The curves are "noisy" (ie they jump up and down a lot) and are not as orderly as the curves on the prosper chart. That's because the volume of loans at Lendingclub is still too low to get really good stats.
Lets slide these curves over to a common origin, so we can visualize how common their shapes are...
Just look at where these curves crossed the 390 day line, (ie 30 days after the 360 day line, because it takes 30 days for a loan to become 1 month late) or visualize where they might cross the 390 day line as they extend, and that tells you what fraction of loans went bad in the first year. This is then an estimate of the annual default rate for Lendingclub loans.
Yipes! What you see is that these various cohorts are defaulting at rates between 9%/year and 17%/year. Conclusion: These are pretty junky loans. It seems unlikely that lenders will do well when such a large fraction of borrowers are not repaying lendingclub loans.
The best discussion among P2P lenders occurs at www.prospers.org. See you there!
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At least they look significantly better than Prosper.
ReplyDeleteWhat's the reasoning behind presenting data in this respect? You're not presenting anything useful that ppl can use to improve their return. I would find it more useful to divvy them up by credit grade or some other meaningful metric that would theoretically have a correlation with loan performance.
ReplyDeleteHi,
ReplyDeleteI'm the personal finance columnist at The Oregonian. I'm writing about peer to peer lending.
Wondering if I could talk to you about the subject. You can email me at itsonlymoneyblog@gmail.com or call me at 800-238-8195 ext. 8359.
Thanks!
Not sure what data you are using or if you understand what you are showing. First, if you are looking at delinquencies, roughly 80% of delinquencies at LC are recovered. Their A loans have had Zero defaults - nobody investing in an A loan has ever lost money. The other loans are better, in that they pay more and default proportionatly less. I have 1600 loans on LC and I am averaging 13% returns - even with the projected defaults, the trend is towards an average return of 11.5% to 12.5%.
ReplyDeleteGosh Scott, the data I am using is the data displayed on the Lendingclub web site. If you don't understand, you should reread the first few sentences of the blog entry, where I explain it fairly clearly.
ReplyDelete