What TERM loan do you invest in?

[Rob L]

For those reasons, I use a different regression model to grade 60 month loans than I do for 36 month loans.

That was exactly one of the questions I had in mind; one model with a 36/60 term parameter or two models.
Thanks for the insight!

[Small Fish Big Pond]

I'm 100% 36, with not intention to look at 60. It seems the more you read and research about 60's the more you want to stay away from them. I would rather continually reinvest in 36's with slightly less ROI, than take the risk with 60's. I thought read something about LC doing 72 and increasing max loan amounts, that would be scary. If I'm a borrower and my mindset is too payoff a CC and I want to extend the term to 60, I'm really not focused on paying it off, just lowering my payment so I can charge more, with 36 I believe people are focused on paying down their debt quicker. These are just my opinions of course but I understand this mentality as I have dealt with it my professional life for 18 years sitting down and talking to people face to face.

[Fred93]

I'm 33% 36 mo, 67% 60 mo.  I prefer the lower risk of the shorter loans, but have come to accept the mix.  I recently started using a tighter filter on the 60 mo loans, to bring the fraction of 60 mo loans down a little.

[Fred]

If you are open to selling and buying on Folio, 60-mo loans are attractive.

[lascott]

I'm 100% 36, with not intention to look at 60. It seems the more you read and research about 60's the more you want to stay away from them. I would rather continually reinvest in 36's with slightly less ROI, than take the risk with 60's. I thought read something about LC doing 72 and increasing max loan amounts, that would be scary. If I'm a borrow and my mindset is too payoff a CC and I want to extend the term to 60, I'm really not focused on paying it off, just lowering my payment so I can charge more, with 36 I believe people are focused on paying down their debt quicker. These are just my opinions of course but I understand this mentality as I have dealt with it my professional life for 18 years sitting down and talking to people face to face.

Regarding underlined text. Fred had quite an interesting (and surprising to me) post in another thread a few days ago.

The second questionable thing here is "9 months". Loans are either 36 or 60 months, not 9 months, and what you care about is the final disposition of the loan, not where it will be part-way through.

This is actually not too questionable.
Using Payment history data, the average life of 36-mo loans is 17.8 months, while the 60-mo loans is ~14 months.
"life" = from origination until paid off or charged off.

[Small Fish Big Pond]

I'm 100% 36, with not intention to look at 60. It seems the more you read and research about 60's the more you want to stay away from them. I would rather continually reinvest in 36's with slightly less ROI, than take the risk with 60's. I thought read something about LC doing 72 and increasing max loan amounts, that would be scary. If I'm a borrow and my mindset is too payoff a CC and I want to extend the term to 60, I'm really not focused on paying it off, just lowering my payment so I can charge more, with 36 I believe people are focused on paying down their debt quicker. These are just my opinions of course but I understand this mentality as I have dealt with it my professional life for 18 years sitting down and talking to people face to face.

Regarding underlined text. Fred had quite an interesting (and surprising to me) post in another thread a few days ago.

The second questionable thing here is "9 months". Loans are either 36 or 60 months, not 9 months, and what you care about is the final disposition of the loan, not where it will be part-way through.

This is actually not too questionable.
Using Payment history data, the average life of 36-mo loans is 17.8 months, while the 60-mo loans is ~14 months.
"life" = from origination until paid off or charged off.

Good catch lascott, would like a better breakdown of paid vs charge off on Fred's sample, also grades would also be helpful in the breakdown.

[michael49]

...

Good catch lascott, would like a better breakdown of paid vs charge off on Fred's sample, also grades would also be helpful in the breakdown.

+1 on that - paid vs charge off is a rather big difference.

[Fred]

Good catch lascott, would like a better breakdown of paid vs charge off on Fred's sample, also grades would also be helpful in the breakdown.

Here is the average life by term, final status, and grade.



Notes:
1. I did not use the latest payment data -- have not had to do this, but if anyone has the latest payment data, you can simply do this too.
2. I used a slightly different query than my prior table, so results are different, but the above table should be more accurate.

[Small Fish Big Pond]

Good catch lascott, would like a better breakdown of paid vs charge off on Fred's sample, also grades would also be helpful in the breakdown.

Here is the average life by term, final status, and grade.



Notes:
1. I did not use the latest payment data -- have not had to do this, but if anyone has the latest payment data, you can simply do this too.
2. I used a slightly different query than my prior table, so results are different, but the above table should be more accurate.

Great stuff Fred, as I suspected 60's avg life paid / charged off historically have shorter avg life which then makes you wonder how the ROI still out performs the 36's. I understand the 60's have greater initial return due to principal vs interest ratio. This is more evidence while I will continue to stockpile 100% 36's. I do like the idea of taking an existing 60 on folio with great history with only 36 left, but unless you can buy it right, the yield might not be worth the investment.

[lascott]

Good catch lascott, would like a better breakdown of paid vs charge off on Fred's sample, also grades would also be helpful in the breakdown.

Here is the average life by term, final status, and grade.



Notes:
1. I did not use the latest payment data -- have not had to do this, but if anyone has the latest payment data, you can simply do this too.
2. I used a slightly different query than my prior table, so results are different, but the above table should be more accurate.

I think a few more years of stats for mine to be valid (sample/count of loans too small).

Mine from my 2 years worth of ~7000 notes (extended download)

Image: http://i.imgur.com/UuwxxB8.png


My SQL is here: http://www.lendacademy.com/forum/index.php?topic=3620.msg32758#msg32758

[fliphusker]

80-20 for a 60-36 split.  Just not enough notes for 36 month hit my filtering, so will take the longer term and keep my fingers crossed. 

[Small Fish Big Pond]

80-20 for a 60-36 split.  Just not enough notes for 36 month hit my filtering, so will take the longer term and keep my fingers crossed.

That must be a strong filter, what notes are you focusing on?

[fliphusker]

0 Inquiries, c,d,e,f,g, income, public records, delinquencies, DTI, exclude Arizona, Cali, Fla, Nevada, home ownership and mortgage, debt consolidation and credit cards only.  I am just a small fry though, and will only grab up to 16 loans/month. 
If I was going to do larger amounts, absolutely would have to change my filters. 

[Small Fish Big Pond]

0 Inquiries, c,d,e,f,g, income, public records, delinquencies, DTI, exclude Arizona, Cali, Fla, Nevada, home ownership and mortgage, debt consolidation and credit cards only.  I am just a small fry though, and will only grab up to 16 loans/month. 
If I was going to do larger amounts, absolutely would have to change my filters.

So you are not using a managed filter like Bluevestment?

[fliphusker]

I set up filters at lending robot.  Thought I had it set up right, was sorely mistaken.  Sitting on 60 notes at 36 months of A and B.  Guess if any consolation, they were free and should be fairly safe. 
So will just hand pick my notes from now on, as too skiddish to make the same mistake again.