Both Lending Club and Prosper have had a trading platform for several years now. Some investors are very active users and sell notes on a regular basis whereas others never even register for the trading platform.
Selling Notes at Lending Club
At Lending Club investors have the flexibility to sell any note they own, as long as it isn’t in default. At any one time around 15% of the notes on Folio are for loans that are late. Many of these notes are discounted heavily and get picked up by those investors with a high risk tolerance.
That leaves 85% of the notes for sale on Folio that are now current. When I checked today that number was in excess of 44,000. Clearly a lot of people see value in putting their notes up for sale.
Selling Notes at Prosper
Prosper has a less vibrant secondary market because they don’t allow additional states like Lending Club does. They also do not allow lenders to sell late notes, which reduces the popularity of the platform. Sellers have a choice to sell their notes at a fixed price or with an auction model.
As of this writing there were just under 9,000 notes for sale (all of them current) on Prosper which is about 20% the size of number of current notes for sale at Lending Club. But there are plenty of buyers on Prosper as well particularly for notes priced at a discount.