Author Topic: Lending Club New Product?  (Read 9711 times)

wiseclerk_com

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Re: Lending Club New Product?
« Reply #15 on: April 15, 2016, 11:20:58 AM »
From a borrower standpoint I can see some sort of "line of credit" product being attractive, whether a consumer credit card or a business credit line, etc.  But I have a hard time picturing how to fractionalize it from a lender standpoint....you can't have several people all willing to loan someone money on a moment's notice. 

I could see an model for that easily. Do wonder though, if that is the product or rather auto loans or something else. Somebody watched the job openings last year? I think their is a high probability to take indicator from looking at the desired experience in these.
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Half Right

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Re: Lending Club New Product?
« Reply #16 on: April 15, 2016, 12:57:33 PM »
Subprime auto currently yielding around 24%, plus you can always repossess .

rawraw

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Re: Lending Club New Product?
« Reply #17 on: April 15, 2016, 08:12:03 PM »
Subprime auto currently yielding around 24%, plus you can always repossess .
I can't tell if this is sarcasm or real

Fred

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Re: Lending Club New Product?
« Reply #18 on: April 16, 2016, 03:05:33 AM »

Half Right

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Re: Lending Club New Product?
« Reply #19 on: April 16, 2016, 09:41:07 PM »
That is the current rate. Unfortunately there is more money available than borrowers at this time and most of the investors are very big institutions and family offices. That's why you haven't seen it being offered anywhere.

rawraw

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Re: Lending Club New Product?
« Reply #20 on: April 17, 2016, 02:52:57 PM »
Subprime auto would probably be one of the worst products for LC to enter.  Part of the reason I'm involved in LC because I think the management is good.  If that was the product announcement, I'd immediately start to reduce the size of my LC account. 

I know it is the rate (I'm good friends with one of the largest banks in the subprime industry), but I should've been more clear.  I couldn't tell if you reducing subprime auto to easy lending because you can repossess the car.  I assumed that was sarcastic.

nonattender

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Re: Lending Club New Product?
« Reply #21 on: April 17, 2016, 07:25:00 PM »
Subprime auto would probably be one of the worst products for LC to enter.  Part of the reason I'm involved in LC because I think the management is good.  If that was the product announcement, I'd immediately start to reduce the size of my LC account. 

I know it is the rate (I'm good friends with one of the largest banks in the subprime industry), but I should've been more clear.  I couldn't tell if you reducing subprime auto to easy lending because you can repossess the car.  I assumed that was sarcastic.

No guess from me on whether auto is the new product, but:  I don't look at "repossession" as the controlling security feature in future.
These things now are practically "Computers On Wheels" (COWs) and can be disabled and held for ransom remotely, most instances...

The more tech gets put on car, the more interesting this market becomes; it's moving towards a sort of monthly subscription biz model.

Milking COWs monthly might be very profitable... ;)
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LoanShark

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Re: Lending Club New Product?
« Reply #22 on: April 17, 2016, 11:07:49 PM »


Years ago I interviewed with a "deep" subprime auto lender.  During the process I got to learn about their operations.
-They primarily wrote "recourse" loans to small (read, really small) auto dealers.  Under these loans, they would pursue the dealer, not the borrower, for the deficiency balance
-A substantial portion of the interest went to the car dealership
-They would underwrite an $8000 loan for a $6000 car, because the dealer would sell the $6000 car for $8000
-All you needed to get a loan was a verified income source- including disability.  That and no repos in the last 6 months.
-You didn't need to have a social security number
-They did so many repos (about 20-30%) that they owned their own tow trucks.  For in-county repos, they would do the tow themselves
-They had a walk-up window where you could pay in cash.  A substantial number of their payments came through this window, and this was in the mid-2000s
-Many of their loan contracts forbid you to drive the car outside of a small radius.
-They were very aggressive debt collectors.  They would appeal in person at your job, or have your car salesman knock on your door.  The better business bureau complaints were hilarious. 

Does this sound like Lendingclub to you?  Subprime auto is probably THE most expensive debt to service.  The loan servicer and the lender should be the same person- so the loan servicer can cover the enormous overhead with the enormous interest. 

I think maybe off-prime car loans might be a better fit.  Id be willing to invest in someone with decent or new credit being charged 4-10% for an auto loan.  But I'll leave subprime auto to the professionals.

Fred93

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Re: Lending Club New Product?
« Reply #23 on: April 17, 2016, 11:53:55 PM »
I loved the movie Repo Man.  Especially loved the philosophical bums who worked for the repo company.  I think I grew up with those guys. 

rawraw

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Re: Lending Club New Product?
« Reply #24 on: April 18, 2016, 09:23:31 AM »


Years ago I interviewed with a "deep" subprime auto lender.  During the process I got to learn about their operations.
-They primarily wrote "recourse" loans to small (read, really small) auto dealers.  Under these loans, they would pursue the dealer, not the borrower, for the deficiency balance
-A substantial portion of the interest went to the car dealership
-They would underwrite an $8000 loan for a $6000 car, because the dealer would sell the $6000 car for $8000
-All you needed to get a loan was a verified income source- including disability.  That and no repos in the last 6 months.
-You didn't need to have a social security number
-They did so many repos (about 20-30%) that they owned their own tow trucks.  For in-county repos, they would do the tow themselves
-They had a walk-up window where you could pay in cash.  A substantial number of their payments came through this window, and this was in the mid-2000s
-Many of their loan contracts forbid you to drive the car outside of a small radius.
-They were very aggressive debt collectors.  They would appeal in person at your job, or have your car salesman knock on your door.  The better business bureau complaints were hilarious. 

Does this sound like Lendingclub to you?  Subprime auto is probably THE most expensive debt to service.  The loan servicer and the lender should be the same person- so the loan servicer can cover the enormous overhead with the enormous interest. 

I think maybe off-prime car loans might be a better fit.  Id be willing to invest in someone with decent or new credit being charged 4-10% for an auto loan.  But I'll leave subprime auto to the professionals.
Interesting model! But yes, Subprime is very expensive. It's why I doubt LC will do well in the consumer Subprime. Bloating their infrastructure coupled with a high cost of capital doesn't seem like a winning combination

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nonattender

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Re: Lending Club New Product?
« Reply #25 on: April 18, 2016, 04:43:51 PM »
-Many of their loan contracts forbid you to drive the car outside of a small radius.

Does your head explode if you cross beyond the radio fence?  If you park somewhere outside of the radius, will your car decide to leave
and go back to the dealer?  There was an old Far Side cartoon where a guy comes home to an empty house, his chairs and couches are
sneaking out the back door.  "My furniture decided to leave me."  Is that the new Aaron's rent-to-own model?  Shit is getting weird... :)
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jheizer

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Re: Lending Club New Product?
« Reply #26 on: April 18, 2016, 04:58:42 PM »
Since we are making predictions I'm going to say boring old student loan refi.  They think it is cool as they are branching out.  Maybe they'll have some good partnership to announce with it or something that makes it more exciting.
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jsnpatrick7

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Re: Lending Club New Product?
« Reply #27 on: April 18, 2016, 05:24:31 PM »
It could have something to do with Title III of the JOBS act: https://en.wikipedia.org/wiki/Jumpstart_Our_Business_Startups_Act.

The act allows for loosening of rules on equity crowdfunding and becomes fully effective on May 16, 2016. The act will allow non-accredited investors to invest in new startups in the pre IPO stage, as well as other equity market investments. It seems that it would be a good fit for LC to allow investors to get involved in seed funding rounds for startups.

AnilG

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Re: Lending Club New Product?
« Reply #28 on: April 18, 2016, 06:08:17 PM »
My guess LC will start lending for drugs and hookers. /s
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RT45

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Re: Lending Club New Product?
« Reply #29 on: April 18, 2016, 06:29:03 PM »
@AnilG Weren't you aware those are already core LC product lines?

Also, I miss the days of Q&A.