Buzz kill time! After five on-time payments, one of my Lending Club loan borrowers has just stopped paying the bill. I’d hoped this wouldn’t happen (of course I hoped this wouldn’t happen!), but it is sort of interesting to see how Lending Club handles it when someone stops returning their phone calls (literally).

When I logged into my account, I noticed it no longer listed my loans as “Issued and Current (2),” but rather “Issued and Current (1)” and below that, “Late 31 – 120 days (1).” Uh oh! So I checked in on it – August’s payment hadn’t gone through, and the one at the end of September had just “failed” as well. I’m not exactly sure what it means for a payment to “fail,” though. I suspect it might mean that my borrower had their payments set up as automatic withdrawals from a checking account, and when Lending Club went to take the money, there just wasn’t enough in the account.

At the bottom of the loan page, Lending Club helpfully listed the actions they had taken, in reverse chronological order. Here’s a screenshot (if it’s too small to read, click on the image to view it full-size):

Of course, that “Engaged external collections agency” at the top doesn’t thrill me one bit. But it’s really nice to see that Lending Club has been doing a lot to try and get payments out of my defaulted borrower. It’ll be interesting to see what happens from here. If a collections agency buys the debt, will I get a portion of my money back? Or will the collection agency try to collect without buying the debt, and so maybe I’ll have to wait?

If the collection agency buys the debt for pennies on the dollar, I could be out 22 bucks in free Lending Club opening-bonus money. I guess I can’t feel too bad about it, especially when I know people not paying their bills is simply a part of life. But… dangit!

Defaults happen.

Late in February, I decided to start experimenting with Lending Club by investing the $50 bonus that was deposited into my account when I signed up (using a referral link). I chose two loans, which were issued and entered repayment. Last week, I received the first payment from each loan! You can see a snapshot of the payment I received from one loan below:

The “completion date” is the day which the payment hit my account. It takes a few days, because the borrowers pay through an electronic transfer, which takes a few days to go between banks.

So now there’s $1.66 in my account – one payment of $0.86 and another of $0.82, minus the $0.02 “cut” that Lending Club took. I could leave the money there and reinvest it once my account balance reaches $25, or I could transfer the money into my savings account and let it earn interest for a while.

If I just leave the money in my Lending Club account, it will be 16 months (15 months from now) before there’s enough money in the account to invest in a new loan. There would be $26.56 in the account at that point. If I move the money to my bank account, which earns 1.50% interest per year, I would have $26.81 by that time. Not a huge difference – I’m not sure that $0.25 is worth the effort of transferring the money every month. It wouldn’t even allow me to invest a month earlier! So I’m just going to let it sit there, for the time being.

All I have to do now is sit back and watch the payments come in each month (hopefully). So far the experience has been simple, easy, and kinda fun. Grow, money, grow!

I’ll continue to give little updates on my Lending Club account here, but there probably won’t be much else interesting to say, unless one of my borrowers decides not to pay, or pays late. However I would love to get the perspective of a Lending Club borrower! If you’ve borrowed money from Lending Club, contact me about the possibility of writing a guest post for Poorer Than You.

Last week, I started up my Lending Club Experiment: to take the $50 bonus given to me for becoming a lender at Lending Club, and use it to test drive the service. It’s a hot topic – I can tell because I received a slew of emails asking me for referrals to get $50 bonuses. If you’re one of those that got a referral link from me, please feel free to share your experiences in the comments here.

It’s been a week, and a few things have happened. One of the loans I picked out last week fell through in the “review” phase, for whatever reason. My $25 was returned to my Lending Club account, and I chose to replace the first loan with a loan at a similar rate and risk level, so my estimated return is still around 13%. Now the two loans (or notes) that I’ve invested in have passed review, and are “issued and current.” They’re accumulating interest as we speak.

The above picture is a snapshot of my two loans, taken this morning (you can click the image to get a larger view if it’s hard to read). I cut off the identifying information that was on the left side, to protect my borrowers. But you can see that I’ve assigned these two loans to the portfolio “Bonus Money,” so that I can track them separately if I ever put money of my own in.

This is a wider view of my investments (again, you can click to view the full-size picture). You can see that my weighted interest rate is 13.32%, and my expected monthly payments are $1.68. I plan on leaving the payments in my Lending Club account, and when they add up to $25, possibly reinvesting in a new note.

There isn’t much for me to do for the rest of the month, except sit tight and wait for the 25th, when the first payments are due!  We’ll check back in with things after that.