Comments on: Comparing Lending Club with Prosper http://www.rickety.us/2009/03/comparing-lending-club-with-prosper/ Mostly about Utah Thu, 09 Feb 2012 02:10:12 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: rickety http://www.rickety.us/2009/03/comparing-lending-club-with-prosper/comment-page-1/#comment-972 rickety Tue, 10 Mar 2009 02:29:30 +0000 http://www.rickety.us/?p=4247#comment-972 Tom, Most of the loans I took out when I first signed up. So most Lending Club loans are four months old and most Prosper loans are eight months. Here is the breakdown by dollar amounts: Prosper: AA 17% A 23% B 50% C 0% D 5% E 5%. Lending Club: A 5% B 53% C 41% D 1%. You are right, the return should be calculated after defaults are subtracted. I have read your blog several times, it is very good. Tom,
Most of the loans I took out when I first signed up. So most Lending Club loans are four months old and most Prosper loans are eight months. Here is the breakdown by dollar amounts:

Prosper: AA 17% A 23% B 50% C 0% D 5% E 5%.
Lending Club: A 5% B 53% C 41% D 1%.

You are right, the return should be calculated after defaults are subtracted. I have read your blog several times, it is very good.

]]> By: Tom http://www.rickety.us/2009/03/comparing-lending-club-with-prosper/comment-page-1/#comment-969 Tom Mon, 09 Mar 2009 13:30:03 +0000 http://www.rickety.us/?p=4247#comment-969 "Note too that Lending Club tends to have lower interest rates thus giving a lower return." As you explain later in your article, a higher interest rate does not mean a higher return. The two defaults with Prosper mean your higher interest rate is a lower return. I expected to see higher default rates with Prosper but was surprised that your defaults are AA loans. Most of my Prosper loans are AA's. Luckily none have defaulted so far. Lending Club only accepts prime borrowers so the risk is lower. In the end, I think your comparison is valuable but it is difficult to take your results and extrapolate them to the general population. One nice addition to your comparison would be to add the average loan age and loan grade. “Note too that Lending Club tends to have lower interest rates thus giving a lower return.”

As you explain later in your article, a higher interest rate does not mean a higher return. The two defaults with Prosper mean your higher interest rate is a lower return.

I expected to see higher default rates with Prosper but was surprised that your defaults are AA loans. Most of my Prosper loans are AA’s. Luckily none have defaulted so far.

Lending Club only accepts prime borrowers so the risk is lower.

In the end, I think your comparison is valuable but it is difficult to take your results and extrapolate them to the general population. One nice addition to your comparison would be to add the average loan age and loan grade.

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