Rate Ladder

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After my gripes I will reproduce the post on p2p no bank post in entirety…

  1. User must sign up in the same session… Amazon, EBay, Prosper, and many many more affiliate programs have a cookie that lasts 30 days.
  2. Any page of the lending club website (including the blog if I am wishing) should be linkable with a referral query parameter. This makes any content produced by lending club a potential hook for an affiliate.

That being said the clarifications are awesome… I really like knowing what the deal is… Stay tuned for my tomorrow’s post on how RateLadder would change lending on Lending Club.

Here is the forum post from Rob @ LC the Web Production, Director (here is a link):

Today Lending Club announced new features on their blog.

To summarize…

  1. Be both a borrower and a lender
  2. Multiple loans
  3. Weekly performance statistics
  4. Ask the borrower a question
  5. $25 both way referral program
  6. Update your profile
  7. Change bank account

I like the changes, but forgive me for yawning…

My biggest gripe as a lender (lack of an advanced credit search) has not yet been addressed… It is very hard to get you money into play on LC. (-4)

My next biggest gripe performance statistics has been minimally addressed. (+3)

My 3rd biggest gripe lack of an automatic Lending Match investment portfolio with advanced credit filtering. (-2)

(+3) for the referral program. (+2) for the $50 bounty on $1000 lenders. (-1) for only being able to link to the signup page… I would much rather be able to link to any LC page (like prosper), for example the statistics page would make an excellent referral link… But then you would have to track the cookie and there would need to be an expiration of that cookie. That being said if you want $25 for signing up at LC use this link… https://secure.lendingclub.com/refer.action?referrer=RateLadder

Overall LC upgrade score (+1).

I received a marketing email today from Prosper regarding the 100MM in loan volume. Titled: You Couldn’t Have Done It Without You. How corney is that? Essentially thanking every lender for their part is reaching 100MM in loan volume.

Here is the rest of the letter…

I think Prosper is doing some interesting things lately and Portfolio Plans are no exception…

A portfolio plan is a series of slices of data that when combined make getting into a diversified investment of Prosper loans extremely simple. There are 4 risk levels for the current plans.

  • Conservative (estimated ROI 8.37%)
  • Balanced (estimated ROI 9.14%)
  • Moderate (estimated ROI 10.39%)
  • Aggressive (estimated ROI 11.48%)

These portfolio plans are based on the slices of data… Which brings me to the ugly. There are almost certainly thin data issues. Readjustments can help, but Heisenberg rules this arena.

With the ugly out of the way on to the 1st good. Newbie small lenders. Over and over again I have watched newbie lenders come and go. They come in bid on 29% HR, get killed in defaults and leave. I would imagine that newbies will now come in and signup up for a portfolio plan. Viola! No more instant HR burnout. I think this will be very good for Prosper’s long turn growth. Pennies add to dollars. The small inexperienced lender will no longer get slaughtered. If you are new to Prosper you should strongly consider Portfolio Plans. Watch the listings you bid on. Don’t bid the loan further down if you are outbid. Learn what makes a good loan.

Now the bad. Many experienced lenders will tell you that their strategy lies within many of the slices currently employed by portfolio plans. These experienced lenders thought they had an edge and now Prosper has taken away that edge. Many will consider portfolio plans the reason they now have to look elsewhere. Large lenders will have even more issues if they stick to the portfolio plan slices.

Which brings me to the final good (so good it might be great). With the newbies locked into slices in the portfolio plans and the experienced but unwilling to adjust lenders sitting out or playing in the sandbox with the kiddies, the opportunity for large lenders and experienced nimble lenders is better than ever. Portfolio plans changed the game. In many ways they define the game. A more defined game has sharper edges. More opportunity outside of the portfolio plan slices as there is less competition. Less competition means high rates. Higher rates = higher potential ROI.

High rates can make up for a lot of sin. Perhaps a perverse example, but the former #1 lender by size (pensioner) believed almost solely in high rates. While his portfolio has taken some astronomical lates, even the notoriously fickle lending stats has him at a positive ROI (currently 2.25%).

Just read this on the forum from a formerly late borrower (Mr Deluxe)…

I like it! Seems like another positive collections step. I hope it works as well as this borrower seems to think… Plus if it works prior to actual collection I pay less fees. There is a call for a scan of the letter on the forum. If it posted I will re post…

This is a guest post from regular reader Melissa…

It may seem at times payday loans are sold as a cure-all for everyone. However, these loans are far from a cure-all and are a consumer-lending product that is targeted for a market that has very few other alternatives. The market is for people with little or no credit history, no other sources of lending, and few assets. Most bankers will have a tough time approving lending for people in this category and so payday loans offer people who have this background a chance to obtain short-term loans that are paid back on their next paycheck cycle.

The interest rates on these loans are typically higher than other sources of lending, like credit cards or installment loans. However, they are also higher risk loans for the lender since no credit check is performed. This allows people who have suffered a foreclosure or a bankruptcy to still have options to borrow, even though the rates are higher. If they show a willingness to repay these loans on time, it can be an excellent way to rebuild their credit histories while providing needed funds in the short-term. Without this industry, people who don’t qualify for conventional sources of credit would not have any other way to meet short-term losses in income.

I had noticed several days ago that several (6 out of 15 in collections to be exact) of my delinquent loans had a new agency with the name “NEW AGENCY TEST”…

Today I received the following email from Prosper…

Thanks you very much!!!! I appreciate your attempts to improve the collections at Prosper. How could anyone object to this? I am very glad they are trying.

Stephen Dubner, co-auther of Freakonomics, will be the keynote speaker at Prosper Days this year.

Described as a melding of pop culture and economics with more than 3 million copies sold worldwide. It is a collection of economic articles written by Levitt and then translated into prose meant for a wider audience.

The range of the articles is startling… from demonstrating the existence of cheating in Sumo to the reduced crime because of legalized abortion.

Prosper Days 2008 should be interesting… For more information sign up Prosper Days

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