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Lending Club Strategies
Posted on 3/25/15 at 12:56 pm
Posted on 3/25/15 at 12:56 pm
Just started loaning on lending club a couple months ago and was interested to see what others people are doing as far as strategy in choosing who to lend to.
I've invested about 3/4 of my initial investment amount, but currently all of my loans are currently either A or B grade. I don't lend to folks who have previously had delinquencies, and look for people who have over 680 in credit. Usually neither of those are available in C or worse, when buying these "junk" notes, what do you look for?
I've invested about 3/4 of my initial investment amount, but currently all of my loans are currently either A or B grade. I don't lend to folks who have previously had delinquencies, and look for people who have over 680 in credit. Usually neither of those are available in C or worse, when buying these "junk" notes, what do you look for?
This post was edited on 3/25/15 at 12:57 pm
Posted on 3/25/15 at 1:12 pm to TJG210
You could look into the basics of how CDOs are run and price based off those models.
Seemed to work right up to 2008
Seemed to work right up to 2008
Posted on 3/25/15 at 1:14 pm to TJG210
I found a better return on 36 mo. loans that are under $10,000 - 10% A - 40% B - 40% C - 10% D
Posted on 3/25/15 at 1:15 pm to dantes69
I don't think this is legal in the state of Tennessee, unfortunately. :(
Posted on 3/25/15 at 1:23 pm to TJG210
What type of return are ya'll finding on this site?
Posted on 3/25/15 at 1:29 pm to GenesChin
Are all of these loans unsecured?
Posted on 3/25/15 at 1:42 pm to dantes69
C and D ratings are the sweet spot for me. The 5 year notes are always disturbing because they are almost always carrying tight debt service.
Posted on 3/25/15 at 1:48 pm to TheHiddenFlask
quote:
C and D ratings are the sweet spot for me.
Are you looking for anything specific, credit rating, past history?
Do you bail at the first sign of trouble?
quote:
What type of return are ya'll finding on this site?
Most of the folks I've seen talk about this are getting around 8-10%. I think right now, I'm at about 8.75%.....though my sample size is hardly a good indicator of what it will be over the long run.
You do have to remember on top of what you get, you need to pay the site commission, and then pay the standard capital gains rate to the IRS.
This post was edited on 3/25/15 at 1:51 pm
Posted on 3/25/15 at 2:06 pm to TJG210
A's aren't worth the trouble. The rates are way too low. B's have been over targeted recently because they are the "safest" with a real return. C's and D's (particularly D's) are being skipped over by both the safety seekers and the yield pigs. Fs and Gs are complete crapshoots, but even with the high rate, don't sufficiently reward you for the drastic decrease in credit quality. That means the yield pigs are in E's which has pinched the available supply. Going from C to E gives you less than a 1% increase in expected return.
I generally find it difficult to determine the difference between C's and D's by just looking at the credit metrics, which is why I lump them together.
I generally find it difficult to determine the difference between C's and D's by just looking at the credit metrics, which is why I lump them together.
Posted on 3/25/15 at 3:40 pm to TheHiddenFlask
Love the explanation Hidden Flask.
Very well said.
Very well said.
Posted on 3/25/15 at 5:55 pm to TJG210
I am getting 10%, however I have been able to get into 102 new loans in the past 3 months off of returns, that gives me a compounded return of 27%
Posted on 3/26/15 at 6:15 am to dantes69
I don't think that's right.
Posted on 3/26/15 at 6:59 am to TheHiddenFlask
I was looking at this pretty seriously a couple of months ago and it seemed that institutions were buying up most of the 'good' loans with automated systems before they hit the street. I contacted a couple of those and was thinking about putting money with them, but both show reduced yields in the last 6 months due to so much many buyers getting into the game.
Are you still able to find significant quantities of good loans to buy?
Are you still able to find significant quantities of good loans to buy?
Posted on 3/26/15 at 7:08 am to Ole War Skule
Institutional buyer platforms don't have access to the same loans as those that are posted on the individual investor site.
Posted on 3/26/15 at 10:11 am to TheHiddenFlask
quote:
Institutional buyer platforms don't have access to the same loans as those that are posted on the individual investor site.
There are two different sites? How do loans get routed? Do the smaller ones go to the individual investor site, larger ones to the institutional?
Posted on 3/26/15 at 11:42 am to TJG210
Just a random mix.
They did it to avoid the hedge funds with algorithms gobbling up the best loans and leaving the consumer side with the scraps.
They did it to avoid the hedge funds with algorithms gobbling up the best loans and leaving the consumer side with the scraps.
Posted on 4/2/15 at 1:24 am to TheHiddenFlask
What do you generally do when you get someone who is in the grace period or late? Is it best just to cut bait and sell the note for whatever you can get for it?
Posted on 4/2/15 at 5:09 am to TJG210
I don't sell. I haven't looked at it in the past year and a half, but the discounts used to be ridiculous. I just always buy very small chunks so that any given single loan default won't hurt me.
Posted on 4/25/15 at 6:58 pm to TheHiddenFlask
I think I'm about to hop in to this investment tool. I am thinking of getting my fiancé in on this and this can be her way of investing. I'll stick to the stock market.
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