Author Topic: Lending Club fail  (Read 4061 times)

blackfedora

  • 5 O'Clock Shadow
  • *
  • Posts: 34
Lending Club fail
« on: August 30, 2013, 04:02:18 PM »
I received a pre-approval for up to $35,000 from Lending club.... I currently have a lending account with them. Good job guys...

Self-employed-swami

  • Handlebar Stache
  • *****
  • Posts: 1094
  • Location: Canada
Re: Lending Club fail
« Reply #1 on: August 30, 2013, 04:11:10 PM »
Haha, awesome! 

You should see if you can be your own funder, just for shits and giggles.

Hugh H

  • 5 O'Clock Shadow
  • *
  • Posts: 75
Re: Lending Club fail
« Reply #2 on: August 30, 2013, 08:02:07 PM »
Haha, awesome! 

You should see if you can be your own funder, just for shits and giggles.

Brilliant… pay interest to yourself and save more!

Nords

  • Magnum Stache
  • ******
  • Posts: 3174
  • Age: 58
  • Location: Oahu
    • Military Retirement & Financial Independence blog
Re: Lending Club fail
« Reply #3 on: August 30, 2013, 10:59:28 PM »
I received a pre-approval for up to $35,000 from Lending club.... I currently have a lending account with them. Good job guys...
So you could borrow money at 6% and lend it out at 15%? 

Yeah, that should work... especially if they'll auto-deduct the P&I payments from your lending account right after it's credited with the monthly deposit.

[/sarcasm]

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 27688
  • Age: -999
  • Location: Traveling the World
Re: Lending Club fail
« Reply #4 on: August 30, 2013, 11:03:23 PM »
I received a pre-approval for up to $35,000 from Lending club.... I currently have a lending account with them. Good job guys...
So you could borrow money at 6% and lend it out at 15%? 

Yeah, that should work... especially if they'll auto-deduct the P&I payments from your lending account right after it's credited with the monthly deposit.

[/sarcasm]

Many people tried this "arbitrage" in the early days of Prosper (this was before LC existed).  It did not work out well (for a number of reasons).

The announcement the OP got could have been worse, it could have been reversed.  I.e. "You've borrowed 20k from us.  Become a lender!"
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

beltim

  • Magnum Stache
  • ******
  • Posts: 2822
Re: Lending Club fail
« Reply #5 on: September 01, 2013, 12:01:15 PM »
I received a pre-approval for up to $35,000 from Lending club.... I currently have a lending account with them. Good job guys...
So you could borrow money at 6% and lend it out at 15%? 

Yeah, that should work... especially if they'll auto-deduct the P&I payments from your lending account right after it's credited with the monthly deposit.

[/sarcasm]

Many people tried this "arbitrage" in the early days of Prosper (this was before LC existed).  It did not work out well (for a number of reasons).

The announcement the OP got could have been worse, it could have been reversed.  I.e. "You've borrowed 20k from us.  Become a lender!"


At one point early on in Lending Club I got an offer to take out a Lending Club loan in order to invest in more higher risk loans, in exchange for which I would get a 4% discount on the interest rate.  I have to say I seriously considered it, but I'm glad I didn't participate - returns in that era were significantly below current returns (this is before they reworked the risk determination).  I definitely would have lost money on that deal.