Early Retirement Extreme Forums

Evidence that marketplace lending is here to stay I think.

GS has launched it's own competitor to Lending Club and Prosper, however, they are funding everything themselves rather than opening up to investors. They have even been recruiting people from Lending Club. The devils!

It's telling that in GS's 147 year history they have never dealt directly with everyday consumers until now. They must see something in this new industry...

The GS news is interesting.

Also, we are starting to see more delinquencies: http://www.marketwatch.com/story/lendin ... siteid=rss

I don't have any money in loans at Lending Club, but I am interested in potentially buying its stock after it dropped from near $15 a year ago to $5 per share.

Chad wrote:I don't have any money in loans at Lending Club, but I am interested in potentially buying its stock after it dropped from near $15 a year ago to $5 per share.

I bought $500 worth about a month ago. It's pretty volatile right now, I was up about 20% now I'm down 10% and am thinking of adding more. Coming from a retail investor, its a good long term bet.

The rise in delinquencies is coming alongside higher consumer indebtedness, as opposed to a struggling economy. I wonder how much it has to do with rising wages. As people make a bit more, they might be biting off more debt than they can chew.

GS (or any bank, insurance company) getting in on smarter, more discriminatory loans makes more sense than p2p. I think p2p was just to bootstrap the capital, shift the risk, and get around some regulations in order to take advantage of cutting edge technology (along with other startup benefits, like the chance of selling out to a big bank for bukku bucks) more quickly.

In 15 years will we make laws such that the APR can only be determined by zip code, age, and income (like ACA)?

p2p lending in the digital realm could be more revolutionary but it's a ways off.

Stumbled upon this platform for P2P loans which are backed by collateral in the form of precious metals in 2:1 ratio (i.e., to borrow $100 you post a collateral of $200). The returns seem quite attractive (~3-4.5% p.a.) given that these seem very low risk on paper. https://www.silverbullion.com.sg/AboutLoans.aspx

Again, on paper, sounds like a great, very safe investment opportunity, much safer than holding money in most US banks. The biggest risk seems to be how legit the actual platform is. Any ideas on how to conduct a proper due diligence on that? Or perhaps any experience lending money on this platform?

No thoughts from anyone? A bit surprised as looks to me as a quite binary situation: either a very nice investment or an outright scam.

Why binary?
From an investors perespective, LC is close to a high yield junk bond marketplace with high fees.
Seems to me it could also be a good tool for someone looking to consolidate and cut down debt

I am not referring to LC but to the precious metals backed P2P lending platform I referenced above: https://www.silverbullion.com.sg/AboutLoans.aspx

I was really happy when I finally pulled my last dollar out of LendingClub, between the defaults, tax complications, not really trusting the reporting... But I am tempted by the IRA bonus they're offering through April 30th :\ http://blog.lendingclub.com/lending-clu ... nus-offer/

Since I weighed in several years back, I wanted to note that I've been unwinding lending club for some time. The returns dried up - not sure if I was just lucky to begin with, or people just took some time to default, but it wasn't worth the hassle. As if to reinforce my decision, just recently I was listening to one of the Mad Fientist podcasts that likened P2P loans to uncollateralized junk bonds. I'd like to be out of it by the end of the year to simplify taxes next year.

I am still hanging tight. My loan profiles I seek are on the safe side and I still get defaults. I am primarily A/B and hi Cs and a few Ds. I filter very carefully. Very little else. Currently sitting at 5.6% on the IRA and 7.4% on the taxable. I would invest more in the IRA but the hoops I have to jump thru make it a no-brainer to send my IRA funds to my Scottrade Roth. This is like 1% of my portfolio so it is more fun than anything. I thought we would get interest on the grace period but I am not sure as I still have late people and never see the interest portion go any way but down. I also have stock in the company in the hopes that Wells or some other bank buys the channel/platform. Holding these notes drives in the point of how unreliable the average person is even if they own a home and make bigger money than I do. It is disgusting actually. It is hard to commit too much to this when I can buy stocks like MO/T/VZ/O/JNJ/OHI and see annual div increases and DRIPing new shares each month. Last month in one of the LC accounts I earned about $50 in interest with $43 in charge offs for a net of $7 LOL. That is not typical but is not exactly confidence inspiring!

I've had Lending Club in a Roth for several years. I was treating it as the bond/fixed income part of my assets. I had bad luck.

I am in the process of divesting but these notes are not very liquid so I'm selling any remaining notes to hopefully get enough to pay off the account termination fees and get out.

UPDATE
This investment has fallen on hard times. My current return is 1.53%. I guess I got greedy back when someone touted high returns with risky levels.
How do you liquidate quickly? I didn't find a simple way. I just wait and transfer out $1000 each time it accumulates. I'm down to $9K and it's taking forever now. What's the penalty for auctioning off??

You can sell notes via Folio Investing, but I have never done it.

I've used that platform, but not recently. It was kind of a pain in the butt.

@tommytebco
There is no quick way to liquidate. I've been selling at a discount for a long time and am barely getting ready to close the account.

I'd recommend against setting up a Roth with them due to the large amount of fees from SDIRA.

Thanks for the reply I figured out to just suffer through. The fees do add up though. That must be why the yield is down so low. Any way, LIVE AND LEARN. This too shall pass.

Still in process of closing my Roth with Lending Club.
I closed mine with prosper with a quick call...

SDIRA is forcing me to take a distribution to close my Roth with them instead of letting me forfeit a few dollars. This means an indirect Roth rollover is what I'll need to do as soon as they respond about how to fill their forms.

The termination fee was initially 250, then the dude said it was 150 and now it's 50 so I get a few bucks back.

https://www.bloomberg.com/news/articles ... at-you-owe

Coming soon: A market based ETF for those who are still interested in consumer junk loans. You can short it too.

I'm quoting myself from rube's journal a few years ago:

henrik wrote: ↑

Sun Jun 08, 2014 1:25 pm

My returns (actual realised, XIRR, annualised) have hovered between 20 and 22%. I'm surprised by how stable it's been, but I have every expectation that as my portfolio and the whole platform becomes more mature, the returns will go down. I believe this also happened with LendingClub and other more popular ones as they grew and matured.

I just finished liquidating the remains of my P2P lending portfolio on Bondora. I made the first loans in the end of November 2013, so it makes for a nice round 5 years. Never added any new funds, but kept reinvesting until 2016. About half of the 300 or so loans I made eventually went sour. I had to sell the last 6 written off loans at a discount of 95%. In nominal terms I did come out in the green though - the total net return was 2.8% (0.55% annualised). Lessons learned - do your own calculations; don't invest on platforms where you can't keep up with changing rules and reporting methods.

Edit: numbers corrected to account for income tax paid (cannot be deferred for P2P/crowdfunding type investments here)