There are more changes happening at Lending Club today. Just yesterday I published an article discussing changes to their trading platform and last night Lending Club rolled out some changes on their main account screen. They introduced a new concept, something called Adjusted Net Annualized Return (NAR). As you can see in the screenshot above there is now an On-Off button on your main account screen. Click the On button and your account screen changes to the one below.
Your NAR box changes to blue and you get an adjusted NAR. As you can see in the screenshots here my NAR dropped from 11.51% to 9.47%. That is not the only change. Your Account Total box has been moved into the middle (now called Account Value) and it adjusts along with the NAR to reflect future potential losses. Basically, what Lending Club is telling me here is that $1,297.80 of my total account value of $31,885.28 is likely to be written off and based on this fact my NAR is really more like 9.47%.
Customizing the Adjustments
So how does Lending Club calculate this adjusted NAR? It does what statistics sites like NickelSteamroller.com and Lendstats.com have been doing for years. It adjusts the principal amount of past due notes with a formula that reduces the value of notes in your portfolio based on how late each note is. Basically, late notes are valued at less than their face value on a sliding scale. This is explain in detail when you click on the new View/Customize Adjustments link. You will see a screen that looks something like the screen shot below. [Read more…]