Rate Ladder is promoting a P2P loan from the blogger “The Penny Saved.”

See the loan request.

Honestly, the interest rate of 16% is rather poor considering that the Prosper lending guidance is a negative 18% due to the C credit rating.

Normally, I won’t even consider anything with a lending Read the rest of this entry »

I often read that borrowers in one state or another are more likely to default on Prosper loans. I decided to investigate if there is any truth to the likelihood that some states are worse credit risks than others. The example that often comes to mind is Georgia which has a high default rate. Currently Georgia has nearly 8% defaults and about 10% late which is a higher than average rate of late loans, but nine states have more loans that are two or more months late than Georgia.

My interest in state by state loan default rates prompted my article Pennsylvania Loans: What were early Prosper lenders thinking? At the same time, I noticed how state interest rate caps vary widely from state to state — Pennsylvania 6% and Georgia 36%. I decided to see if the interest rate caps could partially explain the difference in Prosper loan default rates by state. My theory is Read the rest of this entry »

As I promised, I have extended some loans with Prosper (although I am not quite up to $500 yet). Since everyone can see Prosper loans and which ones I bid on — see my loans at Lending Stats — I decided to have some fun with it by holding a review contest of my loans.

If you provide constructive and specific criticism/advice on 4 or more of the loans I selected (or bid on), I will enter you in a drawing for a finance book. Also, in an attempt to find more advice, if you mention my request for advice and link to this article in your blog, you can receive a second chance to win. All details at the end of the post.

Let’s move on to the the Prosper loans selected and funded each at $50. I stayed with Grades C or higher, no current delinquencies, a low number of recent inquiries, and a low total dollar amount, and DTI ratios of lower than 45%.

• $5,000 for a honeymoon trip to Europe. I don’t like that they could not save up for the trip since that is what I have done for my world travels, but the loan is small the numbers good. It funded at 10.9%.
• Grade C trying to cut down debt with a $6,000 loan. 24% DTI. Read the rest of this entry »

Lending Club updated their interface today with some great improvements. They announced a few days ago in their blog that these changes were coming along with a reminder of the Lending Club 5% bonus program. Also mentioned was the number of lenders on Lending Club doubled in the last month!

But I am writing today about the changes to the Lending Club interface. (Before and after screen shots below.) Many of the improvements are items that I requested in my initial Lending Club review. My suggestions included Read the rest of this entry »

According to the poll conducted with the readers of Personal Loan Portfolio, I am investing my next $500 with Lending Club. Lending Club won 64% of the votes (28 votes), a clear majority versus Prosper.com’s 18 percent (8 votes). Despite, my original conclusions that Lending Club is an inferior investment to the S&P 500, only six votes (including one of my own) selected the S&P 500. And Zopa was even further behind in the voting with only 2 votes. As an aside, I must report that I had one Harvard Business School voter who voted for Lending Club.

Update: Can Lending Club can beat the S&P 500 with this “Thank You” bonus?

Poll results: Read the rest of this entry »

Recently, I created my first loan portfolio at Lending Club. I recorded the loan portfolio creation process and decided to share it in case you have not experienced Lending Club personally. I added some narration to explain the basics of the process. The video is cropped in several places to keep it short — under three minutes total.

This video is me creating my first loan portfolio at Lending Club…

I should have mentioned in the narration that it defaulted the value of each loan to $25 but this is easy to change. By the way, I posted more information on the Lending Club Risk Score a few days ago.

Let me know what you think of the video and if you found it useful. Although, obviously it will not be that useful if you have already experienced the Lending Club loan portfolio creation process yourself.

If you are interested in investing in P2P loans with Lending Club, you can sign up here. If you sign up to lend, you will receive $25 if you fund your account with less than $1000 and $50 if you fund your account with more than $1,000. If you sign up as a borrower and your loan funds, you will receive $25.

lending club, tutorial, loan, p2p lending

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In honor of Prosper.com’s post mentioning the wisdom of crowds, I have decided to allow the readers of Personal Loan Portfolio to decide where I invest my next $500*. The poll is listed below…

Update: People’s Choice Poll Results and Analysis Posted.

Should I invest my next $500 in P2P loans at Prosper.com, Lending Club, or Zopa or skip P2P lending all together and invest in Read the rest of this entry »

Based upon my recent request, I received some useful advice from several P2P lending bloggers that I was grateful to receive before investing in my first loans with Lending Club. I am also excited to share this advice with other potential lenders. First, let me offer my own advice that I wrote on another site I just started – Five Prerequisite Investments to P2P Lending. I listed out the top five places you should put your money before even considering lending with Prosper or Lending Club.

Quick Tip: if you have not already signed up, use these links to Lending Club or Prosper for a free cash bonus upon account funding.

I received advice from the bloggers at Prosperous Land, Prosper Lending Review, Rate Ladder, Lazy Man and Money, and My Microfinance (link removed because website no longer available). So what advice did these bloggers have for newbie lenders?
Read the rest of this entry »

I extended my first $400 worth of loans with Lending Club on Sunday night. I intended to lend $500 but could not find enough people that I wanted to extend credit at this time. I decided to give a quick report of what worked well and what could have been better about the my first Lending Club experience.

Update: I posted a video of the Lending Club Loan Portfolio Creation Process and many of these suggestions were added in the January 2007 Lending Club update.

The Good about the Lending Club Experience

1. The Lending Club website was easy to use and understand — including the pie charts in the portfolio tool.
2. The loan portfolio function was an easy way to start with a potential group of loans.
3. It was reasonably easy to change the portfolio before purchasing by adding and dropping loans.

The “Could have been Better” List

1. Lending Club did not seem to have a very large pool of borrowers. I could not even find enough decent loans to put $500 in a well-diversified portfolio — meaning $25 per loan. I extended a handful of $50 loans and my last $100 was not used. This will leave 20% of the money invested in Lending Club idle for at least another week while I try to find loans. Read the rest of this entry »

Lending money to someone can be a difficult decision. The only two items that should come to mind are the interest rate and likelihood of repayment. Income should be factored into the probability of repayment, but there is more at play than is visible in a profile on Lending Club or Prosper. Take the example of Britney Spears’ lavish spending. Her monthly income is $737K but she has managed to save nothing and spends more than $100K per month on gifts and travel. Britney has a high mortgage payment, but would have a reasonable debt to income ratio. Risk is a much more complex decision than simply the Debt to Income ratio Read the rest of this entry »