Comments on: Lending Club and Prosper Rate Differential: Opportunity or Not?

By: Make Friends, Earn Money

Make Friends, Earn Money — Fri, 04 Apr 2008 18:48:10 +0000

Pinyo I really liked this comparison, thought it summed both sites up nicely and must have taken a while to compare

By: Jason

Jason — Wed, 16 Jan 2008 18:50:35 +0000

For a better comparison, look at the actual average rates in prosper, rather than the max. I don’t know of any loan that went for the max.

By: Pinyo

Pinyo — Tue, 15 Jan 2008 13:41:34 +0000

Cairan – Thanks. I think P2P lending is not mature enough for professional recommendations yet, but I think it eventually could be.

According to the statistics here:

http://www.lendingstats.com/

There are lenders that have nearly $1 million invested in Prosper. I suspect these are organizations that manage the money as part of a larger portfolio for their clients.

By: CiaranFromChance

CiaranFromChance — Tue, 15 Jan 2008 02:08:37 +0000

Good post. This is very interesting stuff. I especially like the part about the potential arbitrage scenario, that’s what it is at the end of the day.

But I think your reasoning is solid, a window like that tends to close fast, that’s why you have to act fast and in an illiquid marketplace (like this) you can also get stuck.

This is all very interesting, i may have a new non correlated investment for clients to further diversify their portfolios, not really, but who knows down the line.

I noticed you guys all talking about $50 here, $100 there. Are there lenders with ten’s of thousands outstanding? or is it still in it’s infancy?

By: Pinyo

Pinyo — Tue, 15 Jan 2008 01:24:39 +0000

@Claus – welcome to Moolanomy. Thank you. I don’t intend to borrow and reinvest any time soon (if ever). I think the spread is too thin. That defaults rate is alarming. I will have to take a look.

@RateLadder – After looking at the chart, I reached similar conclusion as well. Otherwise, the differential doesn’t make sense.

@WealthBoy – Good advice. I would go a step further and say, don’t invest in P2P unless you are already well diversified in more traditional investment vehicles.

By: WealthBoy

WealthBoy — Mon, 14 Jan 2008 17:38:56 +0000

If you are lending on any of the peer-to-peer lending sites, I think it is a good idea to allow your portfolio to mature considerably before investing borrowed funds. Investing on margin is a good way to enhance returns, but you better be sure that your return is higher than the interest rate you pay on any borrowed funds. I think you should probably wait until your portfolio is at least 18 months old to get a good idea as to what your total return is before you borrow any money to lend.

By: RateLadder

RateLadder — Mon, 14 Jan 2008 15:49:19 +0000

Be careful… A “E/F/G” on Lending club is a “C” on Prosper.

By: Claus @ P2P-Banking.com

Claus @ P2P-Banking.com — Mon, 14 Jan 2008 14:22:20 +0000

Hi Pinyo,

For the reasons already stated in the “Borrowing money to lend on Prosper: Wise or Foolish?” post in my opinion borrowing money to lend at Prosper would not be a good idea.

Overall defaults for older loans on Prosper are reaching an average close to 20% as stats on ericscc and lendingstats show