Why did the loan amount beinng less than the revolving debt amount turn you off of investing?
Mostly it's just the issue of data mismatch. The loan was listed as debt consolidation, but did not consolidate all the debt. I realize that there are good reasons people might consolidate only part of their debt (such as some is at a high interest rate, some low), and I realize that the loan amount seldom jibes really closely with the credit report of revolving balance. So there isn't necessarily anything wrong with the loan. But that mismatch was a factor in my not taking on any of it.
Whether the loan request is for more or less than the revolving balance isn't as important to me as the discrepancy. An application for $30K with $5K revolving balance will also raise my eyebrows. Again, I know that not all debt shows on the revolving balance, but it's one indicator.
This applicant had a $97K revolving balance. I assume there are good reasons people can end up with that large a balance, but it's way far out of the norm for LC applications.
Whether the borrower would have had two large payments or one extra-large payment isn't important. However, in this case the borrower was asking for the maximum LC loan. This is a possible sign that the applicant really needs to consolidate more of their debt and is taking a desperate stab at consolidating some of it. If true, that would be a really bad sign.
Another factor, which I didn't mention before, is that a large loan will usually take longer to fill than a small loan. When investors commit to a loan, their money is tied up making nothing until the loan is fully funded. Given a choice between investing in a $10K loan and a $40K loan, all else being equal, I'll take the $10K loan, just because I'll start getting a return on the investment sooner.
Too bad this didn't come up while that application was active so I could link to it. All the numbers mentioned by fliphusker were good. The applicant had plenty of income to make the payments on $97K revolving balance. No public records, no delinquencies, at least a ten year credit record. Don't remember about length of employment, but I usually look at that, and I remember passing on it only because of the balance mismatch and not understanding how so large a revolving balance happens. Yet obviously I wasn't the only one disturbed by something in the loan application -- though others may have picked up something I didn't -- since it timed out only 3/4 funded.
Edward
