August was pretty busy month for us on Lending Club as we purchased a total of $713.72 worth of notes this month. A total of $275.00 in new notes and $438.72 notes from the trading platform. Finding new notes have been challenging lately so we have turned to looking for notes on Lending Club's trading platform. Essentially, we are picking up notes from others who are looking to liquidate their notes.
For these notes, we are searching for notes where the borrows credit score has increased by 20pts or more, the notes has between 9 and 27 months left, the value of note is less than $25, the borrowers credit score is minimum of 720, the borrower is both current and never late, and the note is not marked up. In fact, if we can find them, we prefer ones where the seller is offering at a discount. :)
At the end of August, our Lending Club account balance was at $8,833.49 (an increase of $291.24 from our balance at the end of July). We received $515.65 in payments from our active notes in July; of which, we received, $59.59 in interest (an increase of $5.65/mo.). The principal balance of our active notes was $8,350.39 (an increase of $183.77 from July total), with $25.00 of loans in review or funding and a remaining cash balance of $458.10. We are currently generating 5.24% on our seasoned notes. One loan was charged off this month. The remaining value of that loan was $13.28
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The month of August saw a bit of a rebound for us within our Prosper account as we purchased a total of only $741.44. This is definitely a welcome sight as last month, we didn't even find enough notes to reinvest our payments for the month. That meant our money wasn't getting the immediate compounding effect that we always hope to achieve through our P2P accounts. In fact, one of the biggest draw for us toward P2P notes is the ability to immediately re-invest our notes into more notes almost immediately each month.
As with our Lending Club account, we are also buying notes off the trading platform. Unfortunately, not the same quantities as we are in Lending Club. The main difference and reason is because Prosper notes are mostly offered through an auction format and not as fixed price notes. So far, I think I prefer the Lending Club format over the Prosper trading platform.
At the end of August, our Prosper account balance was at $8,642.81 (an increase of $59.98 from our balance at the end of July). We received $355.09 in payments from our active notes in July; of which, we received, $67.19 in interest (an increase of $5.13/mo.). The principal balance of our active notes was $8,233.10 (an increase of $386.14 from July total due to are spike in activity this past month). We also had $50.00 of loans in review or funding and a remaining cash balance of $384.69. We are currently generating 7.62% on our seasoned notes.
In an effort to grow both P2P accounts, 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.
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Total Value of Both P2P accounts: $17,476.30
($346.90 increase from August)
Total Interest Earned in August: $126.78
($10.78 increase from August)
Average Interest Earned: 6.43%
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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):
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 below to view our peer-to-peer lending accounts
