I just made a another loan on Lending Club. I wanted to get more posts up that are more tutorial related before talking about my lending activity however, I believe it's important to also watch someone as they place loans in real time. This is the first loan I have made since starting this blog. I have placed a link below so I hope you can see the listing of this loan. I will tell you things like that I like about the loan and what I don't like. Also why I chose to invest in this particular loan.
https://www.lendingclub.com/browse/loanDetail.action?loan_id=454237
Pros:
- First the loan met my basic screening.
- B and C grade loans, interest over 11%, no deliquencies, less than 20% DTI (Debt to income), Credit score over 750.
- Homeowner
- Good length of employment
- Using the loan to buy what seems to be a stable asset (this is better than paying for a vacation)
- Very low utilization of open credit lines 0.19% (has room to be flexible in tough financial times)
- Interest rate at 12.18%
Cons:
- Asking for a full $25,000
- Seems that they may need the rental income to make the payments
- Buying Real Estate in California, personally I would not do that
** some of the criteria I mentioned you can't see unless you log into Lendng Club.
Summary:
I wanted a loan over 12% interest because I want to be sure that my NAR (Net Annualized Return) has a pretty good chance of staying above 11%. That may be a little optimistic, my hard goal is above 10% and I definitely feel confident I can do that. I will continue to invest $25 in each loan until I have made a total of 100 loans and then I will consider going to $50 in each loan. I do have one loan that I invsted $50 in. This was a couple that I know personally and I knew their financial situation. That particular loan was almost guaranteed money so I invest more in it. I will be posting more tutorial articles later. Subscribe on the top left hand side and you will be notified when I make my next post about Lending Club.
Tuesday, October 27, 2009
Thursday, October 22, 2009
What is Peer to Peer Lending?
Peer to peer lending could also be called people to people lending. At the very simplest this is a way for ordinary people to request a loan and for other everyday ordinary people to partially or fully fund the loan. So how does peer to peer lending work?
Usually it's administered by a company like Lending Club or Prosper. If you will imagine these companies acting as the central marketplace where lenders and borrowers come to meet. Just like if a borrow were to request a loan online from a bank, they would go to one of the previously mentioned websites and request a loan. Here is where things take a turn for the better. Instead of some big powerful bank with unlimited power determining whether a loan will be approved or not, it is left up to the community of peers who are also lenders/investors in these private loans.
Each of the investors are able to review loans submitted as well as any credit report information provided with the loan. Investors choose to lend as little as $25 up to the full amount of the loan. When the loan is funded and the identity is verified by the administration company (Lending Club for example). Then the borrower will receive the funds and begin making monthly payments to the administration company; who will redistribute funds proportionally to each investor plus the interest earned for providing the loan.
To recap peer to peer lending is a model of lending based on receiving loans form a community of individuals versus directly from a bank. There are huge advantages to this model for the borrows and the lenders both. This will be covered in my next post.
Usually it's administered by a company like Lending Club or Prosper. If you will imagine these companies acting as the central marketplace where lenders and borrowers come to meet. Just like if a borrow were to request a loan online from a bank, they would go to one of the previously mentioned websites and request a loan. Here is where things take a turn for the better. Instead of some big powerful bank with unlimited power determining whether a loan will be approved or not, it is left up to the community of peers who are also lenders/investors in these private loans.
Each of the investors are able to review loans submitted as well as any credit report information provided with the loan. Investors choose to lend as little as $25 up to the full amount of the loan. When the loan is funded and the identity is verified by the administration company (Lending Club for example). Then the borrower will receive the funds and begin making monthly payments to the administration company; who will redistribute funds proportionally to each investor plus the interest earned for providing the loan.
To recap peer to peer lending is a model of lending based on receiving loans form a community of individuals versus directly from a bank. There are huge advantages to this model for the borrows and the lenders both. This will be covered in my next post.
Wednesday, October 21, 2009
29.99% on Citibank Credit Card
I have excellent credit. I am an investor and a borrower on Lending Club recently deciding to refinance my Citibank Dividends credit card which had jumped up to 19.99% from 12.99%. This jump happened pretty soon after the US credit crisis hit. Last week I got my Lending Club loan to pay off that very credit card. However, yesterday I received a letter from Citibank stating that there were some changes that had to be made to my account in order for them to be able to extend credit to me due to the current financial climate in our country. Here are the changes listed below.
The old terms:
- Received up to 3% cashback on all purchases and did not have to carry a balance.
- Interest rate was 12.99%
The new terms:
- Receive up to 10% cashback on any interest paid on the balance of the account if payment is paid on time.
- Interest rate now 29.99%
Another reason why the Peer to Peer Lending model has such oppurtunity to grow in this consumer credit environment. With the loan I got from Lending Club. I got $4.900 for 8.92% (simple interest not a revolving interest). Thank you Lending Club. Feel free to subscribe to this blog if you want to get notified when I update this blog.
The old terms:
- Received up to 3% cashback on all purchases and did not have to carry a balance.
- Interest rate was 12.99%
The new terms:
- Receive up to 10% cashback on any interest paid on the balance of the account if payment is paid on time.
- Interest rate now 29.99%
Another reason why the Peer to Peer Lending model has such oppurtunity to grow in this consumer credit environment. With the loan I got from Lending Club. I got $4.900 for 8.92% (simple interest not a revolving interest). Thank you Lending Club. Feel free to subscribe to this blog if you want to get notified when I update this blog.
Tuesday, October 20, 2009
Subscribe to:
Posts (Atom)