Author Topic: LC just increased loan limit from 35k to 40k  (Read 5536 times)

Ran

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LC just increased loan limit from 35k to 40k
« on: March 04, 2016, 05:33:49 PM »
Nice move

hzhou9

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Re: LC just increased loan limit from 35k to 40k
« Reply #1 on: March 04, 2016, 06:09:37 PM »
Why is this good :)?

Small Fish Big Pond

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Re: LC just increased loan limit from 35k to 40k
« Reply #2 on: March 05, 2016, 12:47:44 PM »
+1 Don't see any sense to it, unless LC is going to market it against Prosper? Anybody have any data how on many loans are 35k now?

yojoakak

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Re: LC just increased loan limit from 35k to 40k
« Reply #3 on: March 05, 2016, 01:15:35 PM »
Inflation, yo!

Thanks NObama.

SeanMCA

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Re: LC just increased loan limit from 35k to 40k
« Reply #4 on: March 05, 2016, 05:47:20 PM »
I feel like the higher this number goes up, the higher the temptation to become a straight roller.  Wiring 40 grand to someone's bank account with no collateral... and with Lending Club having no skin in the game.  :o I don't know. I already didn't like 35k that much even if statistics show that borrowers on that level have performed well. 40k is starting to push it. If Lending Club were sending all of the proceeds to the outstanding creditors, that's one thing but 40k straight into a bank account. Wow!
I'm a merchant cash advance veteran exploring the p2p lending waters.

Fred93

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Re: LC just increased loan limit from 35k to 40k
« Reply #5 on: March 05, 2016, 06:09:05 PM »
I feel like the higher this number goes up, the higher the temptation to become a straight roller.  Wiring 40 grand to someone's bank account with no collateral... and with Lending Club having no skin in the game.  :o I don't know. I already didn't like 35k that much even if statistics show that borrowers on that level have performed well.

The data shows that return is ok on large LC loans.  Of course that return calculation does already consider the effect of those straight rollers and their siblings and cousins as well. 

We don't know why, but then we never know why.  I believe that LC applies different criteria as the loan amount increases.  Whatever they do, it seems that they do it well.

35k loans have done fine.  Therefore, it is reasonable to believe that 40k loans will perform similarly. 

Going from 35k to 40k is only a 17% increase.  Seems like a conservative and reasonable change.


Seems

PhilGD

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Re: LC just increased loan limit from 35k to 40k
« Reply #6 on: March 05, 2016, 08:08:49 PM »
Has Lending Club previously offered loans larger than 35k as part of their "policy 2" program?

I wonder how they adjust their underwriting when they roll out a new product like this. Presumably there isn't much historical data out there on >35k personal loans.

Fred

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Re: LC just increased loan limit from 35k to 40k
« Reply #7 on: March 06, 2016, 08:40:19 PM »
The 35k loans being more likely to default is anecdotal.

Below are some statistics of loans by their original amount, and the percentages of the amount bracket to be charged-off.

Seems loans in the [26,000.01-27k] bracket is the most likely to charge off; while the [34k-35k] bracket is among the least likely.


Small Fish Big Pond

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Re: LC just increased loan limit from 35k to 40k
« Reply #8 on: March 06, 2016, 08:58:36 PM »
The 35k loans being more likely to default is anecdotal.

Below are some statistics of loans by their original camping, and the percentages of the amount bracket to be charged-off.

Seems loans in the [26,000.01-27k] bracket is the most likely to charge off; while the [34k-35k] bracket is among the least likely.




With those stats I can see why LC is raising the limit. Does LC require higher standards with the 35k's?

Rob L

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Re: LC just increased loan limit from 35k to 40k
« Reply #9 on: March 06, 2016, 09:53:28 PM »
Cherry picking loans that are an even multiple of $5,000 looks pretty good.
Bryce recently noted in another thread that univariate analysis alone was pretty worthless.
Of course you gotta do it in the first place to select a set of parameters for your model.
That said, I wonder if this $5k multiple parameter as a model factor would make any significant improvement to the model performance.
Perhaps some models yes and others no. Your mileage will vary.

Fred

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Re: LC just increased loan limit from 35k to 40k
« Reply #10 on: March 06, 2016, 11:29:37 PM »
Cherry picking loans that are an even multiple of $5,000 looks pretty good.

If you are referring to my table, my "single-variate analysis" was in multiples of $1000, not $5000. ;-)

Single-variate analysis is essentially one of the fundamental economic principles: Ceteris Paribus

It is also a good way to test the hypothesis:

H0: 35k loans are more likely to default than other amounts.

Rob L

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Re: LC just increased loan limit from 35k to 40k
« Reply #11 on: March 07, 2016, 10:33:17 AM »
Cherry picking loans that are an even multiple of $5,000 looks pretty good.
If you are referring to my table, my "single-variate analysis" was in multiples of $1000, not $5000. ;-)

Nah. I was using your table but "cherry picking the "$5,000 multiples" was my own observation.
The lack of value comment was directed at conditions not Ceteris Paribus (i.e. testing on a subset of loans selected by a model, not all loans).
A model may have already captured factors that render this observation redundant (not of value), or not.
The only way to know is to add it to the model and test it, and the only way to know about it in the first place is univariate analysis.

« Last Edit: March 07, 2016, 11:17:44 AM by Rob L »

thezfunk

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Re: LC just increased loan limit from 35k to 40k
« Reply #12 on: March 07, 2016, 11:04:57 AM »
I bet they are trying to stay competitive by matching offerings such as:

http://www.homedepot.com/c/Project_Loan

and
http://www.greenskycredit.com/

Fred

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Re: LC just increased loan limit from 35k to 40k
« Reply #13 on: March 08, 2016, 03:18:23 AM »
The lack of value comment was directed at conditions not Ceteris Paribus (i.e. testing on a subset of loans selected by a model, not all loans).

The table was derived from the latest payment data, which includes all ~880,000 loans in LC's platform, past and present. ;)

Lovinglifestyle

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Re: LC just increased loan limit from 35k to 40k
« Reply #14 on: March 08, 2016, 11:11:55 AM »
Thank you, Fred, for the table.  It's a handy reference!