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Lending Loop

i wrote about my adventure with Lending Loop a year orso ago, I know many folks have had positive experiences with them but I’ve chosen this week to stop investing in any loans and withdraw funds as they become available, it will take some time  to get all my principal back… assuming the majority of borrowers repay as planned.

So, why am I withdrawing?

I’m not super happy with the process and how companies appear to be vetted. You can read about Lending Loops vetting process here, and it all sounds decent enough, better than what I could do anyway.  For the first handful of loans I did them manually, I had a go at researching the company and decided which amount to put where. After that I chose to go with auto-lend, where an amount you set is automatically invested.

Currently my profits look like this;

You can also see my gross yield here;

Which looks pretty good, for the about $4,200-ish I have had invested. BUT that 11.5% gross yield is BEFORE the Lending Loop fees, which are 1.5%, and also before any defaulted loans… which is my sore point here.

5 out of these 6 loans were invested on auto-lend. $265.75 is currently delinquent/in default, the majority I don’t have high hopes for and expect a write-off based on the notes. That certainly reduces my $425.17 life time earnings… down to $159.42 between November 2016 and January 2019…. Now I did write previously that I expected some defaults, but ouch, that’s more than I had hoped for!

In comparison if I deposited $4,200 in a high interest savings account, and moved it along to wherever the highest rates were, averaging about 2.75%, I would have earned $265 in the same time frame and would continue to until I withdrew. 

Now I started depositing funds to Lending Loop in November 2016 with my first $200, and gradually kept adding until my last deposit at the start of 2018 so I did not have $4,000 invested during that entire time, which makes the math a little bit hard to do to compare with straight-up savings instead.  I am ALSO not able to forecast what portion of the $3,900 I still have invested will default and what my earnings will be on that over the coming years of repayment, my last loan will not mature until 2023-11-07. However, I do know there will be SOME defaults and I also know that it’s hard to try to beat any market. 😉

My summary? Lending-loop was a fun adventure, I haven’t actually lost any money overall yet. Will I continue to invest? No. Would I recommend it? Meh, it depends! Are you up for an adventure?

My personal preference is probably the more boring high interest savings or occasional splurge on an ETF. 😳