Comments on: Is Lending Through Prosper and Lending Club a Solid Investment?

By: Haywood Jablome

Haywood Jablome — Fri, 12 Mar 2010 06:13:37 +0000

Considering defaults and prepayments, I only made 3% return on a handful of loans. The risk is not worth the time nor the effort.

By: LeeWee

LeeWee — Sun, 13 Sep 2009 12:04:14 +0000

I've been an investor via LendingClub for a year now, and I can say, it IS a great investment. During a time where the stock market and other investment vehicles have gone south, my LC investment has yielded a nice 8.04%… and that is AFTER some losses I have experienced. I was a bit naive and went for 15% loans, only to realize that some of those defaulted. But even with that happening, I am diversified enough that I still see 8% returns… amazing! Highly recommended, go for it! Start with $500 or $1000 so you can invest in 40 loans and get the feel for it. NEVER invest in just a few loans.

By: neilneil

neilneil — Wed, 09 Sep 2009 12:52:23 +0000

The incentive is the same as it is for any other loan that a person would get from a bank: if they don't pay, their credit gets lowered (and they get harrassed by bill collectors (and they feel really really guilty)). Lending club has pretty high credit standards, so all the people who are borrowing (people with at least decent credit) likely have some interest vested in improving or at least maintaining their credit.
As a comparison, Prosper does not have as high of credit standards as LC. I have accounts with both, and LC so far is much better. I've had two loans default on prosper and a couple more are late. On LC, I've had a few people pay a few days late (they have a grace period) but that's it. I've only been with LC for about a year and no losses so far (also they tell you their default rate, i think it's pretty low, like 2%). So at this point, LC is my highest-yield investment, with an average of about 12% return.
***This is just my experience.***

By: steverabago

steverabago — Fri, 04 Sep 2009 13:56:31 +0000

I think the business model is highly risky. Making loans to people with whom you have no relationship sounds great, but how do you collect from someone who doesn't want to pay you when you have a proportional interest in a loan to someone 1,000 miles away. I am an advocate for friend and family loans like at www.ZimpleMoney.com