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First loan to make a payment, pays in full

Started by Peter, July 23, 2013, 11:00:00 PM

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I have about 400 loans funded, and the very first loan that puts any money back in the account pays in full. Earned 19 cents on that $25 investment." class="bbc_link" target="_blank">


Unfortunately, LC will charge you a $0.25 service fee for a full payment on a $25 note (1%), and therefore you'll lose $0.06 ...  that is a known, but thankfully rare, problem with LC's fee structure.


It's not a good decision on their part.  LC also charges a few hundred dollars to the borrower in origination fees, so that, plus the first month's interest, it was an expensive mistake for the borrower.  It doesn't happen too often, and it sucks it was first payment.


How common is it, exactly, to pay off within the first 2 months?  Does anyone have stats?   I started investing in mid-April.  By the time I got to around 100 notes at the end of June, 5 of those 100 paid off the loan as the first payment or before making a second payment.  I figured they found a cheaper rate elsewhere, but that would make less sense if they also have to pay an origination fee.


My experience is about 1% - 2% loans will be paid off in first six months.


Early payoff is correlated with Grade. So, if you go lower risk, it happens more often. My current portfolio is in the mid grades, B-D, and in the last 18 months, about 10% of my loans have paid off early (varying lengths of time, obviously).


One easy way to avoid losing money like this is by investing in loans with interest rates of 12% or more.  Your first month of interest payment should cover the 1% transaction fee if the borrower pays the full amount (at the end of first month).


I've got something like 85 notes.  Started in April.  A couple early ones were paid in full on about the first payment.  The first was one of the riskier notes and I came out a few cents ahead.  The second was an A rated note, and I came out a few cents behind.  Needless to say I was rather PO'd.  The cheapie A rated people are so cheap they don't even pay the lender for their loan.  The rest are all so far so good though.  I can totally understand your frustration.


all sorts of reasons to pay off early. some people may just need the money for a short time. one month in, they may find other funding, or have fulfilled their need for a bridge and paying 1% on a 30 day loan may still be better than 15% annually for 3 years.

some others may pay off a small loan early to take a bigger loan out. I'm not sure if LC has a repeat borrower preference but they may.


Rob L

I have about 1700 notes and so far 3 paid off the loan with the first payment; one A and two D's.


It sounds like I've been initially unlucky, then.  The 5 that paid after 1 month (while I had 100 notes) were: C5, C5, D4, D5, E2.  All except one had between 2 and 5 inquiries in the last 6 months.  Maybe that's a clue.  The one at 5 inquiries would no longer pass my buy screen.   All listed as paying off credit cards as the reason for the loan.


Out of 400 or so notes over the last 6 months I have 8 full paid. Just FYI. Some are within two months.


I see a lot more early payoffs than defaults.   I've been on LC for almost a year, 696 notes, 41 early payoffs, 8 charged off.

NEW LOANS:   | greninja.eth 0.800 Ξ | 981.eth 3.000 Ξ | 190.eth 3.000 Ξ | ALL