It’s prettier and removing it may make the lender feel better in the short term, (no nasty 120+ loans to remind you of mistakes), but they take 6-9 months to actually get you the proceeds of the loan sale which is a heck of a lot longer than Prosper in most cases. Also, since they say they will credit it as extraordinary income, will they give you a breakdown so you can see how much on the dollar you got for your loan ?
It’s nice, but it doesn’t seem quite as transparent as Prosper.
I was not trying to compare to Prosper, but a comparison is inevitable…
As for accounting for the return, by splitting the way Lending Club does here is how my quicken would look.
I transferred X Dollars into LC, I bought some loans, I made some interest, I had some principal default, I made some more income.
The Return of the entire account would account for the total return of my dollars transferred in. The return on the vehicle “LendingClub Loan” would not have any extraordinary income included in the calculation…
I am not a tax expert but it seems cleaner on taxes too. Given their quiet period who knows if this is how they will continue to handle defaults in the future.
As for transparency, if they are not providing the data then they are not being transparent. How they treat the loan that is in default is irrelevant; as long as, they tell me completely transparently how all loans on an individual basis performed as they moved through the various stats of default.