Hi All,

Just wanted to give you a quick update on our thoughts on LendingClub. As you may know, LendingClub is a person to person on-line lending service similar to prosper.com. We signed up a while ago via a promotional offer.

Since most readers of personal finance blogs are interested in peer to peer lending, I wanted to give you a sense of our experience with the site so far. Since we don’t need to borrow any money, the following observations come from the standpoint of being a lender.

Account Sign Up: No problems here. LendingClub’s account sign up and deposit process is seamless and quick.

Better Protection for Lenders: From my review of LendingClub’s stated policies they seem more focused on lender protection than their competitor prosper.com. In this regard, there are two aspects I like. First, they only allow borrowers who have a FICO score of 640 or better. This effectively screens out most of the deadbeats. Second, LendingClub goes after delinquent borrowers rather aggressively. If they don’t hear from a borrower 30 days after payments are due, they call in the collection agency. Relative to prosper’s policies LendingClub’s 30 day period is far more aggressive.

Site Interface Needs Work: LendingClub’s loan listings are somewhat hard to navigate. Specifically, the load time and browsing displays have a cumbersome feel. Also, each loan’s listing in the search results primarily uses text and small icons in LendingClub’s black and orange color scheme, making it a bit of a cognitive chore to search the listings.

LendingClub Is A Start Up: This means there hasn’t been a lot of time for the service’s delinquency numbers to stabilize. Right now the number of delinquencies are somewhere between .65% and 1.5%, depending on how you look at it. This is pretty low, but since LendingClub has only been around for 9 months, its too early say whether these numbers are firm.

So, my assessment of the service now that its potentially very interesting for lenders, but their interface needs work and its still unclear what their default rates look like.

Best,

James

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