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Old 07-24-2012, 08:02 PM
 
Location: US Empire, Pac NW
5,002 posts, read 12,391,665 times
Reputation: 4125

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Hey everyone, just curious what everyone thought of peer to peer lending? For example, prosper.com and lendingclub.com

Personally, I'm on the fence about it, and one reason why I'm gathering opinions about it. The concept is innovative and I think potentially a great way for people who don't have great credit to consolidate debt or for regular people to make big purchases to fund it.

But therein lies the problem. They're regular people. Not corporations, cities, states, or nations who have massive numbers to typically dent any risks (even Europe will eventually rebound, probably with better management and more tightly integrated financial networks as a result of this debt crisis).

Even spreading out the risk among 100 loans carries the risk of having 5% of them default, and suddenly you have a 5% hole you need to climb out of. And going by lendingclub.com's own numbers, even their highest rated borrowers collectively have defaulted on 3% of the loans dispersed, with an additional 1% late.

Personally, I think it is a way to invest and increase your risk exposure, but what benefits are there? Even a well run bond fund will yield ~6%. Am I missing something here? I'd like to diversify away from equities but the more I look the more I see terrible price inflation / bubbles (gold, silver, oil, etc), default / rate risk (bonds at the muni and national levels ... international except Europe, China, and Japan is somewhat better), or just throwing your money away (savings with low rates). Also, unlike a bond fund, I can't just pull my money. It's essentially held until the loan is paid off, so it's like a long-term CD in that sense.
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Old 07-31-2012, 08:20 PM
 
9,639 posts, read 6,049,190 times
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I have a lending club account. It's about a year old with no defaults. Though I avoid the credit card people. I pick those looking at business capital and home renovations.
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Old 07-31-2012, 09:22 PM
 
Location: US Empire, Pac NW
5,002 posts, read 12,391,665 times
Reputation: 4125
Quote:
Originally Posted by LordSquidworth View Post
I have a lending club account. It's about a year old with no defaults. Though I avoid the credit card people. I pick those looking at business capital and home renovations.
What's your return been?
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Old 08-01-2012, 07:59 AM
 
9,639 posts, read 6,049,190 times
Reputation: 8568
Quote:
Originally Posted by eskercurve View Post
What's your return been?
If I played by the rules, supposed to be 12.73%. I've sorta neglected the account and just let it sit, not reissuing monies for the past couple months.

70% of them are class B. 10% class A. 20% are class C/E.

Had about 15% repay the entire thing after the first couple months.
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