Author Topic: Q&A for Borrowers  (Read 5017 times)

WES

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Q&A for Borrowers
« on: February 13, 2012, 02:36:15 PM »
Not really a question, but a comment. I usually stick to Credit Card and Debt Consolidation loans, and I compare the amount requested with revolving debt outstanding. If the interest rate differential is significant, that's a positive factor in my estimation.

Therefore, if the borrower has not provided current interest rate(s)/debt load in his Loan Description (and very few do), I generally tick that button under Q&A.

I have been somewhat amazed that the majority of the answers simply don't address the question. What I want to see is:
     Debt A $x due at x%
     Debt B $y due at y%
     Etc

What I frequently get is "pay off credit cards." Or the disclosure that the borrower is going to build up a nest egg/safety cushion by borrowing more than outstanding debt. Suze Orman would get a kick out of that approach! Or I find that the borrower plans to start a business, go on vacation, buy a car, etc.

I wish LC would provide a template for the borrower to answer the Q&A. Although that might not help in all cases, it would at least point the borrower in the right direction. If a listing can't answer the question, I pass on the loan.

Peter

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Re: Q&A for Borrowers
« Reply #1 on: February 14, 2012, 07:04:20 PM »
You raise valid points but part of the problem is that there are so many institutional investors, or just quantitative investors like me, who ignore Q&A that these loans get funded anyway. Of course, a new borrower probably doesn't know that so it is always amazing to me to see how little effort goes into communicating with investors.
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yojoakak

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Re: Q&A for Borrowers
« Reply #2 on: February 24, 2012, 01:15:31 PM »
I guess there's still a lot of loans that never get fully funded.

e.g. Go to browse notes and sort by Time Left.

Right now I see one with 2 days left and more than few with 4 days left, some aren't even halfway funded.

Some of them even give nice complete answers to the questions.

Peter

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Re: Q&A for Borrowers
« Reply #3 on: February 26, 2012, 07:21:30 PM »
In reality there are very few loans that go unfunded at Lending Club. They have a huge amount of institutional money to put to work as well as millions in PRIME accounts where they do the investing. This institutional money only begins to go to work once a loan has had significant investor interest or has been on the platform for more than a week.

I have seen loans go from 40% complete with 2 days left to 100% complete before they expire. The last time I checked over 98% of the loans on the platform were being successfully funded.
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Newlyfrugal

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Re: Q&A for Borrowers
« Reply #4 on: March 04, 2012, 10:20:52 AM »
I pass on loans where debtors ask for $20k or $35k, but offer no description of their loan and if someone asks a question, the debtor answers generally but does not offer much detail.   I realize that $25 is not much investment, but when I loan to someone, I prefer them to put in a little effort.   How does everyone else feel about this?  Do you go ahead and loan to such debtors if you get high ROI?


Peter

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Re: Q&A for Borrowers
« Reply #5 on: March 04, 2012, 05:19:02 PM »
Newlyfrugal, I have never seen any evidence that a loan will be less likely to default if the borrower goes to the effort of putting in a detailed description or answers questions promptly. One would think that a common courtesy like that would be important but from my experience it has little bearing on returns. So, I only read the loan descriptions occasionally and I never pay attention to the Q&A from the borrower. I realize there are others who feel differently, but I am still waiting for hard evidence that it makes a difference to ROI.
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