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LendingClub Notes Purchased

LendingClub Notes Purchased
Screenshot from lendingclub.com

Oh yeah! I purchased my first few notes today after scouring the available notes for hours upon hours. My fund transfer finally completed and I was surprised to see a few extra cents in my account. Apparently LendingClub debits less than a dollar from your bank account to confirm that the account is yours. You enter the amount you see on their website and then your bank account becomes linked. They deposit the money back though!

There really weren’t that many notes on the trading platform that I was interested in. I have extremely particular requirements, though they are subject to change as I learn more about the market that I am in. There was a moment, towards the middle of my research, where I decided to open up some of the most grossly delinquent loans just to see what their descriptions looked like. I had pictured bad spelling, little information, and high revolving debt amounts. I was horrified to see that many of them would have been the types of notes that I would have invested in!

All it takes for someone with great credit to default on a loan is job loss or an unexpected emergency. For example, I saw a note where the borrower had a few thousand dollars in recurring debt, a $6,000 a month confirmed salary, and a LendingClub loan payment of $300 a month. Under normal circumstances, a 5% payment would be easy. This note is now multiple months late and a collection agency has taken over. Needless to say, this note was listed at pennies on the dollar and I wouldn’t touch it with a 10 foot pole.

In true engineering form, I made a spreadsheet of the notes that I purchased today. If all goes well and there are no defaults, my percentage gain will be 9.4%. That is just slightly off the 9.6% average that LendingClub advertises.

I’ll go into the strategies that I am using once I become more invested. Right now I am only slightly invested and am mostly still in cash.

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Categories: Investing, LendingClub
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