Readers Share Lending Club Returns
Posted by Madison on June 3, 2009
I recently asked How is your Lending Club Account Doing? after seeing my net annualized return on investment at 8.44%.
I enjoyed reading readers’ responses about their portfolios at Lending Club and wanted to share them. It’s fun to see how everyone stacks up and what their portfolios look like.
What I find particularly interesting is that many readers are taking the time to look at what the borrower wants to do with the money, rather than just looking at the interest rates.
Readers’ Lending Club Returns
- 14.46%. All current. One loan is an A, but the others are D or E. I let Lending Club pick the loans for me. – Dough Roller
- 12.15%. 11 loans, all current, one grade D paid off early. Portfolio is A (36%), B (8%), C (28%), D (20%), and E (8%). I’m still relatively early into the terms so the fact that they are all current isn’t a huge surprise, but I expect one of the 12 notes I took out will eventually default. Selection based on how much they were asking to borrow and for what purpose. – Jeremy
- 11.47%. 20 loans, all current, 3 months in. Generally, if I invest in a D, E, or F I read the reason they need the money, and usually only go in on small sums less than $5,000. I keep a pretty balanced portfolio across all the percentages with enough A’s to balance out my higher risk investments. I’m trying to get my portfolio to a point where I’m getting paid at least $25 per month so I can reinvest in other loans. – Jenny
- 11%. 2 loans, both current. I’ve only dabbled in social lending. To spread my risk out a bit, I balanced investments in Lending Club borrowers between a medium-risk borrower with a low-risk borrower. – Frugal Dad
- 10.57%. All current. Mostly A loans that I selected myself, but a couple low quality “gambles” too. – Rocket
- 10.18%. 4 loans, all current, 1 borrower is paying extra every month. I know that means I don’t get to earn interest off him or her, but I’m happy to see their progress in paying it off early. Makes me think I invested in a really good person who has their stuff together. This is why peer to peer lending is better than banks. I really, really care about investing in good people who have their acts together. Not just people who can do math. (i.e. I don’t want to finance your Sea-doo because you’re overfinanced on your truck). – Jessica Ward
- 9.64%. 2 loans, B grade, both current. I picked the loans myself and asked a question of one of the borrowers. – No Debt Plan
- 9.4%. All current. My notes are pretty old (nearly halfway through the 3 year repayment process). – Debt Kid
- 8.83%. 4 notes, all current. I just barely started. Grade A loans. I look at the reason for borrowing. I like to help people who are getting loans for business needs. – Miranda
- 8.75%. A few loans, all current, loans are about a year old. This is a small sample size though, because residents of my state are not currently able to fund new loans via Lending Club. – Patrick
- 7.34%. Over 200 loans. Investing for 1.5 years. I had a few defaults (about 10 of my loans). But gosh! What a great return after defaults and fees. I’m now investing again after they reopened and I’m never going back to Prosper. The quality of borrowers is better, and there is no drama with Lending Club (no quiet periods, no out-of-control defaults, and only good credit borrowers, etc). – LooneyMooney
- 0.74%. The return is low because I have been hit by 3 defaults from D loans that I made at the very beginning. I guess I am paying for my desire to get the highest interest rates possible. I’ve now learned my lesson. Currently, I am cautiously optimistic about peer to peer lending and continue to invest on new notes when I have a chance. – Pinyo
More information on Lending Club can be found in the Lending Club Step-By-Step Guide and my Lending Club Review.
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I am a Prosper Lender(prosper.com), and have been for about 3 years. The only advice I have (which it seems one of your members learned) is stay away from anything but AA and A.
There is little or no insentive for people with C or D rating to pay you back. People can and will use these online lending marketplaces as last resorts in hard times.
Focus on individuals that have no defaults and business that are trying to expand. Avoid businesses that are new, or have fallen on hard times.
I have had above 18% returns over the past two years, but have shifted my monthly money to the stock market as of middle of last year because the value is stronger there, but I still have 12 notes on prosper from the last couple of years.
Thanks for posting about our members’ returns on Lending Club. Your sample has a variety of levels of investments, strategies and performance, but overall I see some high numbers there.
Within the next couple of days, we’ll be rolling out a new feature that will allow you to see the distribution of the entire lending club investor community, and compare yourself to other investors.
Happy to report the platform wide average net annualized return number is well above 9%.
Rob Garcia from Lending Club
I should have mentioned that all my loans were Grade A loans. I decided I preferred the boring vanilla variety over the higher risk, higher reward. The returns have been much better than a CD or savings account, but of course there is higher risk as well.
Interesting to read everyone else’s results!
Maybe we should pitch in and give Pinyo some of our returns!
I have two LC accounts. One is a SIMPLE IRA. Between the two accounts, my returns are about 11.5%. I had one borrower (C level loan) declare bankruptcy after making one loan payment. All other loans are current. I was able to sell the note on the trading platform, albeit at a discount, but that salvaged my yield going to 0 on that particular note. My loan distribution is about 50% A, 25% B, 20% C, and the remainder in the lower echelons. My new loans are going into A’s or B’s exclusively and I’m searching out loans below 5k to fund. I don’t think LC is paying enough interest on loan levels C or below to warrant the much larger inherent default risk.
I currently earn 12.22% I have
2481 loan issued and current
101 loan payed off
6 Late 16 – 30 Days
34 Late 31 – 120 Days
16 Charged off
If you divide 19/2481 loans you get about a .77 percent default rate.
I only invest in 3 types of loans Refinance of Credit Card, Debt Consolation and Medical Expenses. I did not invest in people getting more debt to pay more stuff or invest in business loans. If people need to buy more stuff they should save up and buy it. I invest money in helping people get out of trouble not getting into more trouble. I
also invest in highest paying loans first.
My actual return without defaults would be about 14%. So far lending club seems like it
Paid off: 1
No late, default, or charged offs
(2 loans were late but are current now)
Started to invest in march 2011
only invest in Refinance of Credit Card and Debt Consolation