Comments on blog.JeffersonKim.com: WARNING: LendingClub.com Statistic Innacuracies & ...

The first few months where nearly everyone pays on...

2009-12-22T18:20:06.497-08:00

The first few months where nearly everyone pays on time is called 'speedboating', and this period can lull you into a false sense of security. Lending Club's default rate is still much lower than Prosper's, and I think if you choose your loans carefully, and keep the amounts invested in each loan pretty low, you can obtain 10% return after fees and default rates are figured in. Between my two accounts at LC, I'm netting close to 11%, with no defaults as I approach one year out on most of my loans. Of course, my stock portfolio has outperformed my LC portfolio this year. I probably will not add any additional capital to LC in 2010, as I see how my loans mature. I have been reinvesting interest payments all along.

Most loans go into default about 6 months - 12 mon...

2009-12-15T23:07:28.226-08:00

Most loans go into default about 6 months - 12 months after the first payment, so I would say 120 days might be on the too soon side.

For example, if someone didn't make their payment on the 4th payment, it would be the 4th payment + 120 days before it enters into default or 240 days.

Shouldn't we be looking at data through, say, ...

2009-12-15T22:47:52.244-08:00

Shouldn't we be looking at data through, say, July 31 (more than 120 days before today)?

This changes the performance picture -- returns go to 8% for loan classes A-E.

Result of the softening of the downturn?

Jefferson, you are right. I always argued that th...

2009-12-06T03:53:06.252-08:00

Jefferson,

you are right. I always argued that the growth dilutes the default rates and to see the real picture you have to view loans and defaults for each origination month seperately.

Editor
P2P-Banking.com

Yep. I've drawn graphs of the fraction of len...

2009-12-05T22:49:30.323-08:00

Yep. I've drawn graphs of the fraction of lendingclub loans that have gone bad vs time, and update them from time to time on my blog. I've also posted same for prosper.com loans.

http://fred93blog.blogspot.com/