My goal is to achieve a greater than 13% return using Lending Club, and this month I took a step back, but hopefully the worst is behind me.
Recent Performance
I’ve been doing some complaining about loans that have been paid off early, but this month was a tough one because of a few old loans that haven’t been paid in awhile. Actually, the performance this past month has been pretty good. Another loan of mine came back into good standing, but another was charged off, which is where the drop in interest rate comes from.
I’ve tried to reduce the number of loans that default by using smart criteria, so hopefully I’ve been getting better and I’ve seen fewer loans have skipped payments.
13.71% Interest Rate
I have fewer loans in the grace period, so I think the future looks bright, and I have no new loans that are late.
Take a look at my account snapshot:
There were no new deposits this month (and I’m not planning anything for the next few months, at least). Still, with expected monthly payments of over $150 and, I can’t just sit back and relax. I’ve gotten into a pattern of checking for loans every two weeks, which isn’t too burdensome and doesn’t leave cash sitting idle earning 0% for very long.
Future Lending Club Plans
I won’t be doing much other than simply staying the course by investing in new loans and watching payments come in.
I’ve got my fingers crossed that the worst is behind me, and if a 13.71% return on my investment is the lowest this account gets, I will be pretty happy!
That’s awesome — good for you!
Looks good my man. I increased my investment to about $4,000 and I’m shooting for $10k. That should give me the proper diversification. My target is 12%, I’ll be happy with $100 extra income/month. :)
Your success has inspired me to look into P2P lending. I like the idea of earning 10%+ in interest on loans. I don’t like to lose money, so I’ll check out your smart criteria.
It still seems a bit risky to me. I prefer real estate myself, but you can’t argue with the results you are seeing. I guess everything has it’s risks. You just have to learn the in’s and out’s first before jumping in.
Good stuff, man! Funny that you mention people paying loans off early. It sounds like people might be following one of the most simple tenets of personal finance: using a tax refund windfall to pay off debt.
Well done Daniel. It looks like you may well have two more defaults coming up and that may drop your account under 13% for a while. But you have a similar sized account to my Roth IRA that I opened last year.
I am investing in just D-G rated loans and have an average weighted interest rate of 18.35%. After my third default my NAR went down to 14.48% from a high of over 18%. But now, after three months with no new defaults I am back to 16.4%. So, once you get those two more defaults (if you do) you should see a steady climb back up for your NAR. Good luck.
Dear Texas. Please let me originate loans. Love Kevin.
On the bright side, when you only get loans that have been active for a while you can pick loans that have never had a late payment. Sure you get a worse interest rate, but payment history seems like a very good indicator of future performance. I haven’t had a loan miss a payment since I sold off a bad one I bought on my first day.
@Kevin @ Thousandaire.com, yup, and sometimes people simply unload good ones at reasonable prices. I had one in good standing that I wanted to sell because it was a $100 loan and I wanted to reduce risk. After 5 on-time payment, I’m sure someone got a good deal on it!
Daniel,
I’m having a extemely hard time getting funded on an 11,000 dollar loan because my DTI is 34% and I am assuming that most investors are filtering me out. What is not shown is the income that my wife contributes to the household, including child support payments she receives. Do you have any tips on how to make my loan more attractive? My title states that I WILL NOT pay off early, but I only have a 6% funding with 7 days left.
@Brandon Nelson, BTW, I am one of those borrowers who has NEVER missed a payment on anything in my life….which seems to be a dime a dozen on LC. I feel like I am lost in a sea of loans and don’t see why anyone would pick me over others.