Author Topic: What's happened to all the borrowers?  (Read 10119 times)

Nathan

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What's happened to all the borrowers?
« on: April 08, 2013, 07:46:47 AM »
It seems that gone are the days of 1000+ loan availability. In the last couple weeks, we're seeing very low averages. At the moment, it looks like we're at about 300 loans but over the weekend it was below 200. Why is this? Social lending has two general exposure points which affect business performance: Borrowers and Lenders. Are there less borrowers or are there too many lenders? I'd wager that Lending Club business isn't growing symmetrically. More borrowers are needed to keep up with the amount of money that investors are willing to lend. With investors chasing serious returns, and the fact that every single loan since inception on Lending Club has been 100% funded, I'd argue that they could stop advertising to investors entirely and instead, focus on the borrowers. I imagine that's where the real money for Lending Club comes from. If a loan is 100% funded and Lending Club takes a 1% service fee on payment processing, it doesn't matter if five or 500 people have invested in the loan, the outcome is the same for Lending Club. It seems that Lending Club is a victim of their own success.  But that's just my thoughts...

With such low availability, how do you ensure you get the best notes? Personally, I use bluevestment.com's auto investment and selling service. It sure as hell beats sitting around refreshing the browser all day and trying to quickly pounce on notes. I'm finding $35,000 loans with six total investors (luckily, I'm one of them, even if it's only for a $25 portion). With competition so strong, how do you ensure you get the best notes? I'd love to hear people's comments on loan availability.

New Jersey Guy

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Re: What's happened to all the borrowers?
« Reply #1 on: April 08, 2013, 10:22:46 AM »
"With competition so strong, how do you ensure you get the best notes? I'd love to hear people's comments on loan availability."

Nathan, I can't comment for people who shop off the LC platform as I live in NJ and have to shop off the Folio Platform.  That means I can shop for freshly issued loans but.....ONE AT A TIME!

I'm sure you're going to find out that people here have different buying strategies.  Those will vary from people who auto invest (like you) to those picking loans, one at a time.

How do you get the best notes?  There is no guaranteed process.  However, many here will agree that the eye-ball test is the final (and best) method for qualifying a note for purchase.  You'd be surprised at how many red-flags you could pick up by being the final judge. 

Personally, I like the hunt.
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brycemason

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Re: What's happened to all the borrowers?
« Reply #2 on: April 08, 2013, 10:23:40 AM »
The number of loans is lower on the platform because they get invested fully so quickly--especially in the first week of a month. Looking at the loans on the platform is like looking at a picture of a river. You get absolutely no sense of how fast the water is moving.

I use my website to pounce on loans the moment they become available. Unlike Blue's work, which requires the customer to pick a filter, we take the approach that there are many people out there who want to be provided the strategy, too. Automated investment with said strategy is in the works (realistically a few months away), but for now subscribers have to pop on within a few minutes after the magic hours at LC to get the best selection. Www.p2p-picks.com

Cliff_S

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Re: What's happened to all the borrowers?
« Reply #3 on: April 08, 2013, 12:02:28 PM »
I'm finding $35,000 loans with six total investors (luckily, I'm one of them, even if it's only for a $25 portion). With competition so strong, how do you ensure you get the best notes? I'd love to hear people's comments on loan availability.

I'm sure you have heard it before and will hear it again, but the "best notes" criteria is very subjective.  It's like picking the best horse on race day: a lot of people will bet on different horses based on different criteria, but at the end of the day you don't know who was right until after the race.  With P2P lending coming in second or third probably isn't so bad either.

It took me well over a month to fully invest 10K, but if I was trying to invest 35K I don't think I'd be buying $25 notes.  Just my thoughts, but I'm thinking you can be plenty diversified with larger note sizes.

Cliff

New Jersey Guy

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Re: What's happened to all the borrowers?
« Reply #4 on: April 08, 2013, 01:09:20 PM »
"I'm sure you have heard it before and will hear it again, but the "best notes" criteria is very subjective.  It's like picking the best horse on race day: a lot of people will bet on different horses based on different criteria, but at the end of the day you don't know who was right until after the race.  With P2P lending coming in second or third probably isn't so bad either."

+1
(Great analogy!)
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jsmathur

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Re: What's happened to all the borrowers?
« Reply #5 on: April 08, 2013, 02:03:08 PM »
Nathan, I can't help but juxtapose LC's own statistics in terms of dollar value of loans issued each month, compared with the typical number of loans we see on that platform at any given time.

I agree with you that it clearly seems that there are a lot less loans sitting on the platform waiting to be funded. Seeing 200-300 has been commonplace lately, but it wasn't long ago that you would see well over 1000.

So if the LC stats say that monthly loan issuance is still very strong, but less loans seem available on the platform, there's probably a few explanations which all are probably contributing:

1. Loans are getting funded faster in general, so they don't stay listed on the online platform for very long
2. I suspect many loans are getting funded before they ever make it to the online platform, because they are being snatched up by institutional investors.

I don't think the lower number of listed loans on the web site reflects less demand for loans from borrowers, because the monthly dollar value of loans issued (see the "statistics" section on the LC website, look at the Total Loans Funded graph) continues to be strong. In March LC issued almost $130 million in loans, so there's no weakness in loan demand.

Nathan

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Re: What's happened to all the borrowers?
« Reply #6 on: April 09, 2013, 08:43:34 AM »
The number of loans is lower on the platform because they get invested fully so quickly--especially in the first week of a month. Looking at the loans on the platform is like looking at a picture of a river. You get absolutely no sense of how fast the water is moving.

I use my website to pounce on loans the moment they become available. Unlike Blue's work, which requires the customer to pick a filter, we take the approach that there are many people out there who want to be provided the strategy, too. Automated investment with said strategy is in the works (realistically a few months away), but for now subscribers have to pop on within a few minutes after the magic hours at LC to get the best selection. Www.p2p-picks.com

Perhaps I'm a little confused. You say that you use your website to "pounce on the loans the moment they become available" but how do you do that if you don't use a filter? Are you investing in every loan? I'm curious how your strategy differs from the service at Bluevestment.com. That site checks in every few minutes for new loans to invest in against the filters you have provided. Also provides handling of selling notes that are late or in grace period. I don't fully understand how you can have a service that invests people's money without having some sort of filtering criteria.

brycemason

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Re: What's happened to all the borrowers?
« Reply #7 on: April 09, 2013, 10:27:19 AM »
If you have a question about my service, please post in the P2P Picks section to keep the original thread on topic and I'll answer it there. More or less it's a unique credit scoring technique, whereas filtering just looks for one specific combination of attributes.

Fred

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Re: What's happened to all the borrowers?
« Reply #8 on: April 09, 2013, 11:26:39 AM »
I also noticed that the number of "Removed" fully-funded loans is lower recently.  Usually about half of my fully-funded loans didn't get to the "Issued" status; however, most of them do nowadays.

Perhaps this is another reason for the lower number of borrowers: LC is now more stringent on the borrowers.

GS

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Re: What's happened to all the borrowers?
« Reply #9 on: April 12, 2013, 11:52:57 AM »
I would not be surprised if LC sees a surplus of investors as a reason to raise fees on investors.
« Last Edit: April 12, 2013, 12:32:24 PM by GS »

SeanMcD

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Re: What's happened to all the borrowers?
« Reply #10 on: April 12, 2013, 01:48:36 PM »
I would not be surprised if LC sees a surplus of investors as a reason to raise fees on investors.

The ratio of investors to borrowers fluctuates often, and based on comments from LC and Prosper, is fairly easily changed by where they direct their marketing.  Raising investor fees would be a very heavy-handed method of adjusting that ratio that could cause a great deal of ill will.  LC's status reports clearly show that they're measuring progress by total amount loaned, so they have much more incentive to focus resources on bringing in more borrowers than to keep the number of new borrowers at a constant rate and increase revenue by raising fees.  I'm not saying fees will never raise, but it wouldn't make much sense unless the borrower market were much more saturated than it is currently.

GS

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Re: What's happened to all the borrowers?
« Reply #11 on: April 16, 2013, 07:05:51 PM »
Down to 85 loans on LC right now ... geez ... I think I'm going to have to start investing $50 or $100 when I find a loan I like.

Zach

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Re: What's happened to all the borrowers?
« Reply #12 on: April 16, 2013, 09:19:14 PM »
I would just suggest everyone start using Interest Radar to compete with these big fish...it's not that there aren't enough, its that unless you have automated investment capabilities (via the API that Interest Radar uses) you can't compete to get the loans you want.

It would be the best $60 you've ever spent...trust me.

Disclaimer: I don't receive any compensation for suggesting that you join. I just firmly beleive its the best LC account management tool end-to-end. Not only does it provide you with the most extensive research options, a proprietary loan scoring model, complete portfolio management, but also risk management and SO much more....

storm

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Re: What's happened to all the borrowers?
« Reply #13 on: April 16, 2013, 10:21:16 PM »
I would just suggest everyone start using Interest Radar to compete with these big fish...

Call me crazy, but I think it is very shady when a website is not upfront with its pricing.  I shouldn't have to hand over my personal information to access that information.  I won't bother with retail sites that require registration to see the shipping charges, and this is no different.  It is recommended on this forum over and over which makes me all the more suspicious.  Then there is the idea that I shouldn't have to pay some 3rd party to invest my money. 

I have developed my own scripting tools that I use to invest that I'm pretty happy with.  Plus, many borrowers reveal they are using the loan for other purposes in the comments even though it is listed at debt consolidation.  I have changed my habit of investing late at night to waiting until shortly after the 06:00 PDT update.  I think Lending Club needs to limit the investment amount to, say, $100 for the first few days a loan is posted to give the little guy a chance.  Then the big investers can come in and fund the rest of the loan.  It really makes me wonder where LC's priorities lie.

brycemason

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Re: What's happened to all the borrowers?
« Reply #14 on: April 16, 2013, 10:48:48 PM »
Lending Club's priorities lie in maximizing originations subject to some minimum acceptable basal return on their portfolio.