Lending Club Sandbox: Day 16

Sixteen days after getting $2500 in my Lending Club account, I am finally starting to get payments back on my notes!! These payments are primarily coming from the notes I bought thru Foliofn. Here’s my account summary today:

One annoying thing that has happened, that I didn’t really expect, is that one of the $25 notes that I purchased thru Lending Club is already FULLY PAID! The person just took out a loan and then paid it all back within a few days. (Maybe a scheme to raise their credit score?) In addition, I had at least 2 other notes that didn’t “issue”.

Rather than waste more time with automated investing & then the 3-10 days it takes for a note to issue, I went ahead and bought more notes thru Foliofn. Foliofn is definitely giving me that sandbox-satisfaction of being able to buy notes on the spot. It usually only takes 1 day for my Foliofn notes to clear and become “mine” and often their next payment is less than 1 month away.

Lending Club Sandbox: Day 6-7

Fed up with waiting on new loans to become available on Lending Club, I began exploring the P2P note trading platform associated with Lending Club called Foliofn. The Foliofn website is not nearly as easy to use as Lending Club’s website, but I like the idea that I can trade my notes, previously purchased on Lending Club, or else buy partially paid-off notes from Lending Club investors who are trying to “exit” their Lending Club investments.

I did a little research before starting to buy notes on Foliofn and appreciated this blog post about “Penny Notes”. Borrowers who have only 15 remaining payments on their loans, and who have a pretty decent current history of paying their loans, are likely to KEEP paying their loans and are therefore pretty safe investments! Makes sense to me. I tried to find the penny notes with the highest “Yield to Maturity” (often as high as 12-15%) and preferably discounted or low mark-up (always less than 1.5% markup).

I ended up buying several of these notes as a mini-experiment. Which would win? My Lending Club Automated & Manually invested $25 notes or my Foliofn penny notes? Unfortunately, the penny notes will not last as long in my portfolio (most only 10-15 months), but if the pay-off is good enough, maybe this strategy is worth it?