Results 1 to 3 of 3

Thread: Investing in lending notes

  1. #1
    God/dess anonymous camgirl's Avatar
    Joined
    Mar 2012
    Location
    HEAVEN
    Posts
    5,359
    Thanks
    6,513
    Thanked 11,807 Times in 3,965 Posts
    My Mood
    Sleepy

    Default Investing in lending notes

    Are any of you investing in prosper or lending club?? Not sure if others exist.. I have been dabbling in lending for a few months now as a hobby. wondering if anyone would like to share their experiences. So far so good. I didn't do so well in 2008 with Prosper.. I only invested in 2 loans of a total of $100 bucks so not that big of a deal but it did sour me on it. But it was the height of the recession also. So I am very cautiously just investing a piddly amount of money no more than even 25 bucks per person to spread out my risk.

  2. #2
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: Investing in lending notes

    These lending platforms essentially offer a low dollar 'clone' of the corporate bond market.

    see and for an overview

    As with any type of loan ( and buying a bond is roughly equivalent to buying a loan note ), returns are inversely proportional to loss risk. Corporate bonds offer more liquidity thanks to a secondary market, as well as ( arguably - wasn't the case with GM ) more statutory protection for the bondholders, and much more 'transparent' financial info regarding the 'borrower'. Also, the tax treatment of corporate bond profits is often better than tax treatment of loan note interest income.

    The major advantage of these lending platforms, compared to the corporate bond market, is the low dollar 'ticket' for entry. Perhaps this is the ONLY advantage.

    Personally speaking, these lending platforms involve an uncomfortable level of potential loss risk versus actual rate of return net of taxes. And while a secondary market 'trading platform' for such loan notes has been talked about, at the moment no such market exists ... meaning that your money is also 'trapped' for the duration of the ( fractional ) loan note you 'buy'. This creates a particularly risky situation for a loan note owner in a climate of rising interest rates.

    But then again, that's just me talking, and I can handle the $5,000 increment price tag for corporate bond purchases.
    Last edited by Melonie; 05-13-2014 at 04:54 PM.

  3. #3
    Banned Eric Stoner's Avatar
    Joined
    Oct 2006
    Location
    NYC
    Posts
    5,150
    Thanks
    1,261
    Thanked 1,430 Times in 888 Posts

    Default Re: Investing in lending notes

    My gut says : "Don't touch it ! " Who are you lending to ? What security ? That's on top of all the cares and concerns that Melonie listed.

Similar Threads

  1. lending money to dancers
    By jaizaine in forum Customer Conversation
    Replies: 16
    Last Post: 11-27-2007, 08:45 AM
  2. the vise is tightening on mortgage lending ...
    By Melonie in forum Dollar Den
    Replies: 3
    Last Post: 02-10-2007, 10:41 PM
  3. Replies: 2
    Last Post: 01-21-2006, 01:11 PM
  4. Lending lesson learned...
    By Heaven777 in forum Stripping (was Stripping General)
    Replies: 12
    Last Post: 05-15-2005, 10:34 PM
  5. Lesson:Lending money = sucker
    By Shoot2Thrill in forum Shop Talk
    Replies: 13
    Last Post: 09-08-2004, 03:36 AM

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •