Monday, October 20, 2014

P2P Accounts (Update) - October 2014

September was somewhat flat month for us on Lending Club as we purchased a total of $563.32 worth of notes this month. A total of $100.00 in new notes and $463.32 notes from the trading platform. Considering we received $622.04 in payments from our outstanding notes, this meant we didn't even find enough notes to reinvest that money. Personally, I'd rather hang onto the cash and wait for good quality notes than to invest in riskier notes that I end up having regrets about later. 
This past month, as well as in August, we found a large portion of notes for notes from Lending Club's trading platform.  We are essentially picking up notes from others who are looking to liquidate their notes. For these notes, we continue to use the following search criteria (in no particular order): 
  1. Borrowers credit score has increased by 20pts or more;
  2. The notes has between 9 and 27 months left
  3. The value of note is less than $25;
  4. The borrowers credit score is minimum of 720
  5. The borrower is both current and never late; and
  6. 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 September, our Lending Club account balance was at $8,989.69 (an increase of $156.20 from our balance at the end of August). We received $622.04 in payments from our active notes in August; of which, we received, $60.73 in interest (an increase of $1.14/mo.).  The principal balance of our active notes was $8,354.07 (an increase of $3.68 from July total), with $50.00 of loans in review or funding and a remaining cash balance of $560.62 (increase of $102.52).  We are currently generating 4.88% on our seasoned notes. No loans were charged off this month. 

The month of September was somewhat of a disappointment for our Prosper account as we purchased a total of only $318.11.  Once again, we didn't even find enough notes to reinvest our payments for the month.  That meant our money didn't getting the immediate compounding effect that we always hope to achieve through our P2P accounts. Part of the reason is that work has been quite busy lately. For whatever reason, I can't seem to even find the 5-10 minutes I use to have  each day to do a quick search for new notes. I hope this changes soon because 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.

Similar to our Lending Club account, we are also buying notes off the trading platform.  Unfortunately, we there aren't as many quality notes as we seem to have found in Lending Club.  As I mentioned last month, I think the main reason is because Prosper notes are mostly offered through an auction format and not as fixed price notes. I definitely prefer the Lending Club format over the Prosper trading platform.  Hopefully, Prosper wises up and change their existing format soon.

At the end of September, our Prosper account balance was at $8,671.51 (an increase of $28.70 from our balance at the end of July). It is not much, but I'm still thankful it is a positive number and not a negative number.  We received $424.08 in payments from our active notes in August; of which, we received, $60.64 in interest (a decrease of $6.55/mo.).  The principal balance of our active notes was $8,127.14 (a decrease of $105.96 from August total). We also had $25.00 of loans in review or funding and a remaining cash balance of $544.38.  We are currently generating 7.64% on our seasoned notes.

Total Value of Both P2P accounts: $17,661.20
($184.90 increase from September update)
Total Interest Earned in August: $121.37
($-5.41 decrease from September update)
Estimate Average Interest Earned: 6.26%



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 below to view  our peer-to-peer lending accounts


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