Entries from February 2008 ↓
February 14th, 2008 — Prosper.com, Strategy, Tools
With the release of the monthly statements I can update my Prosper Quicken ROI (Lending Club where is my statement?).
So first let me say that I was expecting to have to default over $300 in principal last month do to the New Agency Test to which I opted in. Prosper has not yet marked those loan defaulted and as such my Quicken ROI was fairly uneventful this month with a normal month increase.
My Quicken ROI went from 10.59% on 1/1/2008 with an average loan age of 213 days to 11.22% on 2/1/2008 with an average loan age of 236 days. This is a fairly typical jump in my Quicken ROI on uneventful months. I am expecting some excitement this month. Prosper Days is just around the corner.
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February 13th, 2008 — Lending Club
Lending Club CEO Renaud Laplanche on Fox Business
Lending Club: Signup via this link and receive a $25 startup bonus
Thanks JD for pointing this out…
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February 13th, 2008 — Prosper.com
This week has been a great week for p2p lending news. Forbes did an article (Banking 2.0: New Capital Connections For Entrepreneurs) and Lending Club CEO Renaud Laplanche was on Power Lunch at CNBC.
I found this of interest from the Forbes article (small business loans from your local bank require a personal guarantee and you don’t personally benefit with your credit score by paying back the loan):
For entrepreneurs, these sites offer an alternative and needed source of capital.
…
The four sites–GlobeFunder, Lending Club, Zopa and Prosper–each estimate that approximately 20% of the loans they handle are for businesses.
“It’s not going to replace traditional bank lending anytime soon, but it will be an alternative for some,” says Dr. Thomas Meyer, an economist at Deutsche Bank Research in Frankfurt, Germany, and author of a research note on person-to-person online lending. “It certainly won’t relieve the entire credit crunch in the private sector because it’s a huge difference in magnitude, but it is a growing niche.”
For small businesses that often get burned by bank credit scoring models, these sites can help ease the pain with straightforward approvals for relatively small loans.
“Traditionally, you could not get small business financing from banks until you had two to five years of financials to present to them,” says Patrick Gannon, a senior vice president at Lending Club and a former executive at Wells Fargo’s small business division. A person-to-person lending site, he says, “creates an opportunity for new business owners or someone with a business idea to pursue that entrepreneurial dream and get it financed by people who find it intriguing or the person’s credit history to be good enough that people will take a risk on them.”
And as for the Power Lunch interview… I think it is great to get coverage of the p2p lending space… I think the p2p loans as compared to CC question was a softball that could have been hit harder, but other than that it was excellent. P2P lending companies offer better rates to borrowers than non teaser rate CC AND unsecured loans from your bank.
If you want to try Lending Club or Prosper I encourage you to use the following links to sign up and receive a startup bonus.
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February 12th, 2008 — Listing Review, Prosper.com, Statistics, Strategy, Tools
With my recent loan on Prosper I tried to keep an eye out for interesting stories along the way. In this case I found something I didn’t like as a lender… Prosper explicitly told me not to put up a 25K listing.
As a lender and data junkie I have known for some time that loans asking for the entire $25,000 are riskier than loans asking for $20,000-24,900. That is, listings for $25,000 are more likely to go late and eventually default than loans for slightly less. Intuitively it makes sense that a larger loan should carry a slight risk premium just based on the larger loan amount, but people asking for the maximum a much more likely to be late and default. Asking for the maximum shows desperation and need. Desperate people in need are a higher risk.
I think Prosper should do everything it can to maximize it’s loan volume, but it should not put lipstick on pigs. By coaching borrowers to avoid this red flag of $25,000 they are obfuscating risk…
How did they steer me away from $25,000? See the screen print, specifically the yellow information box.
From a lender’s perspective this makes $24,000 the new $25,000. Lenders adjust accordingly.
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February 11th, 2008 — SEO, Site Review, Site Statistics
February 8th, 2008 — Listing Review, Prosper.com
So my loan on Prosper closed at a final rate of 9%. What was my social capital worth? Did being a known quantity in the Prosper community help?
To start with I decided to try and measure the average loan rate and standard deviation…
I used the ProProsper Loan Rate Analyzer to look at loans on Prosper in the last 120 days with AA credit grade, DTI from 0%-33%, and amounts from 15K to 25K.
| # Loans |
AVG Amt |
WTAVG Dti |
WTAVG Rate |
WTAVG - ST DEV |
STDEV Rate |
| 104 |
$20,900 |
19.7% |
11.51% |
8.99% |
2.53% |
So if the final loan rates are evenly distributed my loan was within 1 standard deviation. Which would mean that my social capital did not effect the final rate more than normal…
However, I think the final loan rate is not distributed on a standard bell cure. In stead I choose to claim that my social capital was worth 2.5% or the difference between the weighted average and my rate…
What do you think?
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February 7th, 2008 — Prosper.com, Statistics, Tools
The percentage is the amount of money 1 month late or worse versus the amount of money originated. The horizontal axis is the days past origination.
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February 6th, 2008 — Listing Review, Prosper.com
Now is your last chance to get a portion of the RateLadder loan request. The auction ends at ~10:50am pst. Don’t miss out on this one. 
$25 Bonus For New Lenders
How to Use Prosper Listing Widget for MySpace, Blog, Website, or Other
February 5th, 2008 — Carnivals
The p2p lending online evolution is gaining steam. And the carnival of p2p lending is on the 3rd edition.
Editor’s Pick:
Ben presents Why Borrow from a Bank when you can Prosper? posted at Money Smart Life.
Here are the rest grouped by major marketplace:
Prosper:
Cash Money Life presents Prosper - The Ebay of Person to Person Lending posted at Cash Money Life.
Amanda (Me vs Debt) presents Prosper Debt Consolidation Loan - Tips for Potential Borrowers posted at Me vs Debt.
RateLadder presents 5 Tips for Managing your Active Listing posted at Rate Ladder.
(This is probably the weakest of all the articles that made the cut… only tangentially related to p2p lending through the Prosper referral program.) Living Off Dividends presents How I made $1921.11 In Passive Income Last Month posted at Living Off Dividends.
Lending Club:
Jason presents Extensive Lending Club Review with screen shots posted at The Amatureist Financial Journey.
rocketc presents My foray into peer to peer lending posted at rocket finance.
Lazy Man presents Lending Club Gets a Makeover posted at Lazy Man and Money.
General:
Patrick presents What is Peer to Peer Lending? posted at Cash Money Life.
Prosper Blog presents How to Determine How Much of Your Portfolio Should be Allocated to Peer-to-Peer Lending posted at The Prosper Blog.
I want to thank everyone who participated in sending in an article. For those looking submit an article for the next edition, you can do so here.
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February 5th, 2008 — Features, Listing Review, Prosper.com, Statistics, Strategy, Tools
My Prosper Listing has 1 day left in the auction. I reached 100% funding late afternoon last Wednesday. Today is the final day to bid on my loan request. Short of an Act of God this loan is as safe as they come.
My listing fell into the the conservative portfolio plan standing order #2 whose criteria is AA, not automatic funding, 0 current delinquencies, 0-1 inquiries in last 6 months, loan amount >= $10,000, debt to income ratio <= 40%, and 0 public records in the last 10 years. The plan will bid a rate of 10.5% on loans matching the criteria for lenders with cash and other portfolio balancing considerations.
My loan was 100% funded an my rate was bid down to 10.5% in ~ 4 full days. So the portfolio plan had 4 full days in which to add unique bidders onto my loan. Many bids and for what amount were placed by the portfolio plans?
It is impossible to say precisely, but I can tell you how many people bid at 10.5% and I think it is fair to say 90% (maybe more) where from the conservative portfolio plan. In total, I had 193 bids for a total amount of $12,872.87 (~$67 per bid). If 90% of those were from Portfolio Plan bids then 174 bids for $11,658 dollars were from Portfolio Plans. That is a lot of lending and pricing power. (For a full chart of all the bids on my listing grouped by rate bid as of last night please see below.)
$25 Bonus For New Lenders
How to Use Prosper Listing Widget for MySpace, Blog, Website, or Other
I used this code on ProProsper to obtain the data for my listing
select b.MinimumRate as 'Rate Bid', count(b.[key]) as ‘Number of Bids’, sum(b.amount) as ‘Amount Bid’
from listing l inner join bid b on b.listingkey=l.[key]
where listingnumber=272047
group by b.MinimumRate
order by count(b.[key]) desc
| Rate Bid |
Number of Bids |
Amount Bid |
| null |
196 |
24096.4700 |
| 0.105 |
193 |
12872.8700 |
| 0.1223 |
19 |
1356.5900 |
| 0.11 |
15 |
1062.9300 |
| 0.12 |
13 |
1250.0000 |
| 0.115 |
4 |
201.3700 |
| 0.1045 |
4 |
525.0000 |
| 0.104 |
3 |
151.6200 |
| 0.1102 |
3 |
1200.0000 |
| 0.1202 |
3 |
450.0000 |
| 0.1125 |
3 |
226.6200 |
| 0.1035 |
2 |
249.2900 |
| 0.119 |
2 |
510.0000 |
| 0.1105 |
2 |
101.6200 |
| 0.111 |
2 |
100.0000 |
| 0.1025 |
2 |
250.0000 |
| 0.103 |
1 |
50.0000 |
| 0.1033 |
1 |
100.0000 |
| 0.1042 |
1 |
50.0000 |
| 0.1049 |
1 |
50.0000 |
| 0.1111 |
1 |
50.0000 |
| 0.1075 |
1 |
50.0000 |
| 0.1077 |
1 |
80.0000 |
| 0.109 |
1 |
50.0000 |
| 0.1193 |
1 |
65.0200 |
| 0.1195 |
1 |
50.0000 |
| 0.1199 |
1 |
50.0000 |
| 0.1169 |
1 |
50.0000 |
| 0.1175 |
1 |
100.0000 |
| 0.1185 |
1 |
50.0000 |
| 0.1149 |
1 |
500.0000 |
| 0.1207 |
1 |
50.0000 |
| 0.121 |
1 |
50.0000 |
| 0.1213 |
1 |
200.0000 |
| 0.122 |
1 |
50.0000 |
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