[Editor’s note: This review contains several links to Lending Club that are affiliate links. If you open an account through one of these links the blog will receive a small commission from Lending Club. The owner of this blog been a Lending Club investor since 2009 and has over $300,000 invested across taxable and IRA accounts. You can view Peter’s p2p lending accounts and returns here. This review was last updated in June, 2015.]
Lending Club is the world leader in p2p lending having issued over $9 billion dollars in loans since they began in 2007. They are growing at a rate in excess of 150% a year. Why have they been so successful? They provide excellent returns for investors and they allow quick access to funds at competitive interest rates for borrowers.
Before You Begin Investing
Some investors read about Lending Club and dive right in. But the intelligent investor does some research. This article will provide all the information a new investor needs to get started.
To help you get familiar with the Lending Club platform I have recorded a short video. This video provides an introduction to the Lending Club interface and shows you how to invest in these p2p loans.
Before you begin, though, you need to consider if you are eligible to invest. To invest at Lending Club you need to meet a number of requirements:
- Must be at least 18 years of age and have a valid social security number.
- Have an annual gross income of at least $70,000 and a net worth (not including home, home furnishings and cars) of at least $70,000 or a net worth of at least $250,000 (with the same exclusions). Residents of California and Kentucky have slightly different net worth requirements.
- Reside in one of the approved states: California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Kentucky, Louisiana, Minnesota, Missouri, Mississippi, Montana, New Hampshire, Nevada, New York, Rhode Island, South Dakota, Utah, Virginia, Washington, Wisconsin, West Virginia, and Wyoming. (there are options for people who live in several other states – you can invest via the Lending Club trading platform). With the recent Lending Club IPO, there is a possibility for these payment-dependent notes to become available to investors in all 50 states. You can read more about this topic here.
- You are only allowed to purchase notes up to 10% of your net worth.
The eligibility rules do change from time to time so you should check Lending Club’s website for the latest.
What are the Risks?
Every investor should consider the risks of an investment before committing their money. Investing with p2p lending has a number of risks:
- Borrower defaults – the loans are unsecured so an investor has little recourse if the borrower decides not to pay. The annual default rate across all grades at Lending Club is around 6 or 7% with higher risk borrowers having a higher default rate.
- Lending Club bankruptcy – This is a much smaller risk today than it was several years ago because Lending Club is making money and has had an influx of cash with the recent IPO. But the risk will always be there. In the unlikely event of a bankruptcy, there is a backup loan servicer who will take over servicing the loans but there would likely be some disruption and investors could lose some principal.
- Interest rate risk – the loan terms are three or five years so during this time interest rates could increase substantially. If an FDIC insured investment is paying 6% it makes investing in a Lending Club loan at 7% not the best investment.
- Poor loan diversification – many new investors get caught in this trap. They do not take advantage of the $25 minimum investment. If you invest in 20 loans at $250 you are running a much higher risk than if you invest in 200 loans at $25. If you only have 20 loans one default could wipe out most of your gains. You can learn more on basic portfolio diversification and then read a statistical analysis of p2p lending diversification.
- Liquidity risk – There is a secondary market on Lending Club where loans can be sold but if you need to liquidate your entire investment you will likely lose some principal in the process.
- Market-wide event or recession – While p2p lending has been around since the latest recession in 2008, the asset class still remains untested when platforms were originating significant volumes. In a recession, defaults will increase and thus will result in a decrease in investor returns.
How it Works
Peer to peer lending at Lending Club is a very simple process. It begins with the borrower. They apply for a loan and if they meet certain criteria (such as a minimum 660 FICO score) their loan is added to Lending Club’s online platform. Investors can browse the loans on the platform and build a portfolio of loans. The minimum investment an investor can make is just $25 per loan. Each portion of a loan is called a note and smart investors build a portfolio of notes to spread their risk among many borrowers.
Lending Club will perform some level of verification on every borrower. As this verification process is happening investors can be funding portions of the loans. If the borrower passes verification the loan is approved for investors and will be issued to the borrower if fully funded. If the borrower fails verification the loan will not be issued. It will be deleted from the platform and all money that had been invested will be returned to the respective investors.
A loan can stay on the platform for up to 14 days. Most loans are funded much quicker than that and once funded the loan will be deleted from the platform. Approved borrowers will receive their money (less an origination fee) in just a couple of business days once funding is complete and then begin making payments within 30 days. These payments will be for principal plus interest on a standard amortization schedule.
Explanation of loan grades
Lending Club categorizes borrowers into seven different loan grades: A through G. Within each loan grade there are five sub-grades meaning there are 35 total loan grades for borrowers from A1 down to G5. Where a borrower is graded depends on many factors the most important of which is the data held in the borrower’s credit report. The better credit history a borrower has the better their loan grade with the very best borrowers receiving an A1 grade, which carries the lowest interest rate.
Lending Club will pull the latest credit report for every borrower and take the data held in that report and other factors such as loan amount and loan term to determine the interest rate. Lending Club provides more information on their Interest Rates and How We Set Them page on their site. Learn more about the Lending Club borrower experience in this video where I apply for a Lending Club loan.
Starting to Invest
Some investors like to consider every loan individually while others want to put their money to work quickly. Both are possible at Lending Club.
Automated Loan Picking
If the thought of choosing selection criteria or wading through hundreds of loans is overwhelming Lending Club makes it very easy to put your money to work quickly. When you click on Portfolio Builder on the main account page you are presented with three options.
Once you click on one of these options the tool will then build a portfolio based on your selections. Option 1, the low risk option will invest in mainly A and B grade loans. Option 2 will invest primarily in B and C grade loans with some A and some D grade loans as well. Option 3 invests in C, D, E and F grade loans.
If these three options are too restrictive there is a fourth option. The More Options button allows you to choose the exact target interest rate you would like and then it invests in the available loans that match your chosen rate.
Selecting Loans Manually
When you click the Browse Loans link from the Lending Club Accounts screen you are presented with all available loans as you can see in the screenshot above. There are typically somewhere between 300 and 500 loans available at any one time. When you click on a loan you are presented with the details for that borrower.
A loan listing contains five different types of information to enable investors to make an informed decision whether to invest or not.
- The loan details – there is information about the loan itself such as the loan grade, loan purpose, interest rate, monthly payments, loan length and funding information.
- Borrower details – while personally identifying details such as name, address and social security number are withheld from investors, information such as job title, gross income and location (first 3 digits of zip code and state) are included.
- Credit information – Lending Club pulls a complete credit report during the application process and shares much of this information, such as credit score range, delinquencies and credit line details, with investors.
When investing manually investors can decide to lend any amount in multiples of $25. This can be done by just checking a box next to each loan and then clicking the Add to Order button. Then with just three more clicks the investor can complete the order.
Loan Filtering
Reading the details of hundreds of available loans could easily become a full-time job. So, Lending Club provides loan filters where investors can choose to look at only those loans that are of interest. There are over 30 different criteria to choose from – typical filters are interest rates (presented as loan grades), loan terms (36 or 60 month loans), loan purpose, length of employment, loan size and credit score. By utilizing these filters investors can create a more manageable list of loans to consider.
So how do you know where to start filtering loans? You can use one of the third party tools listed below to analyze the loan history or you can start with my simple p2p lending investing strategy.
You can filter the loans on Lending Club’s website and save the filters you create or you can download a CSV file from the Browse Notes screen. Some investors prefer this method so they can run their own loan filtering in Excel. Every loan contains a unique URL that allows for easy investing with just a copy and paste from Excel.
The Importance of Being Quick
In 2013 the environment changed for investors at Lending Club. It became a lot more competitive and loans became fully invested very quickly, sometimes in a matter of seconds. If you want the best selection of loans you should login right when new loans are being added to the platform.
Currently, new loans are added at 6am, 10am, 2pm, and 6pm Pacific Time seven days a week. By logging in within a couple of minutes of those appointed times you will get the best selection of loans. But be quick. Within minutes many of the loans have been fully invested and have therefore disappeared from the platform.
Third Party Tools
While Lending Club provides some analysis of investor portfolios they also provide their entire loan history for download. But you don’t have to do this analysis yourself. Luckily, an entire data analysis eco-system has been created around Lending Club that provides a great deal of information to investors. Since the entire loan history is available for public download some enterprising investors have created a way to query this data and back test various investment strategies.
- NSRPlatform (https://www.nsrplatform.com)
Has a complete suite of useful tools for Lending Club investors. There is a back testing and filter feature that provides a front end to the entire loan history of Lending Club broken down by loan grade. Investors can test various filtering strategies to determine the best historical returns. Investors can also upload their own Lending Club portfolio for analysis. NSR can also be used for order management and automation. - LendingRobot (https://www.lendingrobot.com/)
LendingRobot provides order execution for Lending Club and allows you to create filters to narrow your investment criteria. Besides filter based investing, they also offer a fully automated selection, which will invest in loans for you based on whether you seek a conservative or aggressive investment approach. They also provide data on order history, sell history and provide a cash-flow forecast. - PeerCube (http://www.peercube.com/lc/)
PeerCube has two main functions. It provides an alternative to the Browse Notes section of Lending Club allowing investors to run more sophisticated filters. Then in just one click investors are taken to the Lending Club site to complete an investment on the loan. There is also a Portfolio Upload section where PeerCube provides analysis of an investor’s portfolio. - BlueVestment (https://bluevestment.com/)
BlueVestment specializes in automation for LendingClub. Through BlueVestment, users can create their own filter criteria using 22 attributes and also create advanced filters using the node builder. From there, the strategy can be added to a Lending Club account for automation.
For a complete look at all of the p2p automation and analytics sites, view our comprehensive two part series on the topic.
Lending Club also offers its own Automated Investing service, available within LendingClub.com. This can be found in Automated Investing tab after you login to your account. The service is free to use, but does require an account minimum of $2,500. Users of this service can select investment criteria, which are then executed up to four times per day as loans are listed on the platform.
Conclusion
Lending Club is the largest and most successful p2p lender in the world. They have a long track record now of providing excellent returns to investors. This is why I have over $100,000 of my own money invested in Lending Club and continue to add to that amount. If you want to take the plunge and open an account then just click the link in the box below.
Hi Peter,
I’m thinking about investing in Lending Club but I don’t know if it is the right idea. I am a recent college graduate with not a lot of savings.
How much would you say is a good amount to start to invest with?
Thank You,
Minh
Good question. I think investors should try and be as diversified as possible. A good amount to start with is $5,000 because that will give you 200 notes at $25 per note. Now, I realize that not everyone has $5,000 to start with but the point is here you want to be diversified so one default will not ruin your return. If you only have $500 and invest in 20 notes if one of those notes defaults right away you will be down 5% – that will take a long time to make up.
Say we only have $500 to start out with, would you still recommend investing this way? Maybe by only investing in Grade A loans to start and then trying to move into riskier loans? Or would you recommend just waiting until we had more money to invest?
Steph, You are on the right track. I wrote an article about this a few years back but the same rules still apply in my opinion:
https://www.lendacademy.com/how-to-invest-500-in-p2p-lending/
Do you have any debt? Do you have an emergency savings account? If you have debt, pay it off first. If you don’t have at least 3 months of living expenses saved up, work towards that. If you have no debt and at least 3 months of living expenses in cash, 500 dollars would be better served toward buying a total market fund. I wouldn’t start with lending club till you can buy at least 100 notes or $2500. Hope this helps.
I have had money in LC for over 7 years and my avg. rate after defaults pre-tax is over 7%. I currently have about 80,000 notes in 4 accounts and that is the aggregate average. I do NOT let Lending Club invest for me. i look at every note personally and make my own decisions. At this point, with my experience, it takes me about 5 seconds per note to determine if I will invest or not and how much. With an amount exceeding $1 million, the rate i earn has varied very little throughout the years. So instead of moaning and groaning about LC being a terrible company, why not assess your loan expertise and perhaps change your parameters.
Larry, thank you for your post. I only have $20,000 invested at LC (4 years investing at LC) with a current rate after defaults (pre-tax) also over 7%. My rate was 8-1/2% prior to the defaults spiking in 2016. I immediately ratcheted down the risk I had increased the prior year. I also look at every note personally, and it takes about the five seconds you stated to determine if I will NOT invest. However, I often take longer to invest, even 5 minutes if I google the job description or industry, etc. Your post from an experienced and accredited investor relieves the doubt in the back of my mind that I am wasting time by making personal selections of notes. Information gleaned from Peter Renton and Lend Academy, the LC website statistics page and from gracious commenters like yourself have helped me tremendously. As a non-accredited investor, I’m lucky that Lending Club exists to help me diversify as well as to increase wealth. An unexpected side benefit is that thinking about and learning from buying notes has improved my investing ability in stocks and bonds.
Very good explanation !
I have a question. How could someone with less than $5000 invest in Lending Club, if one of the requirements states that you have to have a net worth of $70000? I live in Kentucky and understand that here we have a different standard for investing in Lending Club. But I’ve read here that you are giving and advice for someone who has not the $70000 net worth?
It is true that the net worth requirements are $70,000 for most states although Kentucky has the additional requirement of all investors needing to be accredited investors.
Lending Club places a maximum of 10% of an individual’s liquid net worth be placed with Lending Club. So, if you do only have a liquid net worth of $5,000 then unfortunately you do not qualify to invest in Lending Club.
Thanks for you answer. But, I don’t see the point. Why should some persons be banned from investing as a way to increase their net worth, just because they have not reached certain amount?
The real reason is protection from lawsuits I believe. They (Lending Club and Prosper) don’t want unsophisticated investors putting their life savings into a single loan and then having that loan default. The investor loses everything and then decides to sue the company.
I’m still not understanding the $70K minimum. If someone makes $50K a year they would still be limited by the 10% rule. $70K seems arbitrary.
Other investments are available to people with much lower incomes.
I agree that it does seem kind of arbitrary but $70k is the number that the North American Securities Administrators Association recommends for alternative investments. Additionally there is at least one state that specifically calls out $70k as its requirement.
Lending Club does not verify any information from lenders. Just put down that you make $250k a year and you’re set.
Thanks again. Yes, there is certain logic on that.
Do you know what if any penalties exist for ignoring the required minimum gross income?
I personally think there is little logic involved. It is my money. Nobody would stop me from flying to Vegas tomorrow and dropping 150% or my net worth (assuming I decided to also go into credit card debt) in slots. I also don’t think people who make less then 70,000 have crashed the global economy. I’m interested because I am attracted to the idea of higher returns while also circumventing cc companies and not investing via the stock market/index funds in multi-national corporations that I fundamentally disagree with on a moral level, even if it is the standard way to save for retirement.
I have never heard of any penalties being levied for any investor who does not meet the income suitability requirements. Personally, I think the income requirement is silly, because as you point out, there are plenty of ways for irresponsible people to lose their money. But those are the standards set forth by Lending Club.
Hey @Peter Renton,
What do you think the worst that could happen would be if somebody didn’t follow the minimum gross income requirement?
Every investor must meet Lending Club’s requirements, if they find you in violation of these requirements they could close your account. But given these are three and five year loans it would take a while for this process to complete. I don’t think Lending Club could or would confiscate the money in your account.
I am sure you are correct, Peter. It would be as if a person lied on a loan application. So long as the loan is being paid on time, instead of attempting to get you for fraud, the lender would most likely ask for the loan to be paid in full and then close it. Or in some cases, they would keep it going while the loan is in good standing.
LendingClub.com could forbid the person from buying pieces of new loans, but I doubt if they would do much of anything else.
That´s not only silly, it is irritating because in my case I have to overcome not only Lending Club´s requirements, but also Kentucky´s own requirements. I believe this is an unfair way to keep you out of the potential wealth you can reach by investing you own money in a smart way.
I completely agree with you. Hopefully the rules will change as Lending Club and p2p lending becomes more mainstream.
Hi, Pavel,
Totally agree with you, it is unfair . every new financial instrument will be pressured by government, financial companies; they dont want average Joe like us to share a pie of lending industries. Bit-coin is an example of such causality .
Thomas
But we can always go around that and keep pushing. For example, I just open a brokerage account with TD Ameritrade which is not what I really wanted to do, but it is a starting point. I hope I´m going to be able to fool Lending Club in the future.
You should try stocks, that PTD rule is stupid. You have to have of money to make money.
That is government for you.
Isn’t it an SEC mandate? Therefore a government restriction? As Pavel pointed out, this is another way of excluding those with out a large amount of capital from getting more, much like corporate taxes loopholes ect. So it’s not Lending Club that’s exclusive, but a law they must follow?
So if it is a law, then words like silly (A man must not water his mule in town on a Sunday is silly) are not up to the task. I think a case could be made for discrimination based on economic status. The government is making decisions for me and excluding me from opportunities allowed to others for no other reason then to protect me? and making the assumption I need their protection? (Isn’t that the nanny state that the GOP is so worried about?) I think it would be interesting to go to court over this issue, catch some jail time and point out the discrepancy of the consequences, for both the lender (jail time, fines? I don’t know) and the state/nation (some tiny gains in tax dollars?) vs the difference in the consequences when a major bank almost ruins a global economy but doesn’t even go to trial.
My understanding is that it is not an SEC mandate or any kind of law but rather guidelines issued by the NASAA (http://www.nasaa.org/). In which case jail time would not be a possibility.
I have been investing since 2007 and i have a moderate return and few defaults on LC in comparison to Prosper but i was a bit more risky there when i started in 2007 . I started before there was a income minimum.
And things are going well even with defaults. I have been more conservative and stayed away from high interest loans that made up the bulk of my defaults. I now reinvest the payments received.
Thanks for the update John.
Been involved with Lending Club investing for over two years. We started out small, using IRA money, and are up to about $80K. I never put more than $25 into a note (we have over 3000 of them) and usually stick to the moderately high risk loans (C & D).
We are averaging about 8.5% return on our investment, so it’s working out for us. There have been thousands in charge-offs, but it’s just part of the game – you can’t take it personally.
One thing to remember is unless you pick their automatic “prime” service, this is an investment that requires tending. Payments come in every day and at my level of investment, I get about $200 in cash per day in my account. I learned not to let this build up, but to reinvest this as quickly as possible – it’s much easier to find 8 good notes in a day than it is to find 24 of them after three days.
We haven’t used the secondary market because it’s just too much work for me to learn about – I’m happy with LC, and if you approach it with the right attitude, you can be, too.
Hi,
Can you please help me with any advice and ways to invest. What right steps do I need to take and investments strategy? I am in need of making some extra money to help my parents.
Thank you for your time.
Kevin
Hey Underdog,
Your comment was helpful. I have a question for you and all investors… I currently stick with A notes (irrelvant to my question) because they are safer and i’m feeling out lending club, but what description types, credit scores, jobs do you all typically stick with as “trustworthy” loan types
Please help me understand this statement:
“2.Have an annual gross income of at least $70,000 and a net worth (not including home, home furnishings and cars) ”
I understand I will NOT include the value of home and cars in calculating my NW for this calculation… do I include the notes against them?
Hi Brad, For the $70,000 net worth calculation you completely ignore the value of your home, car, etc. and you also ignore any loans you have taken against them.
The restrictions are bull. If someone wants to invest they should be given adequate subject material and told to ensure they understand it before investing. Ex = a brokerage account and want to trade options – you fill out extra paperwork saying you read this pamphlet they provide on the characteristics and risks in options, and pass income / net worth requirements. You sign, they ‘review’, and, at least in my experience, approve you.
The point is – they just want the signatures as legal protection from you suing if you start doing things without knowing whats happening and lose all your money then think you can sue. How do they even check into this stuff? I really dont think they do (they haven’t said anything to me or all the folks I know who ignore these BS rules – but learned what we are putting our money into 1st!). Just make sure you know the risks – then just smile and nod…mmhhhmmm, yup, sure, whatever you say government shill / crooked political scum / big business executive slimeball rip-off bottom feeder 🙂 governmental politicians and reps (i.e. SEC, IRS, FDA), lawyers (aka private politicians), big business/corporations – they are almost ALL CORRUPT lining their own pockets at everyone else’s expense and health/safety… I dont presume to know the best solution on how to run a society but I do know that this – Russia, China, UK, USA – is NOT it. So I quietly take advantage of every big company, every politician, every lawyer, judge, tax collector, loophole, error, etc….that I can. Work the system, take what should be yours. No one is going to give it to you without high cost – visible or not. But please – dont abuse your fellow common man. You know who they are. Go after the strong, nipping at their fat, bulbous sides; not the weak and downtrodden, devouring them whole, bones and all.
Wow, B Serious, that is quite the tirade. Yes, I agree that the restrictions are silly but I don’t think they are indicative of a decline in civilized society as you imply here.
Any idea what kinds of debt are used in the 70k net value calculation? I’m specifically interested in student loan debt.
Austo, Lending Club does not state how the net worth number is calculated. This is from their online help: Investors who are residents of states other than California or Kentucky must have (a) an annual gross income of at least $70,000 and a net worth (exclusive of home, home furnishings and automobile) of at least $70,000.
My sense is that student loan debt should be subtracted from your net worth calculation because it is a liability. But they do not verify this information – you just agree it is true when you sign up as an investor.
Hi,
I live in California, I wonder if I would be in violation if I didn’t meet the 70k income requirement for Lending club and 85k income requirement for Prosper. Since they both have different income requirements, I am wondering if I would be in violation if I tried investing $2,500 for Lending club and another $2,500 in Prosper.
I tried asking a Lending club and they told me they have a different platform and didn’t know the rules for Prosper.
Jason,
Here are the official terms from Prosper’s site:
For individual investors who are residents of California: For California investors who purchase $2,500 or less in Notes, your investment must not exceed 10% of your net worth. To purchase more than $2,500 of Notes, a California investor member’s investment must not exceed 10% of his or her net worth, and either: (1) the investor member must have had a minimum gross income of $85,000 during the last tax year and will have (based on a good faith belief) minimum gross income of $85,000 during the current tax year; or (2) the investor member must have a minimum net worth, (exclusive of homes, home furnishings, and automobiles,) of $200,000. Assets included in the computation of net worth shall be valued at not more than fair market value.
So, as long as $2,500 does not exceed 10% of your net worth you will be fine.
Thanks
And Jason would ALSO need $85k gross or $200k net worth. So he wouldn’t technically be eligible.
I just discovered p2p lending investment. My question is how do you calculate the break even point? At what point you have recovered the principle through the monthly payment? Suppose you invest $25 on a note that returns 5% for a term of 36 month. At what point would you recover that $25? Before I commit to this I want to be able to figure out on any particular note how long before I reach the break even point once I start receive payment (principle + int).
Also the other consideration is the taxes. I noticed that it would give you 1099 and the tax is taxed at ordinary income rate. Suppose you have a hundred notes, do they give you the consolidated form so all you need is to check the total? Would they mail you the 1099 or that information is stored online? Also what happens if a note defaults? Will there be a way to claim a loss to offset the tax?
Hi Ben, In answer to your first question, you can easily figure out the payback based on standard amortization schedules. You can learn more by reading this post: https://www.lendacademy.com/do-you-understand-how-interest-is-calculated-on-p2p-loans/
You will typically make a profit on your investment on a 36-month sometime in the third year – early in the third year for higher interest loans.
As for taxes you should read my latest tax post: https://www.lendacademy.com/lending-club-prosper-tax-information-2014/
You will get a consolidated 1099 form that is available for download online. Lending Club will send you an email when it is ready to download.
It seems LC’s recent influx of institutional money is contrary to their original intent. Do you think there will be a point at which the institutional money will take up all the loans and push out the individual investor and/or force them into more readily available, lower grade notes?
RB, Lending Club has said repeatedly that they want both retail and institutional investors on their platform. They have created separate platforms, a fractional pool and a whole loan pool for each class of investor with a random allocation of loans going to each platform. While it is true the higher interest loans are in more demand there are still plenty available on Lending Club today for retail investors.
Automated Investing tool was a disappointment. While my notes were supposed to be 11.88% weighted in the “C” category – my first 12 notes were 100% – C. No other category. I’ve suspended the automatic function until that’s resolved. No way to really talk to anyone at LC or ask questions. Suppose that’s how they keep the costs at a minimum.
David, My feeling is that you gave up too soon. Lending Club’s automated investing is very sophisticated and will seek to hit the goals over the long run. But it also has to balance what is available in loan inventory over the short term. But over a period of months I have found it to be an excellent service.
As for getting someone at LC on the phone, I am surprised you have had some issues there. You should be able to get someone on the phone easily. If you are still not getting a response send me an email through the Contact Us page on this site and I will follow up for you.
Thanks, I’ve got an inquiry in now, and they should be responding in a reasonable time. Your answer makes sense, tho, and I’ll keep the auto turned on to give it a chance.
Peter –
Great post with lots of clearly explained answers. Question – if you had to pick Lending Club or Prosper to be an investor, which one would you choose? Are there any distinct advantages/disadvantages between the two platforms?
Thanks,
Brian
Hi Brian, While I recommend serious investors open accounts at both Lending Club and Prosper, I think Lending Club is a great place to start. They have a broader selection of loans and better automation tools than Prosper. The one advantage of Prosper right now is that they have better filtering that allows investor to get more granular in their selections.
Good synopsis of LendingClub, Peter. I have a question:
LendingClub provides a 1099 that states the interest generated by one’s investment in notes. This is sent to the IRS. They also provide the lender the associated writeoffs and defaults. This is not sent to the IRS. Common sense tells me to net one against the other, but if I report lower interest than that stated on the 1099, my return might be pulled for audit. If I show it as a loss on Schedule D, then if I have prior losses to carry over, I can only write off $3,000 per year. Finally, I could write these off on itemized deductions under Misc. deductions. That would in effect be netting the defaults against interest earned. Can you provide any input on this? I realize you’re not giving advice as a CPA, but I was wondering how you suggest to handle this matter. Thanks.
Hi Larry, You should read my tax post – this will help you understand the tax reporting challenges:
https://www.lendacademy.com/lending-club-prosper-tax-information-2014/
When you face a default, who will be entitled to charge the borrower, legally claim the amount owed? Lending Club managememt / lawyers will handle that?
Guilherme,
Lending Club is responsible for chasing up delinquent borrowers. Here is a post I wrote a couple of years ago about their collections practices, it is still relevant today:
https://www.lendacademy.com/the-collection-practices-at-lending-club/
Hey Peter,
What is unclear to me at the moment is how do you liquidate your assets from Lending club? It seems like the most common portfolio’s have a 36 month/60month lending period, and you can set the platform to automically reinvest your loans.
How does this work when you want to pull your money out? There seems to be very little information about this in their FAQ.
@Kareem
If you want to liquidate, all you have to do is stop investing and turn off any automatic investing. Then every day when principal and interest comes back to you and mounts up, you can withdraw it at a pre-determined amount. For example, let’s say you want to take money as soon as it reaches $100 and you receive about $17 per day in interest and principal. You will have about $100 every 6 days. Withdraw it and keep doing that until you are down to zero. If your goal is to fully liquidate, obviously you will not want to invest any more.
Kareem, As Larry says the principal and interest comes back pretty quickly. But you can fully liquidate your account by putting all your notes for sale on the trading platform. You can read my intro to it here (it is a little dated but the principals still apply):
https://www.lendacademy.com/an-introduction-to-the-lending-club-trading-platform/
Thanks, this is great info. I have a bunch of questions that I hope you can answer:
1. If I choose one of the 3 “Build a portfolio” options, is that interest rate the average that borrowers are paying or the average that investors are receiving, and is it net of Lending Club investing and borrowing fees?
2. Maybe I missed this, but can I have it build me a portfolio and then go through the loans it selected and manually individually exclude ones I feel are too risky?
3. Are there any analytic tools on the analysis web sites you cited that build a yield curve that show the tradeoffs between interest rate and loan quality?
4. If I have to fund quickly at one of the scheduled release times, and I take the time to do any analysis at all, will I be left with the riskiest junk after the institutional investors’ computer trading platforms have already cherry-picked the best funding opportunities?
Hi Doug,
1. The interest rates you see on Lending Club’s site is the rate being charged to the borrower – service fees and expected defaults are not deducted. You do see those estimates when you place an order though.
2. Yes, you can always go through the loans after you have put them in your shopping cart.
3. Yes, nickelsteamroller.com has all that information and more.
4. No, that used to be the case but with the sheer volume of loans now only a very small number of loans are being funded quickly. There are plenty of good loans available at all times throughout the day.
Hope this helps.
it totally did. Thanks.
Hi Peter,
I left you a mesaage on the lender’s section of your site, but I’m not sure if you got it. My question was about the differences between personal loans and business loans with Lending Club. I would like to know which one is more convinient or what are the requirements for taking out a business loan. I don’t want to interrupt the topic of this post, my e-mail is pavelpvrv@gmail.com, thanks in advance.
The key difference between a Lending Club business loan and a personal loan on Lending Club used for business purposes is that a personal loan uses only your personal credit to qualify for the loan. No company financials are used to make an underwriting decision for a personal loan. Here is quick summary of the differences:
Business Loan
From $15,000 to $100,000 loan amount
Must have been in business 2+ years
Must own 20% or more of the business
Can do 1,2,3 and 5 year loans
Personal Loan (used for business purposes)
Up to $35,000
Can be a startup business – business history is irrelevant.
Can do 3 or 5 year loans
While I have not seen a direct interest rate comparison between these two kinds of loans by sense is that if you have a successful and profitable small business you will likely get a lower rate with a business loan than a personal loan.
If I were you I would apply for both loans and see what you get. It won’t hurt your credit score. If you do that be sure to let us know how you go.
Hi, Peter,
Can I withdraw a note or resell it in LendingClub?
If a note defaults, what can we do to get the money back, or just doing nothing? In your experiences, in what period a note starts default payment most likely?
Thank you!
If you have a taxable account (non-IRA) you can sell any note on the Folio trading platform.
But if a loan defaults there is nothing you can do about it. You have to rely on Lending Club’s collections team to pursue it for you.
A lot has been written about defaults – they tend to peak between months 10-16 but there are some defaults at all stages during the life of the loans.
Hi everyone,
I heard Lending Club launch its IPO. But when I searched the date and how and where I will able to buy their stocks, I found only few general information, like, they filed SEC that they will sell their stocks at NYSE.
If you anyone knows the date of IPO, and any other detailed information for anyone who is interested in buying their stock, please share.
Thank you
Lending Club has not completed their IPO yet. It is supposed to happen before the end of the year. I will be covering this in detail on Lend Academy as soon as more news becomes available.
Thank you, Peter.
Question, so I’ve done lending club for about 9 months now and are fairly happy with the returns so far, but I am at a cross road here. I have 15k to invest and I won’t have time to actively manage it while I enter grade school this spring, I don’t want the money to simply sit, but it would be nice if i could get a great return over the next couple of years.
Should I invest the 15k in lending club or do you think it would be best to put the money into stocks while I’m finishing up school.
Thank you
Hi Mark, And while I can’t give investment advice in a public forum like this I am happy to provide some feedback. Lending Club has an automated investment tool that is very easy to setup and provides a hands-off approach.
As for comparing Lending Club to the stock market, I am only putting new money to work in P2P lending but that is an individual decision that will be different for everyone.
Lending Club is great but I believe you can get a better return elsewhere and not have to think twice about what your net worth is. I’m part of a club that is currently earning over 26% net with Lending Club and can prove it, it’s only one part of our assets that is generating great returns.
Is that 26% per year or per note?
Dario, A 26% return is very impressive although you don’t mention how long your account has been open. A 26% annualized return after 3 months is very different from that same return after two years.
There are some investors on the Lend Academy Forum who earn returns even higher than that. I know it is possible, but only by playing in the secondary market. And the arbitrage opportunity there is getting more difficult.
Hi Peter, first of all, thanks for the wealth of information given on this site. I am wondering how I could go about using a Roth IRA for lending. Do I need to go through a Self Directed IRA third party to help me with that? Or would I be able to have a Roth in a bank account and use the account and routing number to transfer funds into Lending Club.
There are strict rules about Roth IRAs but I know you can do a rollover from your existing account into Lending Club. But you will need to open an account at an approved Lending Club IRA custodian. Their preferred provider is SD IRA Services, Inc. You should call Lending Club with specific questions – they have an entire team of retirement account specialists that can help with this process.
can u invest in the loans for shorter terms. or do you have to invest for the whole life of the loan.
David, There are three and five year loans but there is a secondary market. If you don’t want to hold the loan for entire term then the only option is to sell on the secondary market.
Hello,
I like the p2p space since interest rates worldwide seem to trend flat for the foreseeable future. I plan to put $100,000 to work, still a very low % of net worth. Objective is income, but with a 5 year window
Given todays’ P2P market:
How long will it take to deploy $100,000
Would you split between Lending Club and Prosper
Hi Charles,
The answer of how long it takes to deploy $100,000 is “it depends”. As I write this there are 515 loans available at Lending Club. This means you could deploy your $100,000 today at $200/note and be done by the end of the day. Now, it takes several days for all this to actually be invested and some of these loans will end up failing verification or will be canceled by the borrower so it will take several weeks to be 100% invested.
Now, many serious use some kind of filtering which limits choices and therefore increases the amount of time to deploy. For me, it would take several weeks to deploy this much cash but it really up to the selection criteria you choose.
Hi Peter,
I read that there are fees of 1% from any payment i receive from the money i lent and in addition there are collection fees.
So if i deploy let say $100,000 with an interest rate of 10% for 3 years with 0% defaults how much should i get eventually ?
Ron,
As John said below it is unrealistic to expect zero defaults. But what I think you are asking is how the returns work. Here are a couple of posts I wrote some time ago which will shed some light on your question:
https://www.lendacademy.com/do-you-understand-how-interest-is-calculated-on-p2p-loans/
https://www.lendacademy.com/an-in-depth-look-at-investor-service-fees/
Hi, i have been investing in the platform for a few years now and it is unrealistic to think that you will get a 10% return with no defaults. It happens no matter how will you screen the loans.
Do you consider opening platform for non-US investors, like UK residents etc.?
Lending Club is only available to US residents. The UK have plenty of good choices for investors – here are some options:
http://www.p2pmoney.co.uk/companies.htm
Which one of them is denominated in USD? Of course I use UK platforms, but I would like to diversify portfolio over more countries and more currencies. Have everything in one country/currency is not a great strategy. And I am not by far alone.
No UK platforms will take US dollars directly. To do that you will need to invest through a fund such as P2PGI: https://uk.finance.yahoo.com/q?s=P2P&ql=1
They invest in platforms all around the world.
If you want to invest outside of British Pounds, I would suggest Bondora – they are a pan-European platform and I believe you can invest with Euros. https://www.bondora.com/
I have been investing with Lending club for going on 2-1/2 years now and I’m no impressed. I have only started with 1200 to test the waters and Have had ( charge offs) and there are currently 19 more that are either late or close to default.
I am also invested in Prosper and I have only had 1 default. But everything one else is current.
with that said it seems that Lending club is only about making that money on the the issuance of the loan and they don’t care about the investors. they are too quick in giving out the loan with out investigating the borrower. I am going to be closing my account once all loans are done. Just thought I would share my 2 cents here.
If lending club cares about the investors it needs to show it. Not by throwing our money out the window.
First of all, your biggest mistake is investing with only $1,200. It is a numbers game, and even if you are experienced at looking at what loans have a better chance of not defaulting, it is very easy to lose money on such a small sample. At $25 minimum per loan, you can only invest in 48 loans – and that is if you do it all at once. It is not the fault of LendingClub that you are under water or close. It is usually recommended that you start with a minimum of $5,000 and spread it out evenly over 200 loans. That is about the smallest sample you should do. Anything less is foolhardy and a mere gamble. Many of us have 6 and 7 figues in LendingClub and are doing quite well over 5+ years.
SMART MAN, Jmotorev;
These guys are shysters. Good Luck getting your money on the loans. The problem with this WHOLE SETUP is , that YOU have to take LC’s word on people defaulting on a loan. There is NO VERIFICATION that what LC tells you is TRUE and ACCURATE. That’s WHY they operate under STATE LAW, and nothing to do with the FDIC. Federal offense is BIG TIME jail time, state law, slap on the hand for each individual, and the AG office DOESN’T have the RESOURCES to INVESTIGATE this RIPOFF Co.
You won’t get the full story from Peter, he’s the shill for LC.
Ken, What you are saying here is simply untrue. Lending Club operates under federal laws. Every Lending Club loan is actually issued by WebBank, an FDIC insured bank, and they have to comply with all federal banking and fair lending laws. On the investor side Lending Club is regulated by the SEC, another federal institution.
thanks for the newsletter
Nice article, as always. And congrats for updating it.
One thing missing in the ‘third party tool’: during this 18 months a new automated investment tool appeared. And is now bigger (in terms of AuM or team) than all the other ones you mentioned.
Thanks Emmanuel. That was supposed to get updated – I meant to add LendingRobot in. Will get that done. Thanks for letting me know.
can i start investing just with 500.00 dollars?
Yes, you can start investing with just $500 but you will not be very diversified. You should read this post before making any moves:
https://www.lendacademy.com/how-to-invest-500-in-p2p-lending/
Lending club is shaving more money across the board that people can’t even imagine. I have recieved a loan from them and also was looking for another after I paid it off. My score is well above 710 and they were offering me 16% interest. Recently I got into the investing side of lending club but the interest rate they show for typical FICO scores is lower to the investor than what the actual rate is being offered to the customer. So in my case the loan to the customer is 16% but the rate offered to the investor is 12.99%. They are keeping 3% of the interest rate along with all the fees they charge investors. How do I know, cause I saw my loan on the as a customer and investor. I made special remarks in the application that were easily identifiable to me on the investor side. It’s highway back door robbery to investors and customers!
Ted, I think you are confusing APR (Annual Percentage Rate) with interest rate. I have taken out a couple of loans myself at Lending Club, most recently just a couple of months ago, and I can assure you the interest rate offered the investor is the same rate that is offered the borrower. However, the APR is always higher for the borrower because it takes into account the origination fee charged to the borrower. This is disclosed in the Truth in Lending statement and in several places on the Lending Club website. I can assure you there is no highway robbery going on here.
What type of address and income verification tools does LC use for investors?
To my knowledge Lending Club does no verification of address and income for investors, but as part of the investor agreement you have to verify that all the information you provide is truthful. So, if you mislead Lending Club here you are in violation of the investor agreement.
“If an FDIC insured investment is paying 6%”
LOL Yes, because that’ll happen…
So how does money get paid out? Do you get a 1099 DIV or INT?
All money earned is ordinary income but what you will receive is a 1099-OID. See here for more info on taxes: https://www.lendacademy.com/lending-club-prosper-tax-information-2015/
Do you get capital gains as loans/notes are bought and sold?
If you have capital gains from selling notes on the secondary market you will also receive a 1099-B.
todays my first day on the site and i have a few questions if possible. . .my initial deposit was 5,000$ do you think that is enough? AIso I’m having a hard time finding out exactly how to go about buying the notes and getting the opportunity to sell a loan. . .im not sure if today just may be a slow one i just want to make sure I’m not missing out lol
thanks for your time, logan
Hi Logan,
I think $5,000 is enough to get decent diversification – this will give you 200 notes as long as you stick to the $25 minimum.
We describe how to buy new loans in the video and the section above. If you are interested in learning about the trading market where you can sell loans here are some articles for you to read:
https://www.lendacademy.com/an-introduction-to-the-lending-club-trading-platform/
https://www.lendacademy.com/a-guide-to-investing-on-lending-club-with-foliofn/
https://www.lendacademy.com/foliofn-lending-club-users/
I have a 401K with a former employer and am considering moving out of that and into LC. Is there an article with information about how this works?
Thanks,
Jimmy
Hi Jimmy,
We have written several articles about IRA investing – this is really the best way to invest in this asset class in my opinion. Some of these are a little old but the process is still similar today:
https://www.lendacademy.com/benefits-investing-p2p-lending-ira/
https://www.lendacademy.com/invest-in-p2p-lending-with-an-ira/
https://www.lendacademy.com/how-to-open-a-lending-club-ira/
I am seeing different info on what states will let me invest in LC or Prosper. I live in Ohio but also own a home in Arizona. Can I open an LC or Prosper investing account in Ohio or Arizona?
An update, many sites have conflicting data for what states are allowed but LC of course has the correct data. Just didn’t want to open an account before figuring it out. Ohio is not permitted but Arizona is. I have a home in Arizona but am working in Ohio temporarily. I used my Arizona home and banking to set up an account, should be good there.
My next problem is the FOLIO trading account. They want employer name and address which is Ohio. Does anyone have knowledge if this will stop me from setting up a FOLIO account or maybe cause me problems with my main LC account.
Thanks
While I can’t say definitively, my feeling is that this will have no impact on your Folio or main LC account. People often work for employers that are out of state.
Thanks for the reply. I have since been able to purchase some notes and also establish a Folio trading account. I have pulled historical data from Lending Club and have been looking it over. I would like to see similar historical data for Folio but have not been able to locate it. Could you tell me were I might find this?
Thanks
There is very little information on historical data for Folio. But I encourage you to check out the Lend Academy forum where many members discuss Folio strategies at length. You can read through the LC Folio section for a wealth of information:
https://www.lendacademy.com/forum/index.php?board=19.0
Hi Peter,
First, great site and thank you for all the great information you provide.
I had a question regarding some information LC has on their investing site. It says…
“For example, if an investor made a $100,000 one time investment in 36-month, grade B Notes providing an aggregate 6.0% net annualized return, they would receive approximately $3,035 each month in cash payments to reinvest or withdraw.”
Now I think it’s just because I don’t know exactly what net annualized return is, but how do they reach the $3,035 monthly cash payments I would receive if I invested $100,000? I was thinking about investing $10,000 so a $300 a month in payments sounded good to me, that is why I ask this question. Thank you Peter.
Hi Chris,
That is a common question. The reason for the numbers you quote above is that the cash paid back into your account contains principal and interest, not just interest. Now, you can choose to reinvest all or a portion of these payments or just take the cash out.
Chris’s comment- “For example, if an investor made a $100,000 one time investment in 36-month, grade B Notes providing an aggregate 6.0% net annualized return, they would receive approximately $3,035 each month in cash payments to reinvest or withdraw.”
I have been looking into LC and considering giving it a test run, I came across this string this evening and its been very useful. I did want to comment on this recent post where Peter states this is interest and principal. Although am looking at this example and see it like this-
100K invested, 6% net annualized return = $3035 per month, 36m loan- therefore and correct me if i am wrong here- 3035 x 36 = 109,260-100K= $9260 over 3 years/3= $3086 per year= 3.086% return per year. Doesn’t seem too impressive when i look at it like that if indeed i have this correct. Albeit higher than a 36month CD but riskier.
Any comments would be appreciated.
David, Let me try to explain this to make it more clear.
You invest $100,000 at 6% your monthly payment is (according to my amortization calculator) $3,042. Now, the payment in month consists of $2,542 or principal and $500 of interest. So, after month 1 you no longer have $100K invested, you have $97,458 invested since some of the principal has been returned to you. Now, you can choose to reinvest this principal or not. If you do nothing then your outcome will be similar to what you describe above. If you reinvest your principal you will receive your 6% return – assuming no fees and no defaults.
Here is a post that explains this in a little more depth:
https://www.lendacademy.com/do-you-understand-how-interest-is-calculated-on-p2p-loans/
There’s a REASON WHY this COMPANY, operates under California Law. So, when you get RIPPED off, the FEDS ARE NOT INVOLVED. RUN, DO NOT WALK, AWAY FROM THIS COMPANY!!! There’s is NO PROTECTION on YOUR MONEY. You are at the MERCY of their Loan Dept. and there is NO GUARANTEE that the loan you are INVESTING in, is a legitimate individual. They claim that they screen loan applicants, on employment, income,blah,blah,blah,blah. It’s a lie. I have been stating this, every chance I get, to wise people up. You can create a fictitious individual, make the loan, and walk, after 1st payment. That’s what they told me, when they claimed to verify a guy for a 20k loan, with 5k monthly income with 7up, for a downpayment on a house. LC said they couldn’t find the guy, after missing 2nd payment. For all I know, someone at LC made this guy up, got 20k, and LHAO. Don’t get RIPPED OFF, put it in an INDEX FUND or ETF, you have a safer way of ROI. They don’t like me much. I filed several complaints, and found out WHY they operate under STATE LAW. They won’t tell you, HOW MUCH MONEY people lost, investing in their loans. Those different loan grades, don’t mean a thing. A grade A loan is NO better than a D, E, G etc. It’s all BS. RUN FORREST, RUN!!!!
Wow Ken, that is quite the negative review. Clearly you have had a bad experience.
To give a little perspective let me share my own experience. Over all my accounts I have received over 1,000 defaults. Yes, you read that right: over 1,000. That is 1,000 people who have not paid back their loan in full and some of them never even made a single payment. Now, I have made well over 12,000 loans so the vast majority have paid on time every month. Which is why, with a well diversified portfolio, returns at Lending Club are remarkably consistent even after experiencing defaults.
Ken, I have no idea of your personal situation that led to you writing such harsh criticisms but suffice it to say I have had a very different experience. Lending Club continues to provide me and tens of thousands of other investors great returns month after month.
Because Peter, IT’S TRUE.! LC claims they verify the people making the loans. Unless LC has improved their operating procedures, and the way they do business, it’s a sham and ALSO a SHAME. I believe your numbers are in ERROR. Because the loans that were being sold by LC members was HUGE. The INVESTORS WANTED OUT of the LOAN. LC can say WHATEVER they want to appease the INVESTORS, and 1000 DEFAULTS is JUST a FRACTION, (MAYBE for 1 year) but LC DOES NOT TELL the WHOLE story. And after reading other comments about people who made loans and invested, to SEE the SPREAD, LC is making HUGE amounts of money as a middle man, with NO RISK on their part at all. When I talked to one of LC’s attorneys, and HOW EVASIVE he WAS with my questions, that’s WHEN it BECAME CLEAR to me, that ripoff artists were DEEPLY IMBEDDED in this company. LC knows me, and they don’t like me much, because I TELL the WHOLE STORY. Not just BITS and PIECES, Peter. Professional ILLUSIONISTS in banking. BEWARE folks, when it comes to money, HONESTY is THROWN out the window. TRUST is hard earned, and LC has taken the course of P.T. BARNUM ( sucker born every minute). Do you get any perks from LC Peter, or do they just guarantee you won’t lose money?
I have spent many hundreds of hours studying Lending Club over the last several years and I can promise you that my numbers are not in error as you claim. The vast majority of investors do not want out – the opposite is actually true. They continue to invest more money.
And while I do have a business relationship with LC, long time readers know that I try to be very fair in my coverage. But as an investor I get no special treatment whatsoever.
Dear Peter, you are so patient and respectful with the commenters. You share a great deal of valuable p2p information in general and in particular your personal investing parameters and outcomes. I want you to know how much I appreciate your efforts and how much I have benefited from your information and advice regarding LC and Prosper. I’d like to vouch for the accuracy of your statements so far as I have used them and tested them. Also, in defense of Lending Club, I have called them every so often over the past four years and they always have been both helpful and pleasant.
Hi Kate,
Thank you so much. Your comment made my day. I am glad you have found my insights useful. I am still a big believer and am personally still invested in Lending Club and other companies in the online lending space.
As an investor who suffered a 3.5 percent drop in my million dollar portfolio over the last week I decided to try out the lending club with a starting point of 5000.00
What you’re saying is that we are limited to 10% of our net worth, so theoretically I would be able to invest 100k
How volatile is the Lending club? Does it become safer with larger investment? I am currently only doing 25$ increments, thinking that multiple miniature loans seems safer than bulk loans.
Is it worth transferring a large portion of my assets that are now in stocks and bonds over to lending club for more reliable returns?
Hi Andy,
One of the things I love about Lending Club and P2P lending in general is the lack of volatility. With a well diversified portfolio there is very little monthly variance to the returns.
If you are investing $5,000 I would stick with the $25 minimum – once you get over $5,000 I think it is ok to start increasing the note size. You really want at least 200 notes to be well diversified. But after about 1,000 notes there is little advantage in being more diversified.
As to your question as to whether it is worth it for you to put in more that is a call only you or your financial advisor can make. I can’t comment on your personal situation but I can tell you that I have a large portfolio that I share publicly here:
https://www.lendacademy.com/my-returns-at-lending-club-and-prosper/
Also, you should read this short article. It is a few years old but the best practices still apply:
https://www.lendacademy.com/what-are-the-best-practices-for-p2p-lending-investors/
Best of luck.
Thank you for the site – full of such useful info that I’m very tempted to get the ball rolling and make some loans.
But here’s what’s holding me back. Lending Club (stock symbol LC) IPO’d back in Dec 2014 at around $24. A few days later it got as high as $29 and has steadily fallen since then, to close (as of this writing) at $7.73. That’s a near 75% decline.
Yes, the markets have been bad these opening weeks of 2016. But still! 75%?
I’ve done some additional research and many are saying that LC is not doing anything special and that others are figuring that out. They are pure middlemen, gathering, for instance, credit reports on potential clients that anyone can do. So what happens if other companies start to spring up and compete with LC (and Prosper)? Their margins get squeezed, as do the returns to investors.
Here’s the big question: If LC goes under, don’t you, the investor, go under as well? Peter, to the best of my knowledge, your account with LC is not insured. Could it not simply go poof and vanish into thin air?
Lending Club’s stock price got ahead of itself clearly. But even though the stock has fallen 75% I have never once questioned LC’s future viability. They have $1 billion in cash on their balance sheet and are generating positive cash flow every month. Many stock market investors clearly think LC will not become more than a niche specialty finance player and that is why they are being valued. But I have followed LC very closely now for 6+ years and I am very bullish on their long term prospects. Full disclosure: I own stock in LC so I clearly have a vested interest in their outcome.
As to your question about what would happen in a bankruptcy at LC, there is a backup servicer in place and investors should continue to receive their money. For almost all borrowers the money will continue to be deducted from their bank account every month regardless of whether LC is a solvent entity or not.
Why did you delete my comment, Peter?
A 75% decline in LC’s stock price in less than 12 months got you worried too?
Or do you have a much greater stake in LC than you let on and can’t risk spooking future investors?
Be honest. I’m appealing to your humanity. Let your readers read what I wrote. Let them decide for themselves whether they want to put their hard-earned assets with a company with no insurance. They should know that if LC goes under, they risk losing not only a Note here and there, but that they could actually lose their entire account.
Shame on you, Peter.
Shame on you.
Your comment was not deleted. But for all new commenters I hold their comments in a moderation queue before publishing. This is standard practice and it prevents spam from getting through and polluting the comment stream. Your next comment should go through immediately (unless you are using a different IP address).
The only comments I ever delete are those that are offensive or abusive. Always happy to have a lively and open discussion here.
Just for everyone’s curiosity, and as a follow up, I have been investing in LC notes since 2009. I started investing with only two loans of $25 each!, now have thousands of loans, and have scaled very slowly by monthly incremental investments. Now, after into 8 calendar years of investments, I still cannot believe that after all the defaults, and “fraud” borrowers that I also have had, which may not have been vetted 100%, I am still increasing my positions at a steady clip, and have returns over 7% on the safer portfolio, and over 9pct on the more risky portfolio… and have been investing in different managers investing in this field to diversify even more, since a few years ago, in managers such as NSR invest, among many, many others.
So far, have been very happy with returns overall.
Yes I agree that LC does not verify 100pct of their borrowers, and do also understand the same applies to credit card borrowers from banks, and I certainly would want LC to verify all, along with having a much stronger collection process to go after the pay once, then default mentality crowd, yet am cognizant of the fact that there will be crooks in every business, and perhaps the government should be a lot tougher on fraudsters, borrower frauds, and much tougher on scammers.
LC has been doing an excellent job for us small investors, as without them, we would not have the access to loans for as little as $25 investments!
Bravo Renaud Laplanche, the president of LC, who is very small investor friendly.
By the way, I wholeheartedly believe LC is justified in making a profit, why shouldn’t they? I don’t think anyone works for free, and we shouldn’t expect them to not make a profit either.
As far as Peter, I’ve followed his work since day one, and as a genuinely ardent fan of his, and of his showing all his positions, loans, personal money positions quarterly in this field transparently, I have a lot of respect for him, and his team. Because of him and returns shown by him, along with his transparency, I have decided to invest a lot more heavily in this investment space!
By the way, for all those that are curious, want to hear the players in this field, and judge for yourselves, you must attend LendIt conference in San Francisco, CA, April 11-12. It is a must attend, as last year there were over 2,500 attendees when I attended!I I made a lot of great contacts, whom currently am invested through as well.
No, I do not have any vested interest in the above statements, besides learning from the contacts I have gained, and follow. Below is a link I have provided for all to go to in order to attend, and learn, and make contacts if you are truly interested, and are serious to make money in P2P, and marketplace lending, I have, and am.
http://www.lendit.com/usa/2016
I would like to start off with investing in two loans at $25 like you started. Which criteria did you use to select your first 2 loans? I realize it is better to invest in a couple hundred loans but I would like the money that I need for that to come from these two investments instead of my savings account. I do realize that the first 2 loans i invest in won’t give me the 5,000 right away but I know that those two loans will eventually give me more money to invest in more loans. I know that starting off with two loans might be harder but it is obviously not impossible since you’ve done and that is why I would love for you to give me some guidance.
Hi Milagros,
While I understand starting small investing in two loans of $25 each will take you several decades to reach $5,000 if you don’t add any new deposits. Of course, I assume you will be adding money on a somewhat regular basis. That is what I did. I started with two loans but have since added well over $100,000 to my initial investment.
If you are starting small I think it is best to invest in A grade loans. You want to minimize the probably of a default at all costs when you are only diversified into two loans.
Hi Hrant,
Thanks for chiming in. Good to get your perspective here. And thanks also for your kind words and for your LendIt plug. I look forward to seeing you again in SF at LendIt USA 2016.
FYI, Lending Club DOES NOT answer emails.
Hi Mary,
I am sorry you have had a bad experience in your communications with Lending Club. I can assure you that is not typical – I know many people who have said Lending Club is very responsive to emails.
Have you tried calling them? If you are still having no luck let me know and I can escalate it for you.
I’ve emailed back and forth w/ LC and their tech staff. There may be a delay at times but they do get back to you. Also, they have a phone number which they answered when I called.
Hi Peter,
It’s John again. I just checked up on Lending Club again and see that its stock price is now down to $3.50. For those of you that won’t scroll up to see my original replies on Jan. 16 on this site, that amounts to an 88% decline from its all-time high of $29.
I think the market is now fully recognizing how poor a business model LC is when economic times appear shaky (a recession is right around the corner). And with the Department of Justice sending them a subpoena and with its founder and CEO Renaud Laplanche having resigned following an internal probe concerning $22 million in improper loan sales, I’m wondering how you will spin this?
Will you still pitch LC to your readers?
Do you still have the same guts to publish this reply as you did back in January?
It’s over, Peter. Sell what you can on the 2ndary market and cut your losses.
I am still investing and will continue to do so. It is not over in my opinion. I still believe in this industry and I think Lending Club can and will survive.
Your money is tied up for 3-5 years, you really don’t have a way out. The 2ndary mkt was never a place to liquidate your investments efficiently and will likely dry up once the DOJ news spreads; more lendees will default, thinking the ship is going down, especially if a recession hits; remember, P2P lending is completely unproven in bad economic times (ie, it simply wasn’t around pre-2008).
I sincerely wish you luck and commend you for posting my reply.
As a pretty heavy investor with about 85k in their loans I have nothing to complain about. In fact I would argue that people would be more interested in an alternative investment platform such as LC because of the volatility of the stock market. Dependable and steady returns are hard to come by.
There are many things to understand, we are in election time, emotions are high and stock fluctuations in LC have little to do with the quality of the service and more to do with people’s emotional fears.
LC stock has nothing to do with your returns as an investor with the platform.
Any business as large as LC is more than capable of riding out a press scandal, they will settle their problems and go right on making more money.
Andres, there is nothing dependable and steady about p2p lending. It has only existed post-2008, that is, in relatively ‘good’ economic times. If and when (and it is really only a question of when) a recession hits, more folks will hit hard times and default their payments. You are locked in 3-5 years and have no way out. You are going to take some hits. Get ready.
The stock market is incredibly efficient. It was already factored in the rot that has set in at LC. Those that don’t watch the stock price movement are the last to know, just behind those mesmerized by ‘quality of service,’ which will NOT stop the coming defaults. The stock market knows this and that is why the price has dropped and will continue to drop until LC goes bankrupt. Only those lendees that are absolutely set on not ruining their credit ratings will continue making payments. But many will simply be unable to do so. Remember, good credit starts to return in 7 years by law, so many will simply opt to default.
I wish you luck as well, good sir.
You have this all wrong.
The stock market is what is overvalued. Many stocks are 10 fold or more than the company’s real worth simply because everyone is putting money into those that show earnings. Take FB, for example, does anyone really think FB is worth over 200 billion dollars? What assets does it hold? The company is mostly based on projected ad space earnings. If the market takes a real tumble, such as a depression, it is will likely drop to less than 10 billion. That’s a 20 fold decrease or 95% loss of your account’s worth.
Secondly, credit does not need 7 years to return; it improves immediately upon any reported change in your report and even after bankruptcy it can be over 700 in two years.
Lastly, the stock price for LC was definitely overvalued when it went public and remains so despite the recent drops. However, while much of the other high tech bubble prone stocks have continued to bubble, LC seems to have deflated enough that it will not pop much value if the market depresses. It may still be overvalued by 2 to 5 fold compared to the 10 to 200 fold of those in the bubble. Also, even if it were to lose half it’s stock value, it would not affect the operations of LC club. It may actually make LC an attractive takeover target by other market players such as WFC or BAC which would ultimately benefit investors in LC.
Hello,
What do you think of p2p lending in India? There are a handful startups like Faircent, LoanMeet, Lendbox etc. focusing on the same. What do you think will be the most difficult challenge they will face keeping the Indian market in mind?
I don’t follow the Indian market that closely but there was a guest post on Lend Academy recently on India:
https://www.lendacademy.com/p2p-lending-indian-market/
I am interested in investing LC. If I start with $2,000, can I select “C” grade investments and set up an automatic account that will select the loans AND automatically roll over the reinvestment of the income for me? Also, does this approach make sense as I have limited time to research each loan?
So I am sort of new to the investing world. I stumbled upon LC a few weeks ago just browsing the internet looking for ways to make my money grow. However, I dont have much familiarity with the language and processes involved in this business. I understand how most of this works, but could someone please explain to me in laymans terms what happens on my end if a borrower defaults, and what that means for my bottom line? Sorry to sound like such a newbie, but I have to start somewhere right?
Hi Scott,
Yes, everyone has to start somewhere:)
Just trying to put my 2 cents of experience since 2008 in.
If the loans default, you lose out 100% of that loan! Unless it comes back to life (usually not), and/or is collected upon (usually a very small percentage of is).
That being said, as long as you invest $25 for each loan, and diversify into many, many, many loans, like I have, and am making about 7.5% net, and 8.5% net on 2 different portfolios since then, even after all of the hundreds of defaults, fees, and other issues, you shouldn’t mind….invest carefully, bet with your your head, not heart, and don’t jump at the chance to make larger investments per loan, no matter how good a loan sounds.
DIversify, diversify, diversify:)
Open an account now:)
Hope this was helpful. Let me know.
Scott,
Just wanted to add some clarification that if a loan defaults, you will only lose the REMAINING principle and future interest that has yet to have been paid on the loan, not the entire initial investment amount. So depending on how deep into the loan the default came will determine the damage in individual default will cause to your portfolio. Will also echo Hrant and many others on this one…diversity is king.
Is Lending Club now offering the vast majority of their loans to institutions and individuals with huge amounts (millions) to invest? They almost always nowadays only have 100-150 loans available and these are generally not too desirable, when there used to be over 1000 almost every day. The truth, please.
Good question. I was wondering the same thing.
Lending Club ebbs and flows when it comes to the number of loans offered to retail investors. Over the years I have seen the number fluctuate between 0 and 4,000 loans available to retail. I know that for many weeks we have had a much smaller selection than the historical average. To be honest, I can’t provide the reason for that because I don’t know. But I also expect that eventually we will get back to a more typical 500-1,000 loans available.
Don’t do it folks!!! I did a test and invested in 16 loans at $25 or $50 and then had 3 loans with initial investment of $500, $475, and $800. All of the loans were Grade D, E, or F.
Guess which loans defaulted? Uh, yeah. I don’t believe this is an issue with borrowers not paying, I believe this is an issue with Lending Club “cherry-picking” loans for default. If you have more loans at lower investment then Lending Club makes more money in fees. If you have fewer loans at higher investment costs, then Lending Club steps in with a “fake default” and steals your investment. They make money either way.
Definitely do your own homework but I highly recommend being very cautious here.
Hi James,
That is a pretty bold accusation that Lending Club is “cherry picking” loans for default. I have seen absolutely zero evidence of this. Sure, I am just as disappointed as anyone when I see defaults but there is nothing sinister going on, of that I am quite certain.
Also, investing in 16 loans is simply not enough to build a diversified portfolio to test out LC. I think a minimum of 100 loans is needed to truly give it a try.
I am having a similarly negative experience and warn anyone NOT to use this service. Having invested 5000 with the suggested auto-invest back in January 2016, I have earned $77 in the last year, though at the current rate of write-offs, it looks like I will be in the negative shortly.
Out of a total of 307 notes issued, 33 have been paid off, 15 written off, 7 in grace period, 4 in the 16-30 day late period, and another 4 in the 31-120 grace period, all of which will end up being written off. So, the notes are averaging a 50% payoff and 50% write off.
This is completely unacceptable and seems to be complete false advertisement on their part. I don’t feel they are intentionally misleading and not informing people of the actual rate of returns and substantial number of write-offs.
Can anyone suggest any recourse on our part, as it seems to be a significant number of investors?
Hi Jeff,
For an account that is about one year your results don’t seem that far off. I want to point that with 15 late notes it would be highly unlikely and very unlucky for all 15 notes to charge off, particularly when 7 are in grace period. But even assuming the worst and they all do charge off you will still have around 240 notes that are current and paying principal plus interest every month.
I am not sure where you get the $77 from as far as earnings go because with 250 current notes, 33 paid off and 15 charged off that seems really low to me.
I am curious about where do you feel like you are being misled? Your first year charge off amount of 15 notes out of 300 (a 5% charge-off rate) seems about average unless you investing in A-grade loans. Eventually, I feel very confident that your charge-off rate will be substantially smaller than your payoff rate. That is the case for me on all my six Lending Club accounts.
Hi Peter, thank you for the quick response.
All of the numbers are from the LendingClub dashboard; Account Value (which was initial 5k investment) is listed at $5077. And Net Annualized return is listed at just over 1.2%, while below it lists the expected as 5.44-8.1% (which has dropped over the year).
As far as conversion of late to notes (out of grace period) to writeoff has been consistent in the wrong direction, once late, they have not gone back to current status.
I understand that I could have some bad luck, but I am seeing more and more people making similar complaints, and particularly using their suggested algorithm.
All of the time i keep seeing people complaining that lending Club is in some way dishonest or words to that affect. I started investing in 2008 and to date i have invested $29,800 into 1189 notes. The dashboard says i am receiving 4.66% on my notes. 655 have been paid off and 123 have been charged off. YES i wish that none of them were charged off but that is going to happen any time you invest in anything. I tried to take LESS risky notes, mainly in the B category with some C and some A. Some notes always seem to be late. At this point i take by about $300 a month and reinvest it using their automatic platform and the site says i am getting about 8.99%. I am happy because it is more than i can get at a bank and it seems a bit safer than the stock market. I also like the concept of helping out other people. In a more perfect world there could be more background checking of every loan but at this point they seem to be screening out people. I also can screen out people so i don’t invest with people who want the maximum and i do’t invest with people who have done a lot of credit clearances or people who have any credit rating below C. With some of these filters i feel that the site is working for me. Maybe you investors need to refine your filters and better screen who you are givnig money to. Good luck to you in the future.
Jeff, While your experience is at the lower end of investor returns that I have seen Lending Club definitely has some issues in 2015 that carried over into 2016. Ryan covered this on Lend Academy just a couple of days ago:
https://www.lendacademy.com/recent-performance-trends-lending-club-prosper-part-2/
Lending Club adjusted their rates upwards and tightened their underwriting. Time will tell if it was enough.
Thanks for the insight Peter, I just recently started investing in LC testing out a small amount of $500. After consistently only realizing one tenth of a percent interest in my savings account, I certainly wanted and needed that to change. I carefully hand selected my portfolio and was glad to read the article about how to invest smaller amounts. The video demonstration was helpful too. I think going into peer to peer lending with a full understanding that getting rich overnight will not happen and just like with any other investment, the more diversified I am, the lower the overall risk. I’ll add more funds to my account as I become familiar with the entire site and read their 2017 investor update. I’ll be in for the long haul as long as I realize decent and realistic returns over time.
Hi Benita, Thanks for the comment. I also started with $500 and increased it slowly as I became more comfortable with the site. I am glad you are going in with your eyes wide open – peer to peer lending has never been a get rich quick scheme. But there are decent returns available for those who do their research and are patient.
Peter, I opened a LC account for the purpose of barrowing. Now I would like to invest. Can I use the same account or do I have to open a new one with a different email address?
same ok
Lending Club has an archaic system where you need a unique email address for every account you open. So, this means if you are a borrower and now want to become an investor you need to use a different email address. It also means if you are an investor with a taxable account and want to open an IRA account you need a different email address too.
I first started challenging LC on this back in 2010 but they have still not changed it. I think it is a significant inconvenience for investors and one that I hope will be addressed some time. Although I wouldn’t hold your breath.
One final thing, if you have a Gmail address you can insert a period anywhere in the email address – this is how I get around the LC limitation so all correspondence still comes to the same email address.
Hey all,
I am an investor since 2013. Had a great experience when first starting out. Recently the defaults have been killing me. I am down to a 2.13% return.
I an NOT risky with the notes I select. I take time look at each Note’s DTI, Utilization, time worked etc. Just wondering if this is being experienced by others.
Just over 2% seems pretty low according to the “numbers” advertised.
I have the exact same issue (ANAR 1.87%) and it seems that many more people are having trouble as well. I have raised this issue in this thread before, though it has fallen on deaf ears. Most responses talk about achieving 16% returns in the past or needing to buy more notes (or bad luck).
In January 2016, I began investing 5000 dollars in the auto recommendation, before changing it 6 months ago to strictly A,B,C rated borrowers. Currently, after 1.5 years, my account value is 5,123.34 with 50 paid off notes, 26 charged off and another 8 that are late between 31-120 days. In my experience tracking for the last 6 months, not one loan that is late recovers to current, so I anticipate another 8 charge offs in the next month or two.
I absolutely think Lending Club is falsely advertising returns and misleading expectations. It would be very interesting to actually see what averages most of their members are achieving. From my experience, it would be foolish for anyone else to invest in this terrible company.
If anyone is has signed up in the last year and is achieving a decent return, please post how many notes you have and charge offs if you can.
I like LC as an investment option, and think it has great advantages. I have just watched my Rate of return slowly drop and it it frustrating. Could someone who is having better luck give some advice on notes that they select? I hand pick all my notes with what I consider fairly safe criteria.
Any help is appreciated
To learn about my own experience you should read my latest quarterly update:
https://www.lendacademy.com/quarterly-marketplace-lending-results-q1-2017/
I have been investing since 2009 and Q1 of 2017 was my worst quarter ever. We are all struggling with loans issued in 2015 and 2016 that underperformed. Since then Lending Club has increased interest rates significantly which I am hoping will make a difference to returns going forward. Time will tell.
Peter,
As I also have been investing since 2009, am confirming your results, as returns have been trending down.
Also, as always, am a huge fan of yours, Jason’s and Bo’s, for true transparency of your actions, and very high integrity thru your lendacademy.com, as well as your LendIt expos, which every serious person in the marketplace lending field should be subscribed to for free, and attending the expos.
Although the interest rates being charged to borrowers may have been adjusting at LC, or are being adjusted to account for the risks incurred for investors, the main reason I think that returns have suffered is that there is very little enforcement of defaults being pursued.
All these loans are made to borrowers, and are supposedly backed by their credit, and intentions of paying back, so why is it that collection efforts are not rigorous to pursue the late, as well as defaulted loans, to get monies back?
As my dad used to say, follow the money, if no skin in game, no incentive to really pursuing collection. So, Is LC just trying to generate revenue by generating as many loans as possible, or are they sincerely, aggressively pursuing the borrowers who don’t perform?
Hope they wake up one of these days…as if small investors withdraw, institutional players will step into the game, possibly rendering platforms like LC obsolete in the future….Did anyone say Marcus or look at their trajectory?
Thanks for all the replies. I hope this trend changes soon. Maybe the change in interest rates by LC will help. My notes are currently approx. 45% current, 40% paid off and 15% default. Does this seem to be around the norm to others?
Since posting here, my standard for the notes I invest in have gone up even more. They were fairly high before as I mentioned. Ill see if this helps over time. I have also had good luck keeping my return up using the folio platform.
On another topic, I know there are cases out there where people use the lack of penalties and consequences levied by LC to their advantage. I know there is no way around this, but the Home Improvement note for 25,000 given to a individual with a 10,000 a month salary, great DTI and Utilization ratios, and then only 2 payments are made makes me wonder.
Zach, Your breakdown of current, paid off and default is dependent on how long your account has been open. I can tell that with my main Lending Club account that I opened in 2009, I am running about 32% current, 52% fully paid, 15% default.
As for your other comment. Clearly there is some fraud at platforms like LC but I think the platforms continue to do a good job of minimizing this. Keep in mind that someone who is trying to commit fraud will usually make no payments. Borrowers who make only payments I think it is mismanagement or misfortune to blame more than fraud.
Peter Renton, I’m interested in your Q3 2017 update! Keep us informed.
Reginald,
I will have my Q3 update out in mid November. I always run about 6-7 weeks past the end of the quarter so I can get all my statements in.
Just posting my experience. I’ve had an account open since 2012 to 2017. I started out with a $100 as an experiment and just added deposits in once in a while. My total deposits now equal $2550 and my account is worth $3070. All of that money is stuck in notes which means I won’t be able to get my money if I needed it right away. When I started, I used to buy notes that were high risk so I can try to get high reward, but that didn’t end up doing so well. There were so many notes that ended up getting charged off. I have a total of $890 charged off. Now I just invest in A and B notes. I’m thinking of ending this experiment and trying to get my money back eventually. I’ll end up putting the money into my stock portfolio and maybe a new laptop.
Hi John,
Thanks for sharing your experience. Just a heads up that you can place your notes for sale on Folio if you need/want to liquidate your account.
I’ve actually had great success selling notes on the folio platform. I keep a significant portion for sale and my returns there are around 10%. When my LC returns are at 2.03% it’s a nice way to supplement.
Since opening my current Lending Club account in June 2015 I have purchased 3087 loans in the aggressive B-F categories, with the majority in grades C-E. 88% of these loans have been paid off or are performing. 139 loans are in the grace period or are late; some of these will likely not default. Despite what others have written, my experience is that most Lending Club loans — even those in risky grades- — do perform.
I’ve looked at all of the web site info and the reviews and it actually looks like a decent place to invest some money. What I can’t seem to find any info on is how to get out once all of the invested funds are allocated to loans. Is there an exit vehicle available through Lending Club?
Like John, I would also like more info on how to withdraw funds when that time comes. This is the final piece of information that I need after hours of research and review perusal before making a final go/no go decision in LC.
John/Creighton,
You can withdraw funds by using the Folio platform to sell your notes. There is quite an active market there for people who are looking to buy notes – often from states that don’t allow investing on the primary market.
You can read my initial review here (it is a few years old now, but not a great deal has changed):
https://www.lendacademy.com/an-introduction-to-the-lending-club-trading-platform/
There are two more articles with more information that will also help:
https://www.lendacademy.com/major-changes-to-the-lending-club-trading-platform-today/
http://blog.lendingrobot.com/guide/secondary-market-on-lc/
Don’t waist your time with lending club. I invested a little over 25k in their medium risk portfolio. I currently have defaults in excess of 2550. I’m about 1 year in now and have been pulling money out every chance I get. I just want to cation folks from using this service because the consept is very intriguing as an investor but the borrowers are just not reliable. I seriously question the borrower data that lending club provides. Please be cautious if you choose to use lending club!
Dustin, you and I are definitely on the same page. Even if I use the filters I’m getting chargeoff’s that almost equal the interest. This wouldnt be terrible except I have to pay tax on the interest as ordinary income and can only use the losses as capital losses. So tax wise I’m screwed unless I sell stocks or bonds for a cap. gain.
Bottom line is they have no interest in doing a good job of underwriting their debt, and in fact make profit off of the chargeoffs. In the end this will bite them as their lenders like myself lose faith
I started off with $500 investment about 18 months ago. I deposited another $100 and my account value is now $750. Until the beginning of 2017, I was averaging about 13% but due to writers, I’m down to about 10.1%. Although a very small amount, when compared to everyone else, I have 10% default rate. 45% paid and 45% current. I choose my own investments and tend to lean toward a1,a2 and c,d,e classes
Ironically my charge offs were A3, A5.B1. I tested an E5 and they made 3 payments then paid in full. I’m considering another deposit which is what brought me here. However, I balance my choices between A1;A2 and C3 or riskier. This seems to be working for me. Good investing everyone.
Hi,
I am new to LC and would like to understand if I begin with the automated investments, say Option #2 at 13.97%, how close do my returns actually match that? Does it automatically invest the full amount I have to invest? Also, I am assuming the interest payments start coming in monthly is that correct? Do they get automatically reinvested?
Thank you
Kickstarter,
That is not how it works. The 13.97% is the average interest rate of the loans you are investing in. But Lending Club takes an investor service fee (around 1%) and then there will be defaults. A pool of loans with a 14% interest rate will typically have a charge-off rate of 6-7%. So, you should expect returns in the 6-7% range for that level of risk.
You will receive interest and principal payments with 30-45 days of investing in the loan. These do not get automatically invested unless you have turned on automated investing.
Peter,
Appreciate the clarification. In your experience has the automated investing option yielded 6% – 7%. I believe you started off with this option but now manage your own filters invest.
Thanks
I am fairly new to LC as well. I have managed my own investments since the beginning. In my experience so far, strictly using LC, not re-investing or selling notes on Folio, your return will be lower than 6-7%. I may be missing something somewhere, but i am sitting at 2% lately. I think with defaults, the return is more in the 2-4% area.
I have been selling on Folio, and have been able to keep my combined return rate at about 6%
Like i said, i am new to LC, so i may be below the average return.