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 Ythan
0011101111111110
 
Registered: 08/08/97
Posts: 11,195
Loc: Upstate NY
Last seen: 11 hours, 16 minutes
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 Lending Club
#8187649 - 03/24/08 02:57 PM (8 months, 7 days ago) |
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Any of you guys heard of Lending Club? It's a person-to-person site which matches borrowers and lenders. The idea is that by eliminating the middleman, they can offer better rates for everyone involved. They do credit checks on borrowers and assign them a risk grade which determines their interest rate. Lenders can then browse through the list, see why people want loans, and check their FICO scores, credit line utilization, delinquencies, etcetera. You can also ask questions and request more information from the borrower. It's possible to make loans individually in amounts as low as $25, or if you're investing $500+ the site can create a diversified portfolio for you based on your tolerance for risk.
I went the portfolio route and made 40 small, higher-risk loans with an average return of 14.95%. Hopefully everyone pays up, but if necessary Lending Club will assess late fees, handle collections and submit bad credit information for deadbeats. It's not a path to free money of course, even A1-grade loans are assumed to have a .16% default rate. But it's a fun alternative way to invest, I like to know that I'm helping real people get better rates than they could from a bank, and it makes sense to me that improving efficiency in the lending process could increase yields without a catch.
Of course this post is from the perspective of a lender, but it could also be a good source of funding for people who want to consolidate debt, start a business, etc.
If you decide to sign up you can enter my username (Ythan) in the referrer field and we'll both get $25 when you become a borrower or lender, or $50 if you fund your account with at least a grand.
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 Visit the Growery!
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geokills
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Registered: 05/08/01
Posts: 13,450
Loc: city of angels
Last seen: 19 hours, 37 minutes
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 Re: Lending Club [Re: Ythan]
#8187892 - 03/24/08 03:58 PM (8 months, 7 days ago) |
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Very interesting. So you've committed to lending small amounts to 40 high-risk individuals... what are the terms for payback, lump sum, installments over time, how much time? If a contract goes to a collection agency, what rate does the collection agency charge to recover the funds?
Please keep us posted on your results!
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┼ ··∙ long live the shroomery ∙·· ┼
...╬π╥  ╥π╬...
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 YidakiMan
Registered: 09/28/02
Posts: 2,020
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Re: Lending Club [Re: geokills]
#8188162 - 03/24/08 05:07 PM (8 months, 7 days ago) |
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It sounds like a better alternative to those payday loan places.
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Ythan
0011101111111110
Registered: 08/08/97
Posts: 11,195
Loc: Upstate NY
Last seen: 11 hours, 16 minutes
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Re: Lending Club [Re: geokills]
#8188238 - 03/24/08 05:26 PM (8 months, 7 days ago) |
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Yup that's correct, specifically 30% are D-grade loans, 40% E, 18% F and 12% G which gives an average projected default rate of 3.72%. All loans through Lending Club have a 3 year term, paid back in monthly installments with no prepayment penalty. Borrowers get a 15 day grace period, after which they're charged the greater of $15 or 5% of the unpaid installment. Lenders get 100% of all late fees.
When a loan is 30 days delinquent it is turned over to collections. Depending on circumstances the collections agency may keep anywhere from 7% - 30% of the recovered amount:
30–60 days past due: 15%
61–90 days past due: 10%
91–120 days past due: 7%
After charge-off: 25%
Litigation: 30%
Here's some info on how they handle delinquencies along with their current default rates and late payments. Their FAQ has a lot of information too.
I'll definitely keep you posted on my results, I like the concept behind this and I think it will be fun to give it a try. 
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bmiles
artist
Registered: 12/31/07
Posts: 2,244
Loc: on the left side
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Re: Lending Club [Re: Ythan]
#8188266 - 03/24/08 05:34 PM (8 months, 7 days ago) |
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This is a great idea!
I might use this to consolidate my credit card debt.
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Never go with a hippy to a second location.
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abesh
Warrior SixDelta
Registered: 07/31/07
Posts: 310
Last seen: 4 months, 3 days
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Re: Lending Club [Re: bmiles]
#8189349 - 03/24/08 09:13 PM (8 months, 7 days ago) |
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Is this not the same as Prosper ??
I thought about going in on it, but I figured if some one needs to borrow $50 - $300 they probably are not good with money. Now I look at it differently... Shit happens I guess. I think I might invest in this soon,(when I am not so stoned) and will send you a PM.
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If there are no stupid questions, then what kind of questions do stupid people ask? Do they get smart just in time to ask questions?
- Scott Adams
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meams
Stranger(s)
Registered: 01/11/05
Posts: 3,366
Loc: Nawfuck VA
Last seen: 7 hours, 25 minutes
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Re: Lending Club [Re: abesh]
#8189524 - 03/24/08 10:02 PM (8 months, 7 days ago) |
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Hrm. This sounds like something I might be interested in. I quit my job a few months ago to concentrate on this semester. I thought I had enough money saved to get me through until my paid internship in DC starts in May, but I ran out quicker than expected. I need a couple hundred bucks to get me through till my internship starts.
This seems to be the kind of place that could fit my needs. I'd probably end up paying the loan off within 6mo anyways.
So, from what i read:
-You borrow money at a rate dependent on your risk factor.
-This money gets deposited into a bank account
-The amount is paid back over a period of 3 years, with payments being withdrawn from the account once a month
-You can choose to pay back a greater amount in advance if you feel able to.
If these things are how I read them, then I might have to join. Am I missing any crucial details? This is just what I need.
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mandolin.
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Ythan
0011101111111110
Registered: 08/08/97
Posts: 11,195
Loc: Upstate NY
Last seen: 11 hours, 16 minutes
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Re: Lending Club [Re: meams]
#8189949 - 03/25/08 12:14 AM (8 months, 7 days ago) |
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It does look like Prosper, I just came across Lending Club first I guess. The main differences as far as I can tell:
Lending Club interest rate: Determined by formula, based on risk
Prosper interest rate: Determined by lender bidding
Lending Club borrower fees: 0.75% - 2%
Prosper borrower fees: 1% - 3%
Lending Club lender fees: 1%
Prosper lender fees: 0% - 1%
Lending Club loans start at: 7.88%
Prosper loans start at: 7.70%
Lending Club max rate of return: 18.61%
Prosper max rate of return: 12.10%(???)
Lending Club Minimum Credit Score for Borrowers: 640
Prosper Minimum Credit Score for Borrowers: 520
Lending Club Availability: USA only
Prosper Availability: USA only, no loans in NV, RI and SD.
Honestly I'm a little confused. They charge similar fees, and have similar minimum interest rates. But Prosper takes on risker borrowers, yet their rate of return is over 6% lower for lenders. Either borrowers just get a really good deal there, or the low risk borrowers subsidize the high risk ones, or there's some kind of hidden fee for lenders. At any rate, for lenders it looks like Lending Club might be best; as a borrower you'd probably want to check both sites and see which can give you the best rate. Note that each site probably requires a hard credit inquiry at some point.
Meams all your statements are correct. I don't believe you're missing any crucial details. I'm glad it sounds like something which might be of use to you. Let me know if you have any other questions, and do check out prosper.com as well to ensure you get the best deal (remember that Lending Club comes with a $25 bonus though  ) If you do go with Lending Club, geo pointed out that you can just put my username (Ythan) in the referrer field, you don't need a special invite link. Also let me know your username if you sign up and I'll help fund your loan.
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bmiles
artist
Registered: 12/31/07
Posts: 2,244
Loc: on the left side
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Re: Lending Club [Re: Ythan]
#8189958 - 03/25/08 12:19 AM (8 months, 7 days ago) |
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So, Ythan... want to loan me some money?
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Never go with a hippy to a second location.
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Ythan
0011101111111110
Registered: 08/08/97
Posts: 11,195
Loc: Upstate NY
Last seen: 11 hours, 16 minutes
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Re: Lending Club [Re: bmiles]
#8189974 - 03/25/08 12:25 AM (8 months, 7 days ago) |
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Sure man, we always have the Shroomery Mafia if Lending Club can't collect...
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bmiles
artist
Registered: 12/31/07
Posts: 2,244
Loc: on the left side
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Re: Lending Club [Re: Ythan]
#8189979 - 03/25/08 12:27 AM (8 months, 7 days ago) |
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yeah, a bunch of stoners trying to fight/collect money,
that is really scary.
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Never go with a hippy to a second location.
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Ythan
0011101111111110
Registered: 08/08/97
Posts: 11,195
Loc: Upstate NY
Last seen: 11 hours, 16 minutes
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Re: Lending Club [Re: bmiles]
#8189987 - 03/25/08 12:31 AM (8 months, 7 days ago) |
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Dude I would totally come bust you kneecaps, as long as South Park isn't on... 
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Visit the Growery!
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bmiles
artist
Registered: 12/31/07
Posts: 2,244
Loc: on the left side
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Re: Lending Club [Re: Ythan]
#8189998 - 03/25/08 12:36 AM (8 months, 7 days ago) |
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Then you can transfer it to my offshore bank account instead,
no names or personal info are needed.
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Never go with a hippy to a second location.
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dumbum39
The Division Bell
Registered: 02/25/08
Posts: 76
Loc: Siilinjarvi, Finland
Last seen: 10 days, 18 hours
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Re: Lending Club [Re: bmiles]
#8210886 - 03/29/08 03:56 PM (8 months, 2 days ago) |
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this is genius, wish they had this 10 years ago when I was broke and had no credit history =P
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Beyond the horizon of the place we lived when we were young
In a world of magnets and miracles,
Our thoughts strayed constantly and without boundary
The ringing of the division bell had begun
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bfk
Registered: 06/14/07
Posts: 12
Loc: sydney, australia.
Last seen: 4 months, 19 days
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Re: Lending Club [Re: dumbum39]
#8227537 - 04/02/08 05:29 AM (7 months, 30 days ago) |
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Wow that's a really interesting concept...
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Ythan
0011101111111110
Registered: 08/08/97
Posts: 11,195
Loc: Upstate NY
Last seen: 11 hours, 16 minutes
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Re: Lending Club [Re: Ythan]
#8228899 - 04/02/08 02:17 PM (7 months, 29 days ago) |
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For what it's worth, I came across some discouraging stats for Prosper which show a 20% default rate per year.  That's a lot higher than Lending Club's published statistics, and I wonder about the source of the discrepancy. I guess I'll wait and see. One thing that's frustrating about Lending Club is that it takes a while to get the funds actually lent out. It can take up to two weeks for a loan to finish funding, and then a large number of them don't go through when the borrower changes their mind or can't verify their income. Of the initial investment I posted about only 80% is actually lent out at this point, 20% is still "in funding". I really wish that a) they'd offer a money market account for funds which are committed but not lent out yet so you could still earn interest, and b) they'd offer an option to automatically reinvest newly available funds in loans meeting certain criteria. That would really streamline the whole process and I can't see myself using it as a serious investment vehicle until then. But who knows, if the return is a reliable 15+% I might be able to overlook the inconvenience.
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geokills
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Registered: 05/08/01
Posts: 13,450
Loc: city of angels
Last seen: 19 hours, 37 minutes
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 Re: Lending Club [Re: Ythan]
#8255584 - 04/08/08 02:17 PM (7 months, 23 days ago) |
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Received this notice today:Quote:
Lending Club has started a process to register, with the appropriate securities authorities, promissory notes that may be offered and sold to lenders through our site in the future. Until we complete the registration process, we will not accept new lender registrations or allow new commitments from existing lenders. We will continue to service all previously funded loans during this period, and lenders will be able to access their accounts, monitor their portfolios, and withdraw available funds without changes.
The borrowing side of our site will remain generally unaffected by this registration process; borrowers can continue to apply for loans and new loans posted after April 7, 2008, will be funded and held only by Lending Club.
Until the registration process is completed, the company will undergo a quiet period and will not be able to respond to press and other inquiries about Lending Club or the registration process during that time.
Q&A:
Q2. What about referrals?
A2.1 The current referral program is terminated. If you have referred someone who has already signed up as a lender or a borrower, or if you have been referred by someone and have already signed up as a lender or a borrower, you will be receiving your referral payment within the next few days.
Glad I registered when I did... even though I'm locked out from lending for now, Ythan and I got our $25 referral bonus just in time! 
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┼ ··∙ long live the shroomery ∙·· ┼
...╬π╥ ╥π╬...
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Ythan
0011101111111110
Registered: 08/08/97
Posts: 11,195
Loc: Upstate NY
Last seen: 11 hours, 16 minutes
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Re: Lending Club [Re: geokills]
#8257227 - 04/08/08 08:45 PM (7 months, 23 days ago) |
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Hehe yeah, can't really complain about a free $25. 
And I don't object to the idea of them creating a secondary market for their loans. But I'm kind of pissed about how they just dropped the news out of nowhere and went into an immediate quiet period. I mean unless I'm missing something this is a self-imposed quiet period right? It's not mandated by SEC regulations or anything, it's for their own legal / PR reasons. A little advance notice for their members would have been nice, I'm also curious what kind of timeframe they're anticipating, and I especially wish they'd clarify if they're keeping the old lending system or if they're replacing it entirely. I hope they don't switch to a setup like Zopa where the only investment option is their low-yield CDs. I imagine a lot of other people want to know too, some who have much more money tied up in Lending Club loans than I do, but they give no indication how long this quiet period is going to last. I'm sure we'll find out eventually but I'm disappointed how they handled it.
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Visit the Growery!
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Horse_Meister
Edible Farmer
Registered: 01/14/07
Posts: 233
Last seen: 1 day, 11 hours
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Re: Lending Club [Re: Ythan]
#8266093 - 04/10/08 07:48 PM (7 months, 21 days ago) |
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i signed up and gave up your referral code. as i was reading this thread, i thought something of 'what if they just upped and walked away'? then i see the quiet period. i like the idea, there is money to be made... but who are we really trusting? From the map on their site, it looks like only Americans, do they allow Canadians?
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KTHXBai2YoU
Horse_Meister
Life is what happens while you're busy making other plans.
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Horse_Meister
Edible Farmer
Registered: 01/14/07
Posts: 233
Last seen: 1 day, 11 hours
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 Re: Lending Club [Re: Ythan]
#8266327 - 04/10/08 08:27 PM (7 months, 21 days ago) |
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i signed up and gave up your referral code. as i was reading this thread, i thought something of 'what if they just upped and walked away'? then i see the quiet period. i like the idea, there is money to be made... but who are we really trusting? From the map on their site, it looks like only Americans, do they allow Canadians?
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