I am still investing in Lending Club loans as an alternative investment, but I must admit that I am a little disappointed by the performance of my investments, especially when two loans went bad after only two months since they were issued. Overall, the number loans and the number of late and charge-off all grew since last update in December.
I have added 25 new loans since last December, bringing the total number of loans invested to 172. As you can see from the above screenshot, there are 6 loans that are more than 31 days late, up from 3 in late December. Of the three new loans that are late in making payment, one grade B loan filed for Chapter 7 bankruptcy in January only two months after the loan request was approved. I know that unexpected things can happen, but filing for bankruptcy must be an extreme step for a person to take. In this case, I wonder if Lending Club has done a thorough investigation of the borrower’s financial condition before approving the loan. Of course, I also share the blame as there were clear warning signs in the original loan request, such as more than $75K revolving credit balance and 1 delinquency in the last two years. I always avoid borrowers with delinquency history, but somehow this one slipped away.
Of the other five loans that are late, four of them either made partial payments since the first failed payment or had a new payment plan with reduced payment. If all the revised payment plans work out, then the overall situation won’t be that bad as right now the charge-off/default rate is only 1.7% (3 out of 172). Otherwise, the investments in Lending Club will become a little sour because the total value in charged-off and late loan is about $260, almost equal to the total interests of $274 received so far, one year since I first began to buy loans on Lending Club’s secondary market in February 2009.
Though not very happy with the number of late loans, I will keep investing with Lending Club. With nearly $150 monthly payment, I can add a few more new loan every month to keep it going.
BTW, if you are interested in becoming a Lending Club investor, you can receive $100 bonus if you make an initial investment of $2,500 or more. This is a limited offer from LC through its referral program.
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