Stu’s Portfolio: Comparing the Platforms

Many of you know that for the last month I have been trying to put some money to work at Lending Club.  This post is about how that has gone and how it is affecting my portfolio.  My first order to purchase notes from Lending Club was on June 5th, more than 30 days ago.

My first order on LC
My first order on LC

To date, in order to put all of my money to work that I have allocated to Lending Club, a total of $2500, it has taken more than 30 days and the attempted purchase of 20 notes, just to fund 10 at $250 each.  Why I am only buying 10 notes at $250 each is something I will go over in the Portfolio Management section of the site.  Of those 10 notes, only 5 are fully funded and issued while 5 more are still awaiting final approval by LC to final fund.  Not counting the 5 still pending, that is only 5 funded out of 15 or a paltry 33%.

I bring this up to you guys as this is something you should be aware of when trying to fund loans through the Lending Club platform. Yes, they have many more notes available to invest in than Prosper does, however a greater percentage of Prosper's loans final fund.  Here are some questions to consider:

Is it due to a big difference in how the final due diligence is done by both?

Does it lead to a lower default rate for LC loans? I don't think it does however, this is a topic for further research and I'm going to ask the P2P Loan Data King, Michael @ Nickel Steamroller to see if this is true based on his research or not. Regardless, his site is excellent and you should go check it out.

Another relevant question is whether or not the fact that I am targeting many C, D and E grade loans is a factor as well?

Does LC just throw the loan up on their platform and then do the due diligence later, thus kicking out more loans?

At the moment, these are all unanswered questions but I am on the hunt to find out the answers. In the meantime, if you need to start earning interest right away, Prosper might be better for your money as I have had half of my money sitting and doing nothing for a month now that I want to invest.  Just something you need to consider.

Stu, the blogmaster

About the author

Stu Stu Lustman, the author of this post, is a Credit Analyst by trade trying to bring Commercial Credit Analysis techniques to the world of Peer to Peer Lending. Check me out on Twitter, LinkedIn and Google+

3 thoughts on “Stu’s Portfolio: Comparing the Platforms

  1. I’m intrigued by the returns LC & Prosper offer in theory, but if you’re money sits idly for long periods that negates much of the upside. Curious about the waiting period on A-B loans – keep us posted!

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