Lending Club Loan Portfolio Update

Nearly five months ago I started to invest through Lending Club in order to add a little bit more diversification to my investments. Since then, I have been steadily building up my portfolio. The process is rather slow though since I can only buy notes on the secondary market, which I sometimes forgot to do even though I have money sitting idle in my account.

Anyway, things have been going quite well for me so far. Every payment (principal plus interest) has been received on time. No late and no default. Currently, I have a total of 77 loans in my portfolio with four more that I bought today pending.

Lending Club Loan Portfolio

Before I only bought loans with higher interest rates, mostly Grade B, C, and D. Now I also start to a few Grade A loans to spread the risk a little more. The problem for me now is that I can’t lend money directly and loans that are on sale on the secondary market are getting more and more expensive (because the demands are high?). I remember when I started, I had no problem finding notes at discount. Now I always have to pay a premium to buy a loan :( Fortunately, it won’t be long before I can lend directly myself (we are moving to Virginia, which is one of those states where direct lending is permitted).

I always believe, like any other investments, that the size of the investment is important in making meaningful money. This is especially true with Lending Club because of the risk of default, though I haven’t experienced any yet.  I don’t have a target of how many loans I want to own, but I think 100 will be the minimum. As long as the general performance is good, I can accept a few defaults.

BTW, Lending Club recently added Annualized Return to the account, so lenders can see the exact return of their investments. Too bad this information isn’t available to me now because all my loans were purchased with different markups/markdowns.

If you are interested in becoming a lender on Lending Club, check out how you can get $25 ign up bonus to start lending.

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4 Responses to “Lending Club Loan Portfolio Update”

  1. Mr.ArfArf |  Jul 23, 2009 at 12:20 pm

    Hi, Interesting blog! Thanks for posting! :) One thing I’m not clear on is why you can only buy notes on the secondary market? Is it that you need to be an accredited investor to invest new money in a direct loan but secondary loans are acceptable to buy? Sorry if this is obvious, I’m very interested to know. Thanks!

  2. Sun |  Jul 23, 2009 at 8:46 pm

    There are a list of states whose residents are not allowed to lend
    directly on Lending Club. This is the only reason. Currently, New
    Jersey, where I live in, is on that list. I think Lending Club has to get approval to from each state before the state’s residents can become lenders. Since I can’t lend directly, the only way to use Lending Club is through its secondary market. The secondary market is a place where loans are bought and sold. Other than the residency requirement, I don’t know there are other conditions on lending on LC.