pretty good, too. Langmack did another one previously that focused mainly on loan purpose and the borrower's job. Diversification is certainly important as I illustrated earlier this week in my article on the topic.
If you're a lender I recommend the online events lending offers, the collections seminar they recently had was great, too.
Interested in higher returns? Want to learn more about our soon to be released Statistics section? Lending Club is hosting two webinars in October to help you reach your goals:I'm particularly excited about the statistics section, I assume that we'll now be able to compare returns based on type of loan which is the most needed feature in the stats section.
Unveiling the New Statistics Section >>>
Register now for the free, online discussion
Thursday, October 22th, 2009
7:00 pm EDT (4:00 pm PDT)
Join Rob Garcia, Director of Product Strategy, and Sam Kasle, Director of Investor Programs, for the unveiling of Lending Club's new Statistics section. The presentation will cover topics such as returns by loan grade, returns by amount invested, and defaults by loan type. After the presentation there will be ample time for an in depth Q&A.
(Space is limited to 150 attendees, register now)
Higher Returns through Diversification with Scott Langmack >>>
Register now for the free, online discussion
Thursday, October 29th, 2009
7:00 pm EDT (4:00 pm PDT)
Veteran Lending Club investor Scott Langmack will explain how proper diversification leads to higher returns. Mr. Langmack's portfolios have realized 12.6% net annualized returns since 2008. Scott will field your questions along with Patrick Gannon, Lending Club's SVP of Investor Services. Scott Langmack is currently CEO of Blue Chip Expert and author of PeerLendingWealth.com.
Lending Club notes average 9.66% net annualized returns. Notes are offered by prospectus filed with the SEC.
Sincerely, The Lending Club Team
The seminar should be pretty good, too. Langmack did another one previously that focused mainly on loan purpose and the borrower's job. Diversification is certainly important as I illustrated earlier this week in my article on the topic.
If you're a lender I recommend the online events lending offers, the collections seminar they recently had was great, too.
Tuesday, October 13, 2009
Lending Club Notes Picks for 10/13/09
I've been putting off picking notes for a few days because I didn't want to release too much content at once as that last article on diversity was pretty long but hopefully everyone understood it because I didn't get any questions. Holding off might not have been such a bad thing because I found a number of good notes that have potential pending their answers to my questions, and I found these 2 I've posted today.
Without further delay, here are my latest notes picks:
Top Pick: Jimbo
Today's top pick is a man seeking credit to pay off his wife's medical bills related to her pregnancy and giving birth. He claims to have a $3,000 deductible on his insurance and some other bills they didn't pick up. The hospital is threatening to report the debt if he doesn't pay it soon. The borrower says he is saving money for a home down payment and doesn't want to use it but also doesn't want the hospital debt to show on his report as a delinquent debt. This is an odd situation but the interest rate on this note is superb and the borrower's credit history looks great to me.
$5,000@18.78%
Under Review/Unverified

Runner-Up: Ricks Freedom
Our runner-up didn't start out so great, he just put his name in the title, but so did my top pick, so maybe it's not a big deal, but I prefer to know what the loan is about when I read the title. He didn't do much better in the body of the listing either, actually, he put nothing at first, then edited to add a sentence saying that it is to cover his mother's funeral costs and pay off his credit cards. Not the best listing overall but the borrower only has 1 inquiry on his report, has no delinquencies reported, and, according his answers to the questions at the bottom, he has been employed at the same company for 28 years, that's a lot of job security.
$13,750@18.43%
Under Review/Unverified

Other Notes to Consider:
Consolidation Loan, Gold Loan (has nothing to do with gold, seriously), Extremely High Returns
Without further delay, here are my latest notes picks:
Top Pick: Jimbo
Today's top pick is a man seeking credit to pay off his wife's medical bills related to her pregnancy and giving birth. He claims to have a $3,000 deductible on his insurance and some other bills they didn't pick up. The hospital is threatening to report the debt if he doesn't pay it soon. The borrower says he is saving money for a home down payment and doesn't want to use it but also doesn't want the hospital debt to show on his report as a delinquent debt. This is an odd situation but the interest rate on this note is superb and the borrower's credit history looks great to me.
$5,000@18.78%
Under Review/Unverified

Runner-Up: Ricks Freedom
Our runner-up didn't start out so great, he just put his name in the title, but so did my top pick, so maybe it's not a big deal, but I prefer to know what the loan is about when I read the title. He didn't do much better in the body of the listing either, actually, he put nothing at first, then edited to add a sentence saying that it is to cover his mother's funeral costs and pay off his credit cards. Not the best listing overall but the borrower only has 1 inquiry on his report, has no delinquencies reported, and, according his answers to the questions at the bottom, he has been employed at the same company for 28 years, that's a lot of job security.
$13,750@18.43%
Under Review/Unverified

Consolidation Loan, Gold Loan (has nothing to do with gold, seriously), Extremely High Returns
Labels:
funeral costs,
lending club,
medical bills,
note picks
Sunday, October 11, 2009
Beginner's Guide to Lending 2: Diversity
Diversity in investing is about the seemingly simple idea of spreading your risk, the same holds true with P2P lending.
Defaults happen, this is something you have to live with. Of course lending club bings up their credit score and they do everything they can to collect on the debt but you will still end up having some debt that isn't collected, it's a sad truth. By entering lending with this in mind, that it's a matter of 'when' and not 'if' you'll be able to handle delinquencies much better.
Think back for a moment, if you will, on the last time you took a statistics class, if you have. One of the basic principles is that of normal distribution. If we know that we will definitely lose notes to defaults then we can try to normalize the risk so that it's predictable. Normal distribution says that the mean number defaulted notes we have will fall along a bell curve and that the best way to normalize this curve is to increase the sample size.
Here's a graph from Wikipedia's article on normal distribution:
The blue line is what we want, the more vertical it is the more predictable our earnings are because we can state with greater confidence that our average will fall somewhere in the middle of that lump.
So, how do we make the line vertical? That's simple: diversity. Buying more notes increases your sample size, this decreases the variance and makes it more likely that our average will match the overall average.
For example, we can say that if you randomly picked 40 notes from lending club (like with lending match) your net earnings will fall within 1.5% above or below the overall average of around 9.5%.
If we double the sample size to 80 notes then the confidence range falls to 1% in either direction
So, what does all of this statistics talk mean? It means that we can formulate general rules about our investments and diversity. Diversity means we increase the sample size, increasing the sample means the results can be more reliably predicted, reliable prediction means that we aren't gambling, we're taking a predictable risk to gain a predictable return.
So, why do we want a predictable return? Because, if you invest your $1000 between 2 notes there's a possibility that 1 could default and you would lose half your money in 1 swoop, this is unpredictable. It is much more unlikely, however, that $1000 split between 40 notes would result in 20 defaults.
By diversifying we reduce more risk than we lose in returns.
So, if you're just starting out you're going to want to keep your investments to $25-50 per note (my average note size is in the lower 40's), not only will this reduce your exposure to risk but it will also prevent you from the frustration of having a large note default early in the game. If you lose a lot of money early on you're likely to have an emotional reaction and pull your money out, a move that's short-sited and not based on averages, like it should be. Don't get stuck in the situation, just diversify!
Advanced Challenge:
Want to predict your default rate based on normalized distributions? Check out this site:
http://www.surveysystem.com/sscalc.htm
The population is the total number of notes on Lending Club with the credit grades you invest in, the sample is the number of loans in the credit grades you used before that meet your standards for default (IE you can pick charge-offs, charge-offs + >30 days late, etc) and the percentage is 50 (because the default rate on the LC page is the average, or middle, which is 50% on a graph).
The output is a percentage of the average percentage for the groups you picked.
For example, the average across all groups is about 9.5% (.095), you would multiply that by the confidence interval from the calculator (I based this on a sample of 40 notes), which is 15.42% (0.1542) to find out how far above or below 9.5% your 95% confidence interval is.
Is this case, 0.095*.1542=0.0146
This means that we're 95% confident that our average will be greater than 8.04% and less than 10.96% with a random sample of 40 notes.
I know this is some heavy stuff if you've never work in statistics, post a comment if you need help!
Defaults happen, this is something you have to live with. Of course lending club bings up their credit score and they do everything they can to collect on the debt but you will still end up having some debt that isn't collected, it's a sad truth. By entering lending with this in mind, that it's a matter of 'when' and not 'if' you'll be able to handle delinquencies much better.
Think back for a moment, if you will, on the last time you took a statistics class, if you have. One of the basic principles is that of normal distribution. If we know that we will definitely lose notes to defaults then we can try to normalize the risk so that it's predictable. Normal distribution says that the mean number defaulted notes we have will fall along a bell curve and that the best way to normalize this curve is to increase the sample size.
Here's a graph from Wikipedia's article on normal distribution:
The blue line is what we want, the more vertical it is the more predictable our earnings are because we can state with greater confidence that our average will fall somewhere in the middle of that lump.
So, how do we make the line vertical? That's simple: diversity. Buying more notes increases your sample size, this decreases the variance and makes it more likely that our average will match the overall average.
For example, we can say that if you randomly picked 40 notes from lending club (like with lending match) your net earnings will fall within 1.5% above or below the overall average of around 9.5%.
If we double the sample size to 80 notes then the confidence range falls to 1% in either direction
So, what does all of this statistics talk mean? It means that we can formulate general rules about our investments and diversity. Diversity means we increase the sample size, increasing the sample means the results can be more reliably predicted, reliable prediction means that we aren't gambling, we're taking a predictable risk to gain a predictable return.
So, why do we want a predictable return? Because, if you invest your $1000 between 2 notes there's a possibility that 1 could default and you would lose half your money in 1 swoop, this is unpredictable. It is much more unlikely, however, that $1000 split between 40 notes would result in 20 defaults.
By diversifying we reduce more risk than we lose in returns.
So, if you're just starting out you're going to want to keep your investments to $25-50 per note (my average note size is in the lower 40's), not only will this reduce your exposure to risk but it will also prevent you from the frustration of having a large note default early in the game. If you lose a lot of money early on you're likely to have an emotional reaction and pull your money out, a move that's short-sited and not based on averages, like it should be. Don't get stuck in the situation, just diversify!
Advanced Challenge:
Want to predict your default rate based on normalized distributions? Check out this site:
http://www.surveysystem.com/sscalc.htm
The population is the total number of notes on Lending Club with the credit grades you invest in, the sample is the number of loans in the credit grades you used before that meet your standards for default (IE you can pick charge-offs, charge-offs + >30 days late, etc) and the percentage is 50 (because the default rate on the LC page is the average, or middle, which is 50% on a graph).
The output is a percentage of the average percentage for the groups you picked.
For example, the average across all groups is about 9.5% (.095), you would multiply that by the confidence interval from the calculator (I based this on a sample of 40 notes), which is 15.42% (0.1542) to find out how far above or below 9.5% your 95% confidence interval is.
Is this case, 0.095*.1542=0.0146
This means that we're 95% confident that our average will be greater than 8.04% and less than 10.96% with a random sample of 40 notes.
I know this is some heavy stuff if you've never work in statistics, post a comment if you need help!
Labels:
beginner's guide,
challenge,
diversity,
protips
Friday, October 9, 2009
Beginner's Guide to Lending 1: Patience
This is the first in my yet-to-be-determined-part series on lending tips, I'll start with tips for beginners and move on to more advanced stuff.
Patience isn't just a virtue, it's a good way to make money. By the time you've signed up to be a lending club lender you're already sold on the idea, if you add the time it takes for them to look over your account to the time it takes ACH to send money you're probably going to be so excited when the cash hits your account that you'll go spend it all that same day.
This is a terrible idea.
Let's say you start with $1,000 like I did, to test the waters. If you're investing $25 per note (which is what you should do, I'll write more about this in my guide on diversity) you have to find 40 notes to invest in, which doesn't sound like a really big number but I have trouble finding 2 notes for my bi-weekly note picks and I know what I'm looking for. You'll simply be overwhelmed if you're brand new to the game and look for 40 notes and you'll end up with notes you don't want.
This is why you should feel no pressure to invest all your money as soon as it's in your account. It's ok if it takes a month, or even 2 months, you need to be satisfied in your investment and you should never feel like you have to buy a note just to keep your money in something. New notes get listed all the time so check every day for a note that you really believe in. If you're lazy or want outside advice then you should definitely check out my note picks, I pick some high-interest ones to match my lending strategy, you can supplement safer notes with these or use them as a guide to pursue your own aggressive lending.
Once you have all your money invested it's smooth sailing. With $1000 you'll get back enough money to reinvest in 1-2 notes per month and then it's just maintenance. Once you're comfortable with the system and see your returns you'll probably want to add more money. It's a good idea to add money slowly to avoid the temptation of dumping it all into notes at once and to give you time to invest, I find that $1,000 per month is a quick enough pace for the investing to be exciting but still slow enough to give me time to invest. Again, once you've added all that you wish to add you just check in and reinvest. You can tell lendingmatch (which I don't recommend using) to email you every day (which I do recommend) when you have enough money to reinvest ($25+) which I do so I don't have to login if there is nothing to buy. I have just shy of $6,000 invested which gets me just over $200 a month in repayments, or enough to get 2 new notes a week, which is why I post note picks twice a week.
If you're impatient the temptation will be to break one of the many other rules I'll be giving later on and you'll hurt your returns.
Patience isn't just a virtue, it's a good way to make money. By the time you've signed up to be a lending club lender you're already sold on the idea, if you add the time it takes for them to look over your account to the time it takes ACH to send money you're probably going to be so excited when the cash hits your account that you'll go spend it all that same day.
This is a terrible idea.
Let's say you start with $1,000 like I did, to test the waters. If you're investing $25 per note (which is what you should do, I'll write more about this in my guide on diversity) you have to find 40 notes to invest in, which doesn't sound like a really big number but I have trouble finding 2 notes for my bi-weekly note picks and I know what I'm looking for. You'll simply be overwhelmed if you're brand new to the game and look for 40 notes and you'll end up with notes you don't want.
This is why you should feel no pressure to invest all your money as soon as it's in your account. It's ok if it takes a month, or even 2 months, you need to be satisfied in your investment and you should never feel like you have to buy a note just to keep your money in something. New notes get listed all the time so check every day for a note that you really believe in. If you're lazy or want outside advice then you should definitely check out my note picks, I pick some high-interest ones to match my lending strategy, you can supplement safer notes with these or use them as a guide to pursue your own aggressive lending.
Once you have all your money invested it's smooth sailing. With $1000 you'll get back enough money to reinvest in 1-2 notes per month and then it's just maintenance. Once you're comfortable with the system and see your returns you'll probably want to add more money. It's a good idea to add money slowly to avoid the temptation of dumping it all into notes at once and to give you time to invest, I find that $1,000 per month is a quick enough pace for the investing to be exciting but still slow enough to give me time to invest. Again, once you've added all that you wish to add you just check in and reinvest. You can tell lendingmatch (which I don't recommend using) to email you every day (which I do recommend) when you have enough money to reinvest ($25+) which I do so I don't have to login if there is nothing to buy. I have just shy of $6,000 invested which gets me just over $200 a month in repayments, or enough to get 2 new notes a week, which is why I post note picks twice a week.
If you're impatient the temptation will be to break one of the many other rules I'll be giving later on and you'll hurt your returns.
Wednesday, October 7, 2009
Lending Club Note Picks for 10/7/09
Top Pick
Today's top pick is a borrower that owns a coffee house. The borrower says additional money is needed to purchase inventory and hire 2 part-time employees. I like this loan because the business is already established and it's probably making money if the owner is looking to hire 2 more employees. The borrower's revolving credit is pretty good and there are no public records or delinquencies. The only thing that would make this loan better would be an approved/verified status.
Securing Future Loan
$25,000@18.78%
Under Review/Unverified

Runner-Up
The next best loan I found also happens to be from a currently running business. The borrower claims to have a business with $15,000 in receivables but needs cash to keep the business running until they are collected. The borrower has a verified income of over $6,000 a month with approved credit. The only bad thing on the listing is the the delinquency the borrower had 3 years ago. Overall this looks pretty good.
Slow Receivables
$25,000@16.35%
Approved/Verified

Other Notes to Look At:
https://www.lendingclub.com/browse/loanDetail.action?loan_id=446661&previous=browse
https://www.lendingclub.com/browse/loanDetail.action?loan_id=445296&previous=browse
https://www.lendingclub.com/browse/loanDetail.action?loan_id=446497&previous=browse
Today's top pick is a borrower that owns a coffee house. The borrower says additional money is needed to purchase inventory and hire 2 part-time employees. I like this loan because the business is already established and it's probably making money if the owner is looking to hire 2 more employees. The borrower's revolving credit is pretty good and there are no public records or delinquencies. The only thing that would make this loan better would be an approved/verified status.
Securing Future Loan
$25,000@18.78%
Under Review/Unverified

The next best loan I found also happens to be from a currently running business. The borrower claims to have a business with $15,000 in receivables but needs cash to keep the business running until they are collected. The borrower has a verified income of over $6,000 a month with approved credit. The only bad thing on the listing is the the delinquency the borrower had 3 years ago. Overall this looks pretty good.
Slow Receivables
$25,000@16.35%
Approved/Verified

https://www.lendingclub.com/browse/loanDetail.action?loan_id=446661&previous=browse
https://www.lendingclub.com/browse/loanDetail.action?loan_id=445296&previous=browse
https://www.lendingclub.com/browse/loanDetail.action?loan_id=446497&previous=browse
Sunday, October 4, 2009
Who I Am
Before you take investing tips from anyone you should probably get to know them, P2P notes are no different. Really, though, I should start by telling you who I am NOT:
I am not an employee of Lending Club, Prosper, or any other P2P site, I'm just a regular person who uses these sites to invest money. Their names are their respective trademarks and the loans are on their sites, offered by the prospectus available on their site.
I am a a college student, not a financial expert, don't take my posts as advice, they're only intended to highlight some loans I find interesting, if you lose a lot of money don't sue me, it's still your job to determine how much risk you will accept, always investigate notes before ordering.
Although I can't guarantee anyone's return rate, my own rate hovers around 12.5%:
I am not an employee of Lending Club, Prosper, or any other P2P site, I'm just a regular person who uses these sites to invest money. Their names are their respective trademarks and the loans are on their sites, offered by the prospectus available on their site.
I am a a college student, not a financial expert, don't take my posts as advice, they're only intended to highlight some loans I find interesting, if you lose a lot of money don't sue me, it's still your job to determine how much risk you will accept, always investigate notes before ordering.
Although I can't guarantee anyone's return rate, my own rate hovers around 12.5%:
I was first an investor with Prosper, I joined a few months before they filed with the SEC. I switched the Lending Club in May of 2009 and I've invested about $6,000 spread across 150 notes in that time.
I'll make posts about general tips I have for investing later but loans I post will always have a return rate high enough to beat the average. At this point I'm only reinvesting payments I receive so I don't invest in any note that is less than 1% more than my net annualized return. These listings are sometimes from less-than-perfect borrowers so the risk is higher but I've only had 1 late note so far so I think the risk is worth it.
Peer 2 Peer lenders are a small community, if you spot a note that looks good then email me or post it, I'll respond to your emails and comments because I love to hear from other P2P lenders. Everyone has a different strategy and I'd love to get more input when I make posts with lending tips.
Lending Club Note Picks for 10/4/09
Top Pick
Today's top pick is a borrower looking to replace the A/C in his or her rental property. I like this loan because the borrower has never been delinquent, verified their income, has been approved. Based on the expenses the borrower provided in the questions section the rent from the property will more than cover the mortgage and the cost from this loan and the renters are already their. Overall I think this is a fairly safe pick, the only thing I don't like is that high revolving credit but I don't think it's an issue.
Cash for Central Air
$10,000@18.09%
Approved/Verified Income
Runner-Up
The next best loan I found isn't as good as the above pick, obviously, but the borrower has no delinquencies and is looking to lower interest rates. The income isn't verified so bottom line on this one is to wait for income verification but after that I would probably toss $25 at it.
Paying too Much Interest
$19,000@16.7%
Under Review/Unverified

Other notes to consider:
https://www.lendingclub.com/browse/loanDetail.action?loan_id=445423&previous=browse
https://www.lendingclub.com/browse/loanDetail.action?loan_id=445296&previous=browse
https://www.lendingclub.com/browse/loanDetail.action?loan_id=446022&previous=browse
Today's top pick is a borrower looking to replace the A/C in his or her rental property. I like this loan because the borrower has never been delinquent, verified their income, has been approved. Based on the expenses the borrower provided in the questions section the rent from the property will more than cover the mortgage and the cost from this loan and the renters are already their. Overall I think this is a fairly safe pick, the only thing I don't like is that high revolving credit but I don't think it's an issue.
Cash for Central Air
$10,000@18.09%
Approved/Verified Income
Runner-UpThe next best loan I found isn't as good as the above pick, obviously, but the borrower has no delinquencies and is looking to lower interest rates. The income isn't verified so bottom line on this one is to wait for income verification but after that I would probably toss $25 at it.
Paying too Much Interest
$19,000@16.7%
Under Review/Unverified

Other notes to consider:
https://www.lendingclub.com/browse/loanDetail.action?loan_id=445423&previous=browse
https://www.lendingclub.com/browse/loanDetail.action?loan_id=445296&previous=browse
https://www.lendingclub.com/browse/loanDetail.action?loan_id=446022&previous=browse
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