Easy of Use8.0/10
- Availability of Loans for manual investing has increased
- Loan Categories has increased
- Chat Bot is a good idea for improved customer support
- Loan Recovery seems to be improving
- Loan categorisation is something they need to work on
- Auto Investing toggle is still missing
- Referral System is broken
- Human Customer support is still touch and go
LendenClub Portfolio Review (Feb 2021)
We have been investing in Lendenclub for about five months. This is our Lendenclub Portfolio Review for Feb 2021.
If you do not know about Peer to Peer Lending, we recommend: Peer to Peer Investing.
We started the P2P journey with a small amount and still testing waters. Having invested for five months, we are beginning to see patterns and better understand the platform and its working.
Learning over a few months:
- As a platform, Lendenclub seems to be growing again post the lockdowns due to pandemic, which we are still trying to control. The Moratorium given by RBI is behind us, and loan payment is mostly back on track. And companies like lendenclub are now looking to expand.
- As promised by Lendenclub a few months back, they have started giving more options in the manual category for users to invest in, and it seems to be a healthy sign for a company. Users should always have the option of whom they can support.
- They are now working on onboarding more loans providers. Now we can have multiple loans in a different category. They have started a Business loan category. Although mixing the loans and displaying them in the same place creates unnecessary confusion. They can learn from Faircent about categorisation.
- Lendenclub seems to be working on the recovery. Hence more and more loans, even when delayed, are being repaid. This is a healthy sign for a company.
- Lack of control over Auto investment is still a big problem. Also, they should add an option to let the investors know if they want short term or long term investment. Auto Invest invests in long term projects which is a big problem.
- Lack of notification while auto investing is still a bug that they should fix. Or should give at least an option for the same.
- Chatbot recently introduced answers to many basic queries investors might have and is the right way forward.
My Lendenclub Portfolio Review
We have invested Rs.25,000 /- as we are still checking out the default process and still evaluating Lendenclub as a platform. As of today, we have invested in 94 people.
The initial plan to withdraw the entire amount by march, but we will stick within till September, were we will only draw the profit and increase the investment if things improve as we go forward.
Defaults are the arch-nemesis of a lender. As a lender, we lose interest but also lose our principal in case of defaults. Because loans on P2P platforms are not backed, mortgage or guarantee defaults are easy for borrowers who do not worry about credit scores. Trying to keep the defaults to a minimum is one of the criteria for profitable investing in peer to peer lending.
Presently our portfolio is looking at a 3.22% delayed payment. 3 of the 93 people we have invested in have delayed payment.
Of the 3 People – 2 have paid 1 EMI and are likely to clear the rest even if delayed.
The Portfolio is at a 20.04% return if there is no default.
We are expecting at least 2 default and a loss of Rs. 800. So the return when all money is back will be Rs. 4200.
That’s a 16.8% Return in 5 Months.
But we expect more defaults in the coming month, and the final return by September should be at 20%. The default should rise to 5-7 % from the present 2.2%.
Taking default risk into consideration is a smart way of investing. Defaults will happen. It is for investors to take that into account while calculating returns from the platform.
Things to keep in Mind While Manually Investing
- Invest in people above 650 Credit Score.
- Check the number of Loans he has taken and already paid. It’ll show whether he will likely to pay the loan.
- Check the company he is working for. And google about it. A govt job generally means he is on regular pay and unlikely will default. Working in a reputed company means less likely the company will go down, and the salary will more likely be stable.
- Check his income to loan ratio. Suppose a person earns 20,000. And is already paying 16,000 as repayment on his loans. It’ll be tough for him to make repayment for the next loan.
- Check if he stays with family or is rented. Rented is extra spend from his salary every day. A Family home usually is easier on your salary.
Tips to improve your Performance of Auto Investing
- Set Auto Invest to Credit Score> 650.
- Set the Minimum amount earned at above 25000. The higher a person makes, the better chance he will likely pay off the small 10k loan.
- The Younger in person is, the less likely he will understand the importance of credit score. Set age above 25 as criteria for investment.
Additional Settings :
- Invest in a person who lives in his own Home. Rent adds additional expense.
- If you want to be still safer, you can set investment to only Women because women are more likely to pay money than men.
Things Lendenclub Should Work on :
- An easier way to toggle the Auto Investment option.
- Customer Support should improve. Right now, it is still difficult to reach customer support through call or Whatsapp.
- Auto Invest invests in people even if it does not meet all criteria, which is unethical and feel underhanded. Auto invest should only invest when the borrower meets all our requirements.
- Loan categorisation.
- There should be an option for investing in either short term loans or long term loans.
Should you Invest :
They have areas they can work on, but lendenclub is a genuine investment platform. RBI regulates it, and although investing comes with risk related to lending, its a safe investment platform. I hope they improve their website and customer support in days to come to make it easier for customers.
Invest at least 25k-50k for at least a couple of year before taking a call.
That’s all for this month of Lendenclub Review. Also, look forward to our review on Faircent and a few other upcoming exciting reviews. Please give us feedback on how we can improve on this to provide you with better quality reviews.