Hi, Peter, I visit your social lending site on a weekly basis and greatly appreciate the work you do for the p2p lending community. I started investing in Proper loans in May and it's been nearly 4 months now. (Actually, I opened a Prosper account back in 2007, but fortunately, I didn't put any money in it, since as we all have come to know, Prosper 1.0 didn't fare well.) The returns have been quite good, and I just began putting some money into Lending Club this month to compare the two platforms. I expect the ROI to come down as the loans mature, so I am quite realistic in that regard. I look forward to learning more from you and others in the forum.
After having some experience with both Prosper and Lending Club, I realize that for Lending Club the loan sizes tend to be bigger, in fact, so much bigger for the lower grades than those for Prosper. For E, F, G grades, LC allows a whopping maximum of $35,000 for a period of 5 years, whereas Prosper allows for only $4000 for 3 years in E and HR loans. I use Nickelsteamroller for research and screening. To my surprise, even for the lower grades, the smaller loans (<$10,000) in LC don't necessarily do better than the larger ones. In fact, they fare worse. It is difficult to convince myself to commit any fund to a $35,000 loan for a period of 5 years, but if data matters at all, I have to go against my own gut feelings. I have managed to pitch in a tiny portion of the money for a few of loans in the range of $20,000 to $30,000 for the lower grades. (Are they talking about raising the maximum to $50,000? That's mind-boggling--too much temptation to just run with the money.)
Would Peter and others care to comment on that? Why would LC let folks with such high risks borrow $35000? Thanks.
