Tom at Prosper Lending Review may have topped my compiled blogger advice for new lenders by posting advice from 11 people for someone considering peer lending. The person seeking advice is concerned about stock market returns and the low bond/CD rates and therefore is considering putting a 100K into P2P loans to earn 10%. To sum up my advice:

Read the rest of this entry »

My funds arrived to Prosper Marketplace a few days ago. I planned to jump into Prosper and start carefully selecting loans for funding. I browsed a few loans, but I have cold feet.

So I opened my blog to reflect…. Why am I nervous about bidding? I had no problem lending on Lending Club for a total of about $1,000 to date. So why is Prosper Marketplace different?

My trouble in starting to bid seems to come down to the openness of the market. That same openness is great for transparency. As I have read on other blogs, browsing P2P lending is voyeurism. I think it is a bit of Voyeurism and Exhibitionism.

Peer-to-Peer lending feels voyeuristic for several reasons:

• Many loans provide interesting, entertaining, or just odd stories.
• After browsing loans, you cannot help but to feel more secure in your own financial future because you had to read so many poor quality loans.
• It can be fun to pass judgment on others occasionally and with Prosper or Lending Club, you can decide who receives funding and who does not.
• Peer-to-Peer lending allows you to feel superior to others who are not as financially savvy. That is why most of them need the money.

Peer-to-Peer lending is great fun to view the financial lives of others. I like that part of the openness.

So what about the exhibitionism? Read the rest of this entry »

Lending Club is offering a 5% ROI bonus in the form of a “Thank you!” to investors who lend more than $5,000 before February 3rd 2008. If you lend $5,000 before the deadline, you will receive a bonus of $250! If you use my Lending Club Affiliate Link and open the account with $1,000 initially, you will receive an additional bonus of $50! That will add up to an extra 1% to your P2P lending ROI. The best news is that the more you loan, the more bonus you will receive, so if you loan a total of $10,000 before the deadline, you will receive a $500 bonus payout. Even better you can take the bonus out in cash or reinvest it at Lending Club.

How would the Bonus Impact your Lending ROI? 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.

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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?
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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 »

Update 12/3/2007: Advice for new P2P Lenders has now been posted.  

If my account is funded this week, I hope to lend money for the first time using a P2P lending service by Friday. Since I will be selecting my first loans, I am requesting some advice based on readers’ P2P lending experiences. I am planning to combine that advice into a single post for newbie P2P lenders. I would prefer short answers so just a few sentences is fine and it should not take very long to write. If you have a blog, I will include at least one link back to your blog in the advice post.

I will compile the post on Thursday night this week, so please respond before Thursday about 7PM central time if you would like your answers included. I can always update the final post with your advice later if you do not have time before Thursday evening. You can respond as a comment to this post or use the contact form. I appreciate your time and advice.

What do you know now that you wish you knew before you started P2P lending?
Do you use Prosper and/or Lending Club and why?
If you have a blog, what one post on your blog should someone read before investing in P2P lending and why?
What is your favorite P2P lending resource for information? (not including your own blog)
Added: Has your overall plan been through changes since you started P2P lending? If so, how and why?
Any other advice you would like to include?

Thank you!

Although not yet formally announced, Lending Club now has an affiliate referral program. Rex Dixon, Director of Social Media Content at Lending Club, has confirmed it in the P2PNoBank Forums. I believe the deal is the same as Prosper’s referral program — $25 for both referrer and the new person who signs up using the link. However, the details are still vague, so check back at the forum while Rex answers more questions about the affiliate program. I’ll also post a summary of the clarifications.

Update: The referral program is now $25 to $50 cash bonus. $25 for funding your account with $500 or receiving a loan and $50 for funding your account with $1000

Create your Lending Club affiliate link like the one below replacing your Lending Club ID with mine: https://secure.lendingclub.com/refer.action?referrer=PersonalLoanPortfoliocom

Please note that I do not recommend using the email system at Lending Club for referring people until they have addressed the issue of the second link to Lending Club not containing the referral code. I mentioned this issue on P2P No Bank forums. Instead you should construct your own email using the link format above to insure that both parties receive the credit.

Update (11/21/2007): Rob from lending club posted some clarifications on the Lending Club affiliate program.

I decided to sign up with Prosper at the same time I am waiting for my Lending Club account to be tied to my checking account. Interestingly, Prosper allowed me to select my collections agency. The sign up process gave a choice of two companies Penncro and Fristsource and listed their collections statistics which I have posted below. Firstsource does not have a great deal of data history yet since they have only been sent a total of 77 loans, but the results under credit ratings of B-D are promising. I have summarized some of the results in the table below for easy comparison.

Click each graphic to expand and see the full collection performance statistics.

Prosperous Land and Rate ladder have both recently mentioned the communications to existing lenders about testing a different collections agency at Prosper. The above charts must be the initial results of those tests.

Correction (11/19/2007): Mike at Prosperous Land pointed out that the letter recently received is about a new 3rd collection agency. He has more information on collections in the article just posted about adding to the collections effort.

I like how Prosper seems to be open about the data that they provide.

Edit: A few hours after posting this, I realized that the numbers are posted on Prosper’s collection agency page so maybe this is not so new.

After doing a little tire kicking, I decided to sign up with Lending Club first. I have entered all the prerequisite data including the bank account number. The initial sign up was quick and required basics such as social security number to reduce fraud and because they will send a 1099 at the end of the year on interest earned. After a basic automated identity authentication, I entered my bank account information.

Lending Club withdraws a very small amount (under a dollar) from your account to validate the account information. To finalize registration, I must enter the amount withdrawn to validate that it is indeed my account. This process reminds me of the Paypal sign up process except Paypal deposits two very small amounts into your account rather than making a small withdrawal. Unfortunately, the process takes two to three days and it has only been 24 hours so it will be a few more days before I extend my first loans. I am growing impatient already.

So why did I pick Lending Club over Prosper for my first account? Read the rest of this entry »