Friday, May 9, 2014

Lending Club P2P Account (Update) - May 2014





April was decent month for us on Lending Club as we purchased a total of $850.00 worth of notes this month. At the end of April, our Lending Club account balance was at $6,952.40. We received $582.30 in payments from our active notes in April; of which, we received, $40.51 in interest.  The principal balance of our active notes was $6,323.07, with $375.00 of loans in funding and a remaining cash balance of $254.33.  We are currently generating 5.24% on our seasoned notes.
 
 
 (we just added $543 of cash at the beginning of May)
 
In an effort to grow our Lending Club account, we are currently re-investing all of the payments that we receive from our notes. And when the cash balance is low, we are continuing to add more funds to the account so that we may constantly purchase new notes.

Although our cash balance was still $254.33, we had extra money laying around so we decided to add $543 to our Lending Club account in early May. Please note that since the graphic above was a screenshot taken on May 8th, the numbers do not line up with the April data provided because they are reflective of this new deposit. 
 
 
NOTES CRITERIA:
Our family has been investing in peer-to-peer lending notes for approximately 3 years now. And because of past defaults, we have now refined our search criteria. As a result, we now take a slightly more conservative approach with the notes we invest in. Currently, we only invest in notes that fit the following initial criteria:
  • Amount requested is under $6,000;
  • Credit score of 700 or more; and
  • Monthly payment will be less than $250.
From those we evaluate (Employment Status):
  • The borrower's income (prefer > $50,000 but depends on amount requested);
  • Length of employment (must be > 2 years); and
  • Their occupation (certain occupations, known to be more secured, are more desirable).
We then look at (Ability To Pay):
  • Their credit history;
  • Revolving balance; and
  • Debt to income level, etc.
We do not invest in any notes where borrow is currently delinquent, of if they have had  a public record within the last 12 months. We also do not invest in notes where the description provided is "Other." We feel that there is too much risk involve when the borrower is not willing to reveal why he/she needs the money.

Click here to view our the current value of your peer-to-peer lending accounts.

2 comments:

  1. I'm always fascinated by the p2p lending posts, thanks for writing it up! My state doesn't allow me to invest in these so I have to live vicariously :-)

    I'm curious how this affects your taxes. I've heard of people doing these inside of a IRA to avoid the tax headache. What's your experience been?

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    Replies
    1. Taxes are manageable even though we are not investing though an IRA. At first, when we did a lot of buying and selling of notes through the trading platform...it was a tax nightmare. But now that we only buy standard notes and hang on to them until they are paid off, it is like a stock portfolio at tax time.

      If you have a lot of write-off (defaults), I can see how it can take a while to do your taxes as you have to write off each note individually. Having learned this early one, we now take a more conservative approach in our selection of notes and as a result, our defaults have dropped significantly.

      Thanks for stopping by. Hopefully, your state will allow this investment alternative soon. :)

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