Sunday, November 01, 2009

Trying out the Lending Match feature of Lending Club

My Lending Club investment loan account has been on auto-pilot for some time now. All has been well since I last blogged about it in early August. All of the loan payments have been on time. In fact, enough interest and principle repayment has come in that I now have enough from those two sources alone to make a new loan. I also finally have some new work income coming in again, so I am also adding new funding for another batch of loans, the same amount as my original funding. The difference is that this time I will try out the Lending Match feature which automatically selects and recommends a batch of loans given an investment amount and a target interest rate.

The feature gives you a slider bar which displays the interest rate. As you slide between lower and higher interest rates it also displays a pie chart with the percentage breakdown of each credit risk class. I was tempted to go for 18% or even 20%, but the resulting risk profile seemed too "risky" for me. I pulled back and finally settled on 15% as an optimal risk profile for me. My current annualized return is about 13.5% and loan rates have risen by 0.5% since I made my investment loans back in June, so 15% is only a modest increment above my current risk.

Lending Match selected my nine investment loans. I wasn't comfortable with two of the recommendations, so I deselected them, and Lending Match recommended replacements that I was comfortable with. I did this on Thursday. So far, two of the nine have reached full funding and are awaiting final review by Lending Club. A third is very close to full funding. Most of the rest are progressing with funding fine, with only two or three that may be questionable as to whether they will reach full funding before their two week funding period expires.

So far, I am extremely happy with the results I have gotten with Lending Club.

I will do a few more experiments in the next couple of months, and then consider a more serious investment as long as my work income holds up and I start accumulating a little cash to invest.

-- Jack Krupansky

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