What are the Default Rates with Lending Club and Prosper?

…..

One last point to make about defaults. The longer a loan goes without defaulting the better off you will be. For example, if you have invested $25 in a loan that defaults after 18 months you will not lose your entire $25 investment. You will have received principal and interest payments for 13 or 14 months, so your total loss will only be around $13 – $15 depending on the interest rate. So this will have less of an impact on your net annualized return.

I intend to keep a watch on this portfolio of loans from 2009-10. I will report back on the defaults (both actual and my estimated calculation) on a monthly basis to see how they are going. My goal here is to report the facts as they are. I believe that p2p lending is a great investment, but there is a risk of defaults. It is best if investors come in fully informed as to those risks and not be disappointed a year or two into their investment.

Read more

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: