It has been 6 months since I got my first payment from a borrower on Lending Club. It is going relatively well, although just last Friday I had my first charge off. After making a whopping ONE payment the borrower stopped paying, eventually filing for Chapter 7 bankruptcy and leaving me without $24.38 in principal. I don’t know what in the loan profile should have tipped me off, if anything. Good verified income, a long term job, a mortgage, but also a delinquency about 4 years back and a lot of credit lines. I had several other loans lapse into late payments before catching back up, so I’ve currently got no late notes.
With $212 in interest, less the $24 just mentioned and the $8 in fees I’m up $180 on my deposits of $3200. Lending Club tells me that is an Adjusted Net Annualized Return of about 14.3%. I wish they would give you an estimated total return based on all the notes you currently have, sort of like they do when you place an order. I can see my weighted average rate of 15.8%, which I guess would be what I would get if no one defaulted, and I know my current return, I just don’t have a very good idea of what to expect, except I’m sure that my overall return will probably fall. When shopping for notes I try to keep that average around 16% with a range of notes from A to G grade, in a self-managed bell curve of sorts.