

Peer To Peer Loans Grow - jkuria
http://online.wsj.com/article/SB10001424052748703421204576331141779953526.html?mod=googlenews_wsj

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nowarninglabel
I'm surprised they didn't mention www.Kiva.org, although the model is slightly
different, we've also been pretty involved in small business loans in the U.S.
and the numbers continue to grow. I had the pleasure of sitting in the other
day on an investment committee discussing risk of small business loans via a
new partner in New Orleans and the depth of detail of the risk assessment was
striking. This is perhaps why we've managed to keep overall default rates
fairly low, which makes me wonder if Prosper is really just figuring out the
right risk strategy this time around.

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orijing
_But by spreading risk, peer-to-peer loans tend to have lower interest rates
than comparable bank loans, consumer-credit experts say._

That doesn't make sense. Banks make tons of loans, which by definition spreads
out the risk of any individual loan going bad. In addition, sometimes they
have insurance or other derivatives on their books.

I would say banks have their risk spread out a lot better than any individual
investor, unless that individual is Paul Graham status of $$$.

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pixelcort
Investing on LendingClub is extremely fun. They give you CSV data of all past
and upcoming loans to play with and show you your Investor Percentile, which
compares your return to other LendingClub lenders. I enjoy competing to get
the highest return by predicting which loans will default based on past data.
Currently I'm in the 92nd percentile of lenders.

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Dornkirk
On average how quick do you see a return from your investment (loan) on this
site? How common are losses and what assurances does lendingclub give?

I'm just wondering if it'd be a good thing to sign up for and play around
with, I've currently got a spare $30k sitting around not doing anything
(except losing value I suppose).

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pixelcort
Payments are made in equal amounts each month over a 3 or 5 year period.

Losses depend on the kinds of loans someone invests in, so this varies.

These are unsecured loans, so defaults are normal. My strategy is to try to
limit myself to the minimum per-loan investment, which is $25 per loan. This
way a given default won't significantly harm me (I'd only be out $25 per
defaulted loan).

Of course, none of this is investment advice, read the prospectus, etc...

