A reader recently asked how the interest is calculated on Lending Club loans and what her return in dollars might be.
Here’s my answer:
Loans through Lending Club are amortized over 36 months to keep payments fixed.  The quoted rate is the yearly rate, so 1/12 the rate is applied to the outstanding principal each month.  To [...]

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Continue reading → Calculating Potential Profit on Lending Club Loans

Rethinking Historical Default Rates When Applied to Small Value P2P Loan Portfolios
Historical default rates can be difficult to apply to small value P2P loan portfolios.  The first thing to remember is that, much like stock market returns, historical default rates do not necessarily predict future default rates.  The next major problem with analyzing risk in [...]

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Continue reading → P2P Lending Default Considerations (Part 1)

The new wave of Peer to Peer Lending providers allow ordinary citizens to lend and borrow money with one another, online, in a convenient, secure and legally compliant manner.  But is there a way to leverage this new financial service by combining it with a highly networked (and highly internet savvy) political support structure?
We present [...]

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Continue reading → Peer to Peer Campaign Finance

In a major development in the P2P Lending space, one that has implications for the entire P2P Lending model as it currently exists, it appears that LendingClub.com has partially ceased operations. A notification is up on their site that they are no longer accepting new P2P lender registrations and that no further loans may [...]

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Continue reading → Lending Club Shuts Down (Temporarily?)

Last week, peer-to-peer lending provider Lending Club began offering data exports containing a variety of information from their peer-to-peer lending platform/marketplace, including: data for loans that have funded to date, loans whose listings are currently active, and loans which were rejected for not meeting Lending Club’s strict credit qualifications (minimum 640 FICO, with no [...]

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Continue reading → Lending Club Loan Statistics Site Launches

The second Carnival of Peer-to-Peer Lending installment was hosted by BripBlap & included the following articles:
RateLadder dispenses some Not So Obvious Tips to Maximize Your Chance of Funding for Prosper borrowers (including neat graphical analysis of factors like listing time, duration, and description length), and also presents updated Prosper vintage curves (late rates, as of [...]

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Continue reading → Carnival of Peer to Peer Lending #2

Lending Club, the peer-to-peer lending site, is offering a 5% cash-back bonus to lenders who lend $5,000 or more by February 3rd, 2008.
OK, that sounds neat, but what if you have access to a fair amount of capital -and- a fair number of friends with good credit who you’d trust to loan a large amount [...]

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Continue reading → Gaming the Lending Club 5% Bonus Promotion

Prosper has recently done something *wonderful* for current and future Prosper Lenders. But I bet you don’t know what it is - or, if you do, why it’s so unbelievably important.
Since it’s garnered very little attention in the P2P Lending Community thus far, I wanted to shine a little bit of light on it [...]

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Continue reading → Prosper Lending: Interest Rate & Bidding Guidance

Prosper has recently done something *wonderful* for current and future Prosper Lenders. But I bet you don’t know what it is - or, if you do, why it’s so unbelievably important.Since it’s garnered very little attention in the P2P Lending Community thus…

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Continue reading → Notes on Prosper Lending: Interest Rate & Bidding Guidance

One of the most often misunderstood issues I see popping up on the official forums with some frequency is that of reinvestment risk. To be absolutely clear, the kind of “reinvestment risk” that I’m referring to here is that which is taken on when good borrowers make their payments or pay off their [...]

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Continue reading → Prosper Lending: Reinvestment Risk

Prosper.com uses a proprietary & predictive credit scoring model called Experian ScoreX PLUS(sm) to calculate borrower credit scores. Prosper then assigns a letter grade based upon specific score ranges.
While the score ranges may look similar to FICO(tm) scores, they are not FICO(tm) scores.
As ScoreX is a predictive model, the credit grade that borrowers are assigned [...]

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Continue reading → Prosper Lending: ScoreX Plus

Prosper loans are an entirely new asset class.
There is, quite simply, no (truly) analogous (or available) existing historical performance data to look to for guidance - even when it comes to lending purely “by the numbers”.
History is being made each day at Prosper.com - and the performance you see in your portfolio today will set [...]

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Continue reading → Prosper Lending: Default Projections