Any other peer-to-peer lenders?

[ClearSky_CalmSeas]

I've been investing in one of the larger peer-to-peer lending sites since 2017. I'm not naming it because I don't want this to seem like I'm advertising for them, I am simply interested in other peoples' experience.

At first I was investing fun money, seeing what it was about, but I was consistently getting good returns so I found myself investing more and more until I was up to $20K. I never invest more than $25 per loan. At first I individually chose every loan and was very particular - they had to have a low debt to income ratio, I only invested in debt consolidation loans (never for new purchases) and 90% were in grade B or above. I preferred to loan to teachers, nurses, professionals. But as my balance grew I had to switch to auto-reinvest because it was too much work to select individual loans as the repayments flowed in so I had less control over the loans other than risk rating and term (# of years).

When COVID hit and I saw the huge unemployment impact I thought for sure I was going to lose a lot in defaults. I switched off auto-reinvest in early March and have been withdrawing all the cash as it builds up. Surprisingly, I currently only have 2% of my 900+ loans in late status.

Is anyone else a peer-to-peer lender and what have you experienced since the COVID crisis? Have you seen an increase in defaults?

 

[DrRoy]

I put $5K into one about 6 years ago. I had screening criteria and did $50/loan. The first couple years I was getting about 6% return, which was better than I could do elsewhere for fixed income. There were always a few defaults here and there. Then one year I only made a little over 2% due to defaults, and I figured if a recession hit it could be quite bad, so I started withdrawing the cash from payouts. Also, IG bond yields had improved. I am now down to $600. I was surprised to not see a rise in defaults with covid, but I am still fine with tapering out.

 

[donheff]

I didn't do it as an investment but have loaned about a thousand dollars through Kiva. Kiva is an international nonprofit, founded in 2005 in San Francisco, with a mission to expand financial access to help underserved communities thrive. You make micro loans to help people start businesses, etc. and as the loans get paid back you reinvest with other people. Now that the increased standard deduction has made charitable deductions out of reach for most of us this is an attractive way to help out. The investment stories are very compelling.

The relevance to this thread is that Kiva has a rate of repayment of about 97%. These third world people work hard and repay their loans.

 

[nobody]

I do peer to peer with real estate, minimum is $1000 per property with peerstreet. I've been getting about 7% on the money there. This last year I am seeing a rise in the loans being defaulted, when that happens so far I don't get my monthly interest but once the property gets resold I get the back interest and my principal. If anybody is interested let me know and I can refer you to get a bump.

 

[pb4uski]

Just wondering out loud... if interest rates end up going negative this might be a great alternative to negative interest rates for at least some of your fixed income portfolio.

 

[ClearSky_CalmSeas]

Just wondering out loud... if interest rates end up going negative this might be a great alternative to negative interest rates for at least some of your fixed income portfolio.

That's what we were thinking right before COVID. We stopped reinvesting in t-bills when the rates dropped so we had extra cash and were thinking of putting a big chunk into Prosper where I've been consistently getting @ 5.5%. COVID changed our minds about that. It's possible that with the unemployment assistance the negative impact has been delayed and I'll start to see more defaults coming up.

 

[Austin704]

I've put $2500 into Lending Club just to see how the investment performs. This is a tricky time since lenders have a difficult (perhaps impossible) task knowing who might be a credit risk as the economy continues to struggle with Covid. Lending Club tightened their credit standards earlier this year. I am auto-investing and almost all my initial investment has been allocated at $25 per loan. I turned off auto-reinvest and chose to leave it off until I see how this bet plays out. One thing I can say for sure--while the returns might prove to be good, this is a 24-36 month commitment as the loans pay back. So you have to be willing to sideline your money for awhile.

 

[JDARNELL]

I did it a few years back and have let my loans run out. Return is 6.82% after write offs the last decade.

 

[Wille]

I invested $8K 4 years ago in both Lending Club and Prosper. They started out at ~10% returns, but now are 4%-5%. I am liquidating these and moving the money into bond funds. The challenge that I see is that you are locked in for years with the loans and the returns have diminished significantly.

 

[JDARNELL]

I invested $8K 4 years ago in both Lending Club and Prosper. They started out at ~10% returns, but now are 4%-5%. I am liquidating these and moving the money into bond funds. The challenge that I see is that you are locked in for years with the loans and the returns have diminished significantly.

Yep that is what I see also this the reason for my liquidation also.

 

[racy]

We have some money invested in trust deeds (farm loans) and also in real estate bridge loans.

 

[SumDay]

I inherited Promissory Notes from my parents. Does that count?

They passed during the great recession, and 6 of the 8 defaulted and I chose to get rid of the less than desirable properties. I still have two left, and we've settled into a nice routine. One note is 7% and the other is 0% as I took pity on the buyer. And I want it paid off ASAP.

 

[Sunset]

I inherited Promissory Notes from my parents. Does that count?

They passed during the great recession, and 6 of the 8 defaulted and I chose to get rid of the less than desirable properties. I still have two left, and we've settled into a nice routine. One note is 7% and the other is 0% as I took pity on the buyer. And I want it paid off ASAP.

If you gave me a 0% promissory note, I'd pay it off within 300 years

 

[RenoJay]

I had done $250k each at Prosper and LendingClub which was enough to get me a “representative” at LC. He promised 9% returns, but over the five years that I held the loans, it ended up being more like 6% and the 1099 I had to include with taxes was like 50 pages! At Prosper I did a little better at around 7%. I’m no longer interested in unsecured loans; many people don’t seem to care enough about their credit score to prioritize unsecured lenders. I want real collateral.

 

[Onward]

I've been investing in Lending Club and Prosper pretty much since the beginning. Many hundreds of loans, possibly thousands. I spent a great deal of time researching and implementing "optimal" investment strategies on the platforms.

The long-term annual returns at both (5-6%) have been a big disappointment vs. the original promise. The whole p2p-lending "experiment" has been a big disappointment for me and everyone else I've heard discuss it.

Tax-wise it's lousy because the many capital losses (from defaults) can't be used to directly offset the interest income from loans that are current.

I quit investing some yrs ago when Lending Club & its CEO got caught with their morals down.

Now I'm just waiting for the few straggler loans to mature.