Want Better Returns? Lend to Prime Borrowers

I'm a lender with Lending Club. All of my loans are current except for one (and he is on a payment plan and assuming he doesn't pull scumbag moves, he will now pay back at a higher rate than the others, but I should get back at the least my principal). I am also a "high-risk" lender. I typically loan money to Ds and Es. My returns, currently are 15% (-minus 1% fees). I typically look for loans that people are trying to consolidate debt and no accumulate more. I was "high-risk" credit too, and now I'm "low-risk". My scores are in 700s because of efforts I made. I only have $500 invested, in case people are going to pull the scumbag move, but the quality of borrower is much higher than you will find at Prosper. Because my credit is "thin", I could only borrow from Prosper...put it that way. Lending Club does not play. I do advise that you do not use the portfolio service and actually read the listings you want to invest in, so you get a feel for who you're lending to. Bad apples still get through LC, just not as much.

sounds like a go offer

My husband and I were borrowers on Prosper and I hate that "Prosper" has been given a "bad" name because of the non-paying members. We borrowed almost $10,000 (with two loans) and had them payed off with in a little over 18 mos with NO defaults. We don't have the greatest credit score..due to unfortunate events that happened in our lives a few years back, but I hate that only those with Great Credit ratings are only considered for this program on here with the Lending Club. I do understand those risking their own hard earned money to be critical when choosing someone to lend to, but the best credit ratings are not always the best way to choose those people. There are still good, honest, hard working people that are very trust worthy w/out that of excellent credit ratings still out there and it upsets me that the american society has made a "bad" name for all of us.

There are legal requirements for lending that vary from state to state. Because it is registered with the SEC and this is a new type of business (and it goes against the face of big banks) there will probably be some scrutiny.

Are your roommates on your tax return? You can't count the aggregate as a household if there are no financial ties (other than paying housing to the same entity).

Read the prospectus because there are considerable risks associated with this that go beyond a borrower defaulting. Also contrary to comments, if you read this you will find they don't verify everyone's income. Monetarily, they have little incentive to collect on late payments and defaults.

I don't understand why there is a minimum salary requirement to loan money. Is this correct? Why does it matter how much I make if I want to loan someone $100?

Also, my household income is far more than $70k (probably more like $200k), but my household includes me and 3 roommates.

Can I lend to people or not?

randyeich, click the wrong button or what?

You won't get rich through LendingClub (lenders aren't allowed to loan more than 10% of their income), but at least you're dealing with an S-1 registered company and pre-screened borrowers, many of whom have good ratings and are disgusted with the behavior of the major banks and credit card companies. I put up $500 and I'm satisfied with the loans I made (>10% after LC gets its take).

I was burned on Prosper (6 of 13 loans went bad) and the 26% default rate mentioned will keep me away. Anyone for collateralized "social lending?"

I'm a lender in Lending Club, haven't had any problems yet, seems to be going along just fine. Started the first of the year, hopefully it'll stay the course.

to the fellow that said refinancing his 4-year old car loan would lower his DTI, this is only marginally correct. refinancing will barely put a dent in his DTI, since he already owes the interest accrued over the first 48 months which is when the vast majority of interest accrues. however, his monthly payment would be lower which is more about cash flow.

also, the criteria for borrowing through LendingClub is contingent on your current credit standing, not future credit standing. you do have to have "very good" credit or better.

as far as LendingClub being a good deal for lenders or not, even though I clicked Yes, let the buyer beware!! I have lost money on Prosper.com loans before, even with careful screening. but if you study it very closely there are worse investments out there. savings I-series bonds have been some of the better rock solid ones out there with no risk of capital. LC, stocks, bonds, etc do not offer the same sort of guarantee.