Right now is the perfect time to borrow money from a peer to peer lending site such as Prosper or Lending Club. Why? There is less competition between borrowers.
Here are some hard numbers to support this. Let’s start with Lending Club. Normally there are around 450-500 loans available for investors. For example, as reported on Twitter on October 28 there were 527 loans to invest in. Today as of 12:30pm EST there are only 335 loans. Investors looking to invest new money or re-invest their interest earned have fewer choices, which means a better likelihood your loan will be funded.
Prosper is an even better deal right now for borrowers. With their recent change in lending models, there are very few loans available to invest in; as of this writing there were just 16 loans. My guess is that all of these 16 loans will get funded simply because there are so few alternatives for investors.
Now, there are credit standards, so not just anyone can apply for a loan. But if you have decent credit and a good FICO score (more than 660 for Lending Club and 640 for Prosper) then you have an excellent chance of getting funded. Here are links to the eligibility requirements for borrowers for Lending Club and Prosper.
If you are on the fence about getting a loan or are thinking of waiting until after the New Year, stop what you are doing. Act now. There may never be a better chance of getting your loan funded than right now. When you are borrowing money you are competing against all the other borrowers for the investors dollars. Right now, the competition is light. I am guessing within a week or two of the New Year the number of borrowers will dramatically increase. So get in now.
This is excellent advice for the borrower at Prosper & the author is absolutely correct in saying that you’ll never again have it so easy.
However at Lending Club where I invest, there are in fact loans that don’t fully fund regardless of the time of month. Recently these have been the highest rated ones as they’re paying under 6% right now. Of course these borrowers often take partially funded loans at that level due to the low interest rate & low origination fees for A listed loans. So it’s less clear cut over there. Nevertheless, the last few days of every month through the first few days of the new month are ALWAYS the best time for getting your loan fully funded at Lending Club.
Dan, you make a good point about these low interest rate high grade loans. I think most people come to p2p lending with the idea of making higher returns than that so I could see why they wouldn’t all fund. Having said that, it seems that any higher grade loan on Prosper is funding fast. There was a comment on my previous post about a woman who had her loan on Prosper funded in 13 minutes, B rated @ 13.4%. I am guessing that is unprecedented in p2p lending.
I read that post & 2 things jumped out at me, in addition to the incredible 13 minute funding time. To be 100% frank, it bothered me a bit that the poster seemed so casual about applying for that loan. Perhaps i’m reading too much into it but it seemed like this individual gave as much thought to committing to this 13% loan…………as I would to where I’d be picking up take out tonight.
Obviously it’s possible that she was just giving us the abridged version of her thought process & of course her decision making process affects me in no way whatsoever. It’s just that I’ve skimmed through thousands of loan applications at LC, …………but I’ve never read a post from someone who just got their loan funded. I’m hoping that this person’s process doesn’t reflect the thought process of the majority of borrowers………………….at least not the ones at LC. Like I said, perhaps I’m reading too much into this.
The other surprising thing was of course the $10k that apparently was apparently put up by 1 investor. She mentioned that there were institutional type investors at Prosper? I’ve never invested there so I have no way of knowing. Peter, is it your understanding that there are in fact “non individual investors” at Prosper or LC??
Obviously I have no idea as to this borrower’s mindset when she took out the loan, so I would be hesitant to read anything into her comment on that score.
As for institutional investors I don’t believe there is on LC or Prosper. My LC rep told me that there have been a couple of people this year that have made seven figure investments, but I believe they were individuals not institutions. As for Prosper, according to the tool at Eric’s Credit Community the top lender has just over $700K invested. You can also see on that list a couple of large lenders that have started investing in the last week or two, so maybe she scored one of those people.
I heard the same thing from LC. In fact that one guy who shows up on some of the web sessions, Eric Langxxxxxx (I forget his exact name) once mentioned that he had something like 4000 notes & that his avg. investment was $250. So that’s a million dollar investor right there. And I recall that he’s not LCs largest investor.
I’m sorry but putting $10k into 1 note (at Prosper no less) is more than a bit crazy………… unless you’ve got at least 2 million total in play & even then.
Agreed. Putting $10K into one loan no matter how much you have invested is a bad decision. I am guessing it is one of these newbie investors. Hopefully they won’t learn their lesson the hard way.
I am in agreemment that it’s a great time to be a borrower and it’s a tough time to be an investor. I believe that guy who put down $10k was probably not making as big a mistake as you guys may think. If the supply of decent loans are limited, where are you going to put your dollars? It’s not like prosper is going to pay you any interest for the idle money that is sitting in your account.
Right now I fear that there is way too much money chasing after loans that don’t really exist. I’ve noticed that many listings that are nearly funded have no explaination from the borrower on why they need the loan or what their means are to pay it off. The social aspect of the site has really eroded. At this point it’s a bunch of people chasing numbers to achieve greater numbers.
I hope this changes soon.