If you have read my previous posts I have been burned doing p2p loans through Prosper.com.

LendingClub has always prided themselves in having a stronger review process. I have a few loans with LendingClub and believe it or not they are all current with no charge offs. I am currently earning a 9.86% return from what they tell me, which if those loans stay current isn’t that bad considering how low interest rates are. I have been debating throwing a little more money into LendingClub but Prosper has left such a bad taste in my mouth I am still on the fence.

Regardless, just remember that if you start p2p lending you are doing so at your own risk. I imagine now that the economy is turing around a bit the chance of defaults is probably much lower than what I went through.

To qualify for the $64.62 you need to open a new account through this promotion link and link a bank account. Once that is complete the bonus will be deposited into your account. You must invest that bonus into lending club loans and cannot withdraw it.

Unfortunetly the link they gave me doesn’t talk about the bonus, but here is the small print I was sent:
** The special referral bonus program begins December 3, 2009. Referrals must use your special link between 12.03.09 and 12.31.09 at midnight in order to qualify for the $64.62 bonus. The referral must complete registration as a Lending Club investor and link a bank account in order to receive the bonus funds. Bonus funds may not be withdrawn and must be invested in Lending Club notes. Funds received may be taxable, please consult with your tax advisor. Recipient is responsible for all taxes, if any, due.

And here is a screenshot of the promo info when I log into my account. Click on it for a larger photo…

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There is a new LendingClub Promo where you can get $25 when signing up as an investor (lender). If you are new to the whole Person-2-Person investing, check out my latest Lending Club post for more info.

The $25 Lending Club bonus will be deposited in your account after you have created a new investor account, link a bank account and make a deposit into your Lending Club account. There is no expiration date on this LendingClub bonus, which means this could end at any time.

I need to refer you for you to qualify for the $25 bonus. If you are interested, please complete the form below and I will generate a referral for you to your email. (Please give this some time as I need to generate this manaully for you.)

cforms contact form by delicious:days

(Don’t worry, your email address is safe with us. We will delete it as soon as the referral is generated. We never have and never will send out spam to you!) 

I have had a good experience with LendingClub. I wish I could say the same thing for Prosper.com since I am now moving everything from Prosper to LendingClub. P2P lending is a unique way to spread out your investments as well as helping out someone in need

If you are looking for another way to invest your money and get $25 along with it, why not try it out.

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I am now in the red and most likely will lose even more then the $62.74 I have lost thus far. I was an early investor in Prosper when they opened in 2006, so you can see that I would have been better putting my money in a savings account.

A few months ago, after reading some comments from my previous prosper posts, I decided to give LendingClub a try. LendingClub works the same as prosper but touts stricter underwriting guidelines to help weed out those unsavory borrowers.

I set up an account and funded 8 loans. I did 2 loans with an A credit rating, 4 with a B credit rating and 2 with a C credit rating. After watching these loans over the past few months, I have been surprised that they are all current, even through this current recession. Two of those loans have been paid off completely. My average rate of return is 9.75%. This is pretty good considering the current savings rates out there.

Since this has been a successful test I have decided as I receive payments from my Prosper loans that money is going directly into a new LendingClub loan. I have not funded a new Prosper loan since May last year, so I am hoping LendingClub can help make up for my losses at Prosper. I still feel that person to person lending is a great way to invest and that the company that can get a handle on bad borrowers will ultimately win the prize. Right now, I am pretty sure that Prosper isn’t the one!

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The interesting thing was that not only did I receive an email from LendingClub stating that they are reopening, I also received an email the same day from Prosper.com saying that they are now registering with the SEC.

Here is an exerpt from the email:

Until we complete the registration process, we will not accept new lender registrations or allow new commitments from existing lenders. If you’re an existing lender, your current lender agreements will be unaffected; your existing loans will continue to be serviced; you’ll be able to track and monitor your loans; and you’ll be able to withdraw funds from your Prosper account.

If you’re a borrower with an existing loan, you will continue with your current borrower agreement and be unaffected by the registration process. If you’re a borrower seeking a loan, you will still be able to create a new loan listing, which we will endeavor to fulfill through alternative sources.

This is interesting that they will try to fulfill your loan through other sources. I am curious as to what those may be. I am not too concerned with this since the lack luster performance I am having with Propser has me taking out all my money and puting it into LendingClub loans. In the past 3 months I have seen 5 bankrupicies and many late payments at Prosper where my LendingClub portfilio is still going strong and is completely current.

If you are looking for a way to diversify your investements, then P2P lending may be an option for you. I would recommend that before you start lending you read some of the help forums to understand risks as well as what makes a good balanced portfolio of loans. There’s money to be made there, you just need to do it smart!

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I wanted to do a quick follow up on my Lending Club account. For those of you that don’t know what Lending Club is, they are a peer to peer loan service where regular people like you and I can get money or loan money to others. Lending Club is a competing service to Prosper.com.

Well after logging into my account, I was pleasntly surprised to see that all 25 of my loans are current. My average return is 17% on all 25 loans. My Lending Club account is far superior to my Prosper.com account where I currently have 8 loans out of 22 that are in bankrupcy. I am begining to think that Lending Club is better able to weed out the scammers.

Due to the economic slowdown I am seeing many more people trying to borrow money from Lending Club. I am going to add a few more hundred dollars into it to try to increase my return. I am also thinking of taking a Lending Club loan out and reinvesting that money back in as loans to others. Hey with an 18% return, I don’t think I could do much better anywhere else!!!

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Well not much new to report, and that is good news! All 37 loans are still current, and I was able to pick up another $50 loan (Credit Rating: AA @ 11.00%) with payments from the outstanding loans. This puts me now at 38 loans with an average interest rate of 13.01% One of my loans is also being paid off, so should have enough in my account to pick up another $50 loan. I think I am going to go a little riskier this time to increase my overall loan percentage. One of the loans went late last week, but then was paid up in a few days, so I received a late payment fee of $.03. That loan was an AA Credit Rating, so I assume he just forgot to pay it. I’ll definitely take the late payment!!

One thing to remember is that if you decided to get involved in lending on Prosper, make sure as soon as your account reaches $50 (minimum loan amount) you bid on another loan as the prosper account does not pay interest on the cash balance in your account. To keep that loan interest rate up there you need to keep all your money into loans.

So far things are going well and I hope it continues this way. Only time will tell what a possible recession my do to my loans, but as I said before this was throw away money for me, as had I invested it the stock market, I would have lost it all!

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Well so far the experiment is moving along smoothly. I have received my first $50 in payments yesterday which I used to bid on another loan (Credit Rating: AA @ 11.25%). All loans are now current and none are late which is great news since my one late payer doubled up on her January payment and is now up to date.

Since the $50 in payments I received is made up of prinicpal and interest, I have decided upon this strategy for adding the new loan every month:

• The first two loans, over the next 2 months, will be targeted at credit grade C or Higher, with a tendancy to choose AA, A or B.
• The third loan, in three months, will get a little riskier and take someone with a HR credit rating assuming their credit stats don’t have any glaring concerns.
• I will then repeat with 2 higher credit loans and then a third with a high risk borrower.

This three month cycle of adding two safe loans and one risky loan to my portfolio should help keep my risk low while slightly improving my average interest rate. Only time will tell how this will work out in the end, especially if we are approaching a recession. Remember, most of these P2P lending sites have not been through an economic slowdown. Hopefully things will work out for the best and I will keep updating you on my progress here.

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I added 28 new $50 loans to my original 8 loans. Here is the breakdown:

36 loans at an average interest rate of 13.8%

Credit Rating for each loan: 2 HR, 5 D, 8 C, 4B, 11 A, 6 AA 

I calculated that I should bring in $52.26 / month in principle and interest on the 3rd of every month. I will reinvest that amount back into another loan immediately.

So I am set up to be a little more conserative with more loans in the higher credit ratings. Out of all these loans only 2 are late. One is a HR (High Risk) credit loan that is in collections, I have pretty much written this one off and have adjusted my experiement to account for that. The other late loan is only a month late. This one usually gets paid, but it is always a month behind, since I don’t think she has enough to make 2 payments to get caught back up. So I end up seeing a late fee payment every month which isn’t a bad thing as long as she keeps paying. All the rest of the loans (34) are in good standing now.

Prosper makes this whole process pretty easy. The only challege is picking the right loan to bid on. My criteria is to avoid anyone that has had a public record or bankrupcy on their record. Hey if they’ve done it once, they might do it again since they are familiar with the process. (I realize that is a blanket statement and probably not statistically true, but I am sticking to it!). I also look for people that have a DTI (Debt-To-Income) ratio of under 40%. At some point that number can get out of control and that person is borrowing to pay other borrowers and can never get out of that hole. Even though HR credit loans are the most attractive from an interest rate perspective I am now not bidding on anything lower than a C credit rating since I can still get a modest interest rate at a lower risk. And the final piece to my bidding strategy? Look for loans that are already 100% funded. I mean hey, if everyone else is bidding it must be a good loan right? Obviuosly I do this with caution. Always read the borrower description, review the credit info and any questions other lenders have asked of that borrower.

We’ll see how this goes. I would like to not have to add any more money to this and just watch it roll over every month, however if I get a high rate of defaults I may think twice on rolling this every month. Check back for updates.

Don’t forget that Prosper is currently offering a $25 bonus if you sign up as a lender.

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It looks like LendingClub has sweetend the pot on its bonus offer when you open a new account.

They are now offering 5% of anything you lend over $5000.  So, for example, if you lend $7,500 Lending Club will credit your account with $7,500 * 5% or $375. You need to subimt your loan bids by February 3rd, 2008 to receive the 5%. LendingClub will notify you of the amount of your bonus by the end of day, Friday, February 8th, 2008. Not a bad deal if you were going to loan out the money anyway.

If you are not willing to part with more than 5k, they are still offering the following signup bonuses when you lend less:

I have already dropped $500 into 20 various loans and have received my $25 Bonus. We’ll see how this works out.

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(Click for larger image)

All I did was open a LendingClub account, add my bank, verify it, and transfer in $30. (you only need to transfer in $1 to get the bonus, but I put in more to test their site out with a small loan) Very Simple! And they even posted the bonus to my linked checking account (I blocked it out for privacy sake) instead of keeping it in my lending club account. Not sure why they did that since I thought they would want me to put that bonus back into LendingClub. I am gonna do it anyway! The loan process was very easy and I am currently waiting to see if my bid for the loan gets funded.

That was some of the easiest free money I have made in a while! And remember if you fund the account with $1000 you can get $50 instead of $25.

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