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Messages - jz451

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61
When you say dealer do you mean an auto dealer? Basically any loan w/ collateral are with cars that are paid off or have value left over to cover the loan, or in LCs case at least a good portion.It would be in LCs interest to turn to collateralization to recoup some of the investor fees lost from loans charged off and keep investors happy.
Since I temporarily work at a loan company at a branch, I can say that the process is pretty easy for loans w/ collateral with only a few extra steps added. Basically pictures are taken of the car for proof of milage and condition and obtaining the title to transfer title of the vehicle. All underwriting is done at headquarters so cost is centralized. Filing this paperwork should not add any significant cost to the application process.
Every bank on every street corner does the sort of lending you describe. But they have loan officers and back office staff devoted to the underwriting, collateral, filing uccs, doing collateral inspections, etc. But the difference is they are balance sheet lenders not trying to make every loan identical. But for an assembly line model, like mortgage or consumer credit, these sort of modifications make the efficiency ratio , price per loan produced, and defect rate all increase. At least that is what I'd suspect. Someone may figure it out

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You're talking about cars. A peer lender could certainly be an indirect auto funder in theory. Again, if it's homogeneous it's easy. But indirect auto likely wouldn't work because dealers wouldn't put up with changing dollars available for funding based on sentiment. They want constant credit availability.  Collateral of a car vs a house is extremely different proposition. 

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62
Since I temporarily work at a loan company at a branch, I can say that the process is pretty easy for loans w/ collateral with only a few extra steps added. Basically pictures are taken of the car for proof of milage and condition and obtaining the title to transfer title of the vehicle. All underwriting is done at headquarters so cost is centralized. Filing this paperwork should not add any significant cost to the application process.
Every bank on every street corner does the sort of lending you describe. But they have loan officers and back office staff devoted to the underwriting, collateral, filing uccs, doing collateral inspections, etc. But the difference is they are balance sheet lenders not trying to make every loan identical. But for an assembly line model, like mortgage or consumer credit, these sort of modifications make the efficiency ratio , price per loan produced, and defect rate all increase. At least that is what I'd suspect. Someone may figure it out

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63
GS is going to do this in close loop. Take in online depot, lend it out online as unsecured consumer loan. Then bundle those loans together, secutized then sell them in the ABS market. Every single step GS can do it alone. Plus they are FDIC insured bank with stable funding. A natural question to ask is what competitive advantage LC has that GS does not or cannot build over time? I can find none at the moment.

You could say that as well for LC vs the brick and mortar loan companies like Springleaf which I currently work for temporarily. Comparatively LC has lower rates since I routinely see 30%+ loans all day long and wonder how they get away with it when cheaper options are available.

As to comparing vs GS, LC is a P2P platform so it's more democratic in the way the returns are spread vs GS taking in all of the profits.

64
The difference is that YTM is not the same as receiving interest. There will always be interest received and LC takes their $.01/1% fee. That will always happen regardless of YTM because of the basic mathematics of amortization that interest is always accrued during each month.

The implication of the negative YTM for the last 3 payments of an A1 loan is that we lenders get $0.00 interest for all of them (presumably LC won't charge us) and LC gets less than their 1% service fee. There is simply not enough interest money from the borrower to go around. I know I've gotta be wrong about this, but someone please show me the error of my ways.

65
General Lending Club Discussion / Re: LC daily loan volume
« on: June 21, 2016, 04:10:53 PM »
Looks like the number of loans might be ticking upward after the drop from 5/1 to 6/1. The average of the moving average looks to be in the 1400-1600 range. Hopefully there will be a continued recovery in loan volume.

66
Investors - LC / Re: New Loans of the E F and G Grades
« on: June 16, 2016, 02:42:00 PM »
No he is describing his Prosper diversification. Lending Club doesn't have a AA grade.

My Adjusted Net Annualized Return is at 8.60%.  A few other investors on here claim 9-10%. With no E, F, or G loans, I will never be able to match their wonderful returns!

I have 11% NAR on my Prosper account and I'm 67% AA and A, 27% B&C, and 6% D and E.

67% and 27%? Is that on Lending Club? Please do teach us your secrets, O Great master investor!  Serious! How do you do it?
Are you suggesting I switch from Lending Club to Proper???????

 ;D ;) ;) ;) ;)

67
There is no secret sauce to be honest. It's just like any other investment where you continually put money in and let it grow over time. That might mean putting in an initial $10,000 and continuously adding like $500 or something every month, reinvesting the payments and letting the interest.

Just like any other investment you have to research what you want. You have to determine your risk tolerance and buy notes up to your threshold loan grade. The best thing to do is go to NSRplatform and Peercube to analyze the different charts offered and backtest different filter strategies you might have in mind. Automated investing options are available that select notes based on filters you make using LCs own service, Lending Robot, or Peercube.

If you are not willing to take the time to research and analyze different filter strategies, then this is not the type of investment for you and should stick to simple mutual funds and ETFs.

68
Investors - LC / Re: You have to love Wall Street
« on: June 11, 2016, 01:42:06 AM »
I don't know but I'll have whatever they are drinking.


Here's some Wall Street insight.  (Pls don't attack me.  I'm not the guy who made either prediction.  I'm just the messenger.  I'm pretty sure that at least one of these is bonkers.)

http://www.lmkat.com/2016-06-10-fbr-co-weighs-in-on-lending-clubs-fy2016-earnings-lc/
Quote
FBR & Co. analyst B. Ramsey now forecasts that the firm will earn ($0.01) per share for the year, down from their previous forecast of $0.09. FBR & Co. currently has a “Market Perform” rating and a $4.00 target price on the stock.
...
RBC Capital started coverage on shares of Lending Club in a research note on Wednesday, March 16th. They issued an “outperform” rating and a $92.00 price objective for the company.

Edited to add: If anybody has access to that RBC report, please share with us what logic and calculations got them to that $92 number.

69
Investors - LC / Re: Lending Club Loan Demand
« on: June 10, 2016, 06:52:49 PM »
Do they even have a true cost of capital? Their stock has been down since the IPO so there is no empirical  way to determine the cost of capital.

I will chime in that it's a bad idea for LC to buy and hold notes.  If they're holding notes for 30 days or whatever as inventory so that they can sell a bundle of notes to an investor, then maybe that's ok. 

Like I said before, with LC's cost of capital probably in the teens or higher, they have no business whatsoever investing their cash in notes that earn 7-8%.  Period, end of story.

70
Investors - LC / Re: Lending Club Loan Demand
« on: June 10, 2016, 11:19:09 AM »
That's rather disheartening to read, even if they only intend to hold the loans for 30 days.

71
Investors - LC / Re: Lending Club Site is Down
« on: June 08, 2016, 10:12:00 PM »
I had the exact same thought the past hour. It's nice being one of the optimist on this forum.

72
General Lending Club Discussion / Re: Website Down
« on: June 08, 2016, 09:39:42 PM »
It appears the site is back online for the moment. I got through to the home page without the error message and able to access my account.

73
Investors - LC / Re: Lending Club Site is Down
« on: June 08, 2016, 09:38:23 PM »
It appears the site is back online at least for the moment. I got to the front page without the error message.

74
General Lending Club Discussion / Re: Will LC file for bankruptcy?
« on: June 08, 2016, 01:17:13 PM »
I highly doubt that investor's notes would be used to finance a buyout, can you imagine the class-action lawsuits that would bring? Besides the notes are so illiquid it wouldn't be worth their time and have such a long time horizon it's laughable in the case of a buyout. If a single Chinese billionaire can buy 11% of LC a group of investors can easily afford to buy the company outright.






If the board is "on board" with an RL return / leveraged buy-out, those notes sitting on the balance sheet might wind up financing it.

So, it's not entirely my "worst case greedy bastards" scenario above - I'd be wrong about how brazen and quickly they'd lever LC up - doing it all at once, rather than a slow bleed through levering up to fund their own loans.  But the net effect, absent BRV, is "similar".

Fred93 seems to think that the prospectus limits LC's ability to take on debt senior to the retail note holders, but the "seniority" of a noteholder is - even in the prospectus - very uncertainly disclaimed.  And they already have those lines open with banks - how does one explain that?  Aren't those "probably" senior to the noteholders if they draw from them?  Did they just want to open a bunch of credit lines to improve their credit score?  Strange stuff...

75
Investors - LC / Re: You have to love Wall Street
« on: June 07, 2016, 11:08:36 PM »
This hasn't even happened yet. And if a party were to buy it out, it would likely be done in cash like if I were to buy a sports team.

I hope he didn't pull it off. Usually PE buy out comes with leverage by issuing new debt. Those deb will certainly be more senior to retail note holders.

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