I checked up on my Lending Club accounts the other day, and was surprised to see 3 new late loans. Up until now I had seen late loans slowly trickle in, but never 3 out of the blue. So I took a look at my individual loans and this is what I saw:
The three late loans are from the same person! How could I have been so stupid! I'm pretty sure I know what happened. Since Lending Club takes 14 days to close a new listing, and I was moving money to LC very quickly earlier this year, the same loan might have cropped up a few times in Lending Clubs portfolio generator. Since the portfolio generator returns about 20 loans( for a $500 input), it could be possible to overlook the fact that I already had bought a piece of that loan.
I did a quick look through my other LC loans. It turns out I have 12 pairs of loans, and 1 triplet. Some of those loans are for more than $25 each. In fact I lent 1 person $525 when I first started with LC. Looking back, it was a foolish thing to do. My first $1000 that I invested in LC, I did $500 with the portfolio builder, and went out on a limb and put the other $500 on a good looking loan. Since then I've done some research on expected returns from personal loans, and I would be much more afraid to make that same size loan again.
So to prevent such an occurrence in the future, I'm instituiting a new policy for myself. No new money to a P2P lender until the previous money has "settled", Ie the loans are issued. This means about 7 days for Prosper and 14 days for Lending Club. Interestingly, Prosper has an option in their auto bidding program to not select loans already purchased. That may actually prevent this. I hope LC institutes a similar option, assuming they every come out of this quiet period.
Does all this have me down? Not really, because when I think about it realize that the reason I was moving money so quickly was because of the bonus LC offered at the time. From that promotion, I got $370. So right now all of my late loans are more than made up for by LC's generosity.
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