M is for Money

I have a little bit of money invested with Lending Club, it seemed a great way to earn a better return than the stock market. But if you think Wall St is fickle, you should see borrowers when it comes to paying back your money.

Last year I had two loans go into default, one skipped town immediately after taking out the loan. It still hasn’t been written off by Lending Club, though I already wrote it off in my books. The other got behind but then turned it around and paid off the entire balance immediately. After that, all was quiet for several months. My confidence was once again growing in Lending Club and its model, month after month borrowers were making their payments on time. That is until last month, when yet another borrower fell behind.

Like the other unpaid loan, this was a good borrower. They earned a “B” ranking from Lending Club, which means they had decent credit and qualified for a lower rate. Unfortunately there is no way to know what is going on in this borrower’s life and whether they will turn things around. I had been planning to inject new money into Lending Club, but not now. As much as I distrust Wall St, individuals seem to be worse. As someone who always paid their debts on time, I can’t imagine skipping out on my obligations. Borrowers at Lending Club know that their “investors” are individuals, not some faceless corporation. But that doesn’t stop them from stiffing everyday people like myself. I won’t be pulling my money out of Lending Club, but I won’t be adding new money either.


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