Account Balance

[thezinfan]

Hi,

Question about account balance of LC investors. Even on days where I don't have any changes in loans-in-funding, I notice that my balance is higher in the morning than the evening . Do they process payments, then later in the day reduce accrued interest balance? (account balance = available cash + in-funding-notes + Outstanding Principal + Accrued Interest)

Thanks,

Larry

[DiligentiaLLC]

Larry, while I know that your post is about LC, I thought you might be interested to know that Prosper has a similar phenomenon where your balance can be incorrect for 24 business hours.  I submitted a guest/commentary article to Peter on this very topic and it explains where & why this takes place.  I wouldn't be surprised if LC has a similar situation/problem.

As soon as Peter publishes it to the front page (of SocialLending.net) you can read more about it.

Food for thought,
Chris

[Peter]

I am still looking into this and hope to have something on the blog about it soon. Stay tuned...

[Newlyfrugal]

I invested in LC in Sept 2010 and now have 301 loans.  When I log on to my account in the a.m, nothing happens to my cash available amount.  By 2 pm CT, I notice that LC withdraws some money, as shown in "pending withdrawals."  By 4 pm CT each day, my "available cash" begins to increase in increments.  I don't know exactly when the available cash stops increasing each day, but I have seen increases added to my account as late as 10 pm CT.  Does everyone else have the same experience?

[yojoakak]

I've seen the same thing happen.

Here's my guess:

LendingClub processes payments all day.

As the payments come in they deduct their "1% fee" from your account.

Around 5pm Eastern time they start crediting your account with the payments, which goes on until until the wee hours of the morning (although probably just midnight in California.) Where it stops, nobody knows.


(Of course when a loan goes into default, that entire amount gets deducted from your total, but that hopefully doesn't happen everyday.)

[Peter]

Sounds like a reasonable explanation. I am still working on getting a clear confirmation on this issue.

[Newlyfrugal]

I asked Lending Club about when they pay accrued interest to my account.   They replied:


"Thank you for your e-mail. You will receive payments in accordance with the payment due date on the loan. For example, if you own a note that has a payment due date of 2/27/12, the payment will be pulled on that date and the accrued interest for that individual note drops to zero. The payment will take 4 business days to process. After those 4 business days have passed, the payment will post to your account as principal and interest received. Since you own portions of multiple loans, these payments are processed through out the month, which causes the values to fluctuate.  Please let us know if your have any other questions or concerns."

The red highlighting is mine.  Can someone explain to me what this highlighted area means?  When the accrued interest for that individual note drops to zero, does LC add that interest to my "cash available?"

[Peter]

"Thank you for your e-mail. You will receive payments in accordance with the payment due date on the loan. For example, if you own a note that has a payment due date of 2/27/12, the payment will be pulled on that date and the accrued interest for that individual note drops to zero. The payment will take 4 business days to process. After those 4 business days have passed, the payment will post to your account as principal and interest received. Since you own portions of multiple loans, these payments are processed through out the month, which causes the values to fluctuate.  Please let us know if your have any other questions or concerns."

The red highlighting is mine.  Can someone explain to me what this highlighted area means?  When the accrued interest for that individual note drops to zero, does LC add that interest to my "cash available?"

First let me explain what your highlighted text means. You see on your Account Screen an Accrued Interest amount. This accrued interest amount increases each day and then when a payment is received that accrued interest is reduced and the amount is moved to your cash account.

What Lending Club don't say and the reason that an account will go down in value occasionally is because of fees. Sometimes they will take out the fee a few hours before the payment posts to your account, in which case you will see your account go down a few cents. By the end of the day your account should have all the payments in there and you will have a higher balance (assuming no defaults).

[Newlyfrugal]

Thank you, Peter, that makes sense.  I appreciate the time and effort that you put into the forum and blog.