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P2P Bubble Bursts? LendingClub Stock Plummets

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joltdude
Senior Contributor

P2P Bubble Bursts? LendingClub Stock Plummets

Saw this online and interesting how LC is having issues with the bottom dropping out...

https://t.co/5FVkiqTnrz

Message 1 of 5
4 REPLIES 4
CreditMagic7
Mega Contributor

Re: P2P Bubble Bursts? LendingClub Stock Plummets

I was about to open a new topic on this when i found out. Glad somebody got this up.

 

Wonder what happens next?

 

LendingClub Plunges

 

http://www.bloomberg.com/news/articles/2016-05-09/lendingclub-plunges-after-ceo-quits-firm-finds-loa...

Message 2 of 5
Imperfectfuture
Super Contributor

Re: P2P Bubble Bursts? LendingClub Stock Plummets


@joltdude wrote:

Saw this online and interesting how LC is having issues with the bottom dropping out...

https://t.co/5FVkiqTnrz


LOL, love the "rarely just one cockroach".  Interesting, raising rates for slowdown in economy.  Wonder if same data used by banks, and seeing the tightening up.  Now is good time to garden (and keep a BT card around, just in case it becomes very difficult to consolidate debt).

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Message 3 of 5
RonM21
Valued Contributor

Re: P2P Bubble Bursts? LendingClub Stock Plummets

To think before I learned about these forums, I took a look at them.


Total CL: $321.7kUTL: 2%AAoA: 7.0yrsBaddies: 0Other: Lease, Loan, *No Mortgage, All Inq's from Jun '20 Car Shopping

BoA-55k | NFCU-45k | AMEX-42k | DISC-40.6k | PENFED-38.4k | LOWES-35k | ALLIANT-25k | CITI-15.7k | BARCLAYS-15k | CHASE-10k

Message 4 of 5
Anonymous
Not applicable

Re: P2P Bubble Bursts? LendingClub Stock Plummets


@joltdude wrote:

Saw this online and interesting how LC is having issues with the bottom dropping out...

https://t.co/5FVkiqTnrz


I'm honestly not surprised by this.  I first got involved in P2P lending almost 3 years ago and I have an account with LC.  I stopped investing additional funds a little over a year ago when LC made considerable changes to the platform.  Before the changes I was rocking a 12% return with no defaults.  I had it down to a science.  Then they changed how much data I could see about a borrower.  The most critical change was concealing the borrowers location.  One of the questions I'd pose to a credit application was "If this person lost their job in a month or a year were they in a location where they could find work again?".  They then also started changing what info you'd see about a borrowers occupation.  Another critical piece of information, especially since less than 4% of college grads and professionals are unemployed.

 

I presumed the vast majority of people want to pay their debts.  Expanding on that, a person would only stop paying if they stopped working.  LC kept pushing their internal rating model and claiming it was better at assessing risk.  Since the platform change, a little more than half the investments I made defaulted dropping my rate of return to 8%.  The rate of return is actually FAR lower.  What LC doesn't make transparent is just how costly their fees are.  They take 1% of the payment investors receive, each time a payment is made.  Doesn't sound like much does it?  Well, that payment is principal plus interest, then LC takes it's cut.  I've been screwed by borrowers repaying the loan in full in less than a year.  Not to mention the vast majority of the loans I have maturing are 0 profit.  You only get a few pennies of interest for the last year of a loan, and LC always takes at least 1 cent.  15% of my portfolio stopped being profitable about half a year ago.

 

I've been crossing my fingers just trying to ride out the remaining loans.  The problems at LC go deeper than is generally known, you'd have to be an investor to really get a feel for how LC screws not just the borrower, but the investor as well.

Message 5 of 5
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