Every P2P Loan is Getting Funded at Lending Club

It hasn’t happened since September of last year. That was the last time a loan was listed on Lending Club’s platform that did not get funded.

Now, of course, not every listing becomes a successful loan. Some are removed because they fail some form of verification; others are removed by the borrower. But according to Lendstats the last time we saw a valid loan on Lending Club not get funded by investors was in September, 2011.

Good News for Borrowers

So this is good news for any borrower taking out a Lending Club loan. As long as they do everything Lending Club asks of them and all their information on their application is correct their loan will be funded.

If you are a Lending Club borrower there is no need to sit around worrying about whether your loan will get funded. It will. Even when it looks like it won’t.

I have been watching this closely for some time now. On the Browse Notes screen at Lending Club you can sort all the loans by time left. As of this writing the oldest loan on the platform right now has six days remaining and is 90% funded. Clearly that note will easily fund. But it is not always like this.

Just last week I noticed this loan that had just 1 day and 14 hours left and was only 36% funded. Sure enough it funded at 100% and just issued yesterday. Then there was this loan that I thought may be the first loan not to fully fund. The day I checked it had just 1 day and 12 hours left and it was only 14% funded. With a $30,000 loan amount I thought there was no way it would attract more then $25,000 in funding in the last day and a half. I was wrong. It was fully funded before it expired. However, since then it has been removed by Lending Club so this borrower never actually received their money. The fact remains, though, that investors were willing to fully fund that loan.

Where are these Last Minute Investments Coming From?

Now we can’t be sure but it is highly likely this money is coming from within Lending Club itself. There are rules regarding how much the LC Advisor funds can invest in a loan during its first seven days on the platform. But my understanding is that after this time period there are no restrictions. So, on any given day there is probably a large sum of LC Advisors money to put to work and much of it will go towards loans that have been on the platform a while. There is also all the PRIME accounts that Lending Club controls and that may account for some of the late flurry of investment.

Anil over at the Random Thoughts blog had an interesting analysis yesterday that might give us some pause about this last minute rush. His analysis showed that a loan is much less likely to default if it issues within 10 days of its listing date. In fact those loans issued between 14 and 17 days after listing are more than twice as likely to default as those loans that issue within 10 days of listing. So maybe those investors getting in at the last minute will not do as well.

Many Popular Loans Fully Fund in Just a Couple of Days

It is clear that there are many active investors on Lending Club, some with large accounts I expect, who are putting their money to work as soon as loans appear on the platform. Many of the loans I invest in are popular and fund within a week and sometimes much sooner. By the time I get to them some are 90% funded within a day or two. This is why I now invest twice a week in new Lending Club loans rather than once a week which is the way I used to do it. I don’t want to miss out on the popular loans.

What do you think? Have you noticed these loans getting funded at the last minute? Is this a good or a bad thing? As always I am interested in your comments.

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