Wed 15 Oct 2008
Fishing Through LendingStats To Learn About Prosper
Posted by RichSlick under MMO
[8] Comments
Yesterday I inquired about the absence of Prosper bloggers lately and I received a few responses from , , & but I decided to do my own little research and I found some startling information.
As you can see from the table below, the top 10 lenders appear to have high default rates and horrible returns. I would imagine that the top 10 lenders with vast sums of money 600k+ would do their best to mitigate losses but that’s not really what the table shows.
Prosper October 2008
| Name | Loans | +4 Month Late | Default | Dead Money | Est. ROI |
|---|---|---|---|---|---|
| carrey79 | 935k | 18.89% | 18.97% | 37.86% | 4.43% |
| shark | 884k | 11.92% | 4.54% | 16.46% | 2.12% |
| pensioner | 883k | 17.95% | 32.33% | 50.28% | 1.45% |
| Fred93 | 825k | 6.75% | 4.84% | 11.59% | 6.8% |
| Aberdeen | 706k | 0.22% | 0.00% | 0.22% | 0.47% |
| L5 | 629k | 10.48% | 19.16% | 29.64% | 7.73% |
| Annaolis82 | 613k | 14.13% | 8.06% | 22.19% | 3.04% |
| MaltinVACOL | 611k | 7.35% | 0.57% | 7.92% | 4.06% |
| rwm684 | 408k | 9.31% | 15.76% | 25.07% | 2.93% |
| MuleShoes | 404k | 15.91% | 43.38% | 59.29% | -17.85% |
I took these stats from which tracks Prosper loans. I simply picked the top 10 lenders and sifted through some of the statistics. I mainly focused on +4 months late and default loans and returns. Note that I added a column named “dead money” as this is a combination of +4 month late loans & default loans. I’m going to guess that +4 month late loans aren’t going to be paid back and might as well be default.
Assuming, however, that the +4 month late loans don’t count, the returns are still horrible.
The average default rate for the top 10 lenders is 14.76% and the average estimated ROI is 1.518% on average loans of 689k. If you add back the +4 month late loans then the average “dead money” percentage jumps to 26.04 percent!
From this , I calculated that 330 lenders out of 6010 listed earned 10% or better returns on prosper. That ratio breaks down to about 5.4% of total lenders beating 10% ROI and 94.6% earning less than 10% return on their investment.
Oddly enough, this seems to fall in line with the and curve which I’ve previously written about here.
8 Responses to “ Fishing Through LendingStats To Learn About Prosper ”
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October 21st, 2008 at 12:37 pm[...] Math – The next day after asking the question, Get Rich Slick Fishes Through LendingStats To Learn About Prosper. He takes the top 10 lenders (by money invested in loans) and calculates that the estimated ROI at [...]
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June 20th, 2009 at 8:28 am[...] jumped over to LendingStats.com and the data seems strange. Back in October 2008, I wrote this post which showed something I coined “dead money” as 4+ months late and defaulted loans of [...]
October 15th, 2008 at 10:26 am
I never wrote about my Prosper investments on my blog, but I put a few dollars in there. Obviously, it is not to the same level as the folks you posted above.
According to Ericscc.com this morning, a full 26% of my loans are late – and another one not reported is showing <15 days late in my account. This guy has always paid in the past, and sometimes shows <15 days late, so I suspect that he will pay – but, I also think that he will eventually NOT pay.
Eric shows my expected ROI to be -.36%, on an average weighted interest rate of ~16.3% and an average weighted credit score of A-!
In other words, I had what appeared to be a pretty conservative portfolio, on paper, lending to mostly B and A grade borrowers….and I am still getting hammered.
Of course, as Lazy pointed out in his comments, a return of -.36% is MUCH better than my 401k performed this year! But, on the other hand, there is a CHANCE that my 401k will rebound over time – there is almost NO chance of getting money back on these defaulted and late loans.
You need to add one more column to your chart, though. I think one of the most important factors in assessing someone else’s loan portfolio is the average age of their loans. These statistics only get worse over time. FWIW, my average loan age is 478 days.
October 15th, 2008 at 12:38 pm
Thanks for the insight Travelin’ Man but what is your verdict? I have yet to find ANY person/blogger to tell me, “It’s great…I love it…..I’m making a lot of money….”
or anything like it.
October 15th, 2008 at 5:28 pm
Thanks so much for posting about Prosper! I’ve been contemplating it for about a year now, but always suspected that borrowers would take this type of loan less seriously than any other kind.
If it’s an option, you might want to check data for smaller lenders (under $10K). I think there’s a good chance that people with hundreds of thousands to invest this way are probably more interested in making sure that the money is working (i.e. lent and earning interest) than in waiting for ideal opportunities.
October 15th, 2008 at 11:49 pm
In case you didn’t know lending has been temporarily suspended while Prosper tries to open up the secondary lending market.
My current return on Prosper is 0.97% assuming 4+ month late loans default (I have one that is 8 months late and another that is 13 months late that still have not been officially defaulted). The only reason I may break even / make some money is a $3800 loan to by brother in law (out side that loan my investment in Prosper is about $1000).
October 16th, 2008 at 12:29 pm
In case you didn’t know lending has been temporarily suspended while Prosper tries to open up the secondary lending market (might take 6 months).
My current return on Prosper is 0.97% assuming 4+ month late loans default. The only reason I may break even / make some money is a $3800 loan to by brother in law. Outside that loan my investment in Prosper was only $1000.
October 16th, 2008 at 3:54 pm
My verdict? I have added no new money for about a year now. I have/had been reinvesting my payments into new loans, and planned to do that until I hit my target amount. I currently have about $60 sitting idly in my Prosper account, as I had recently decided that I was just throwing good money after bad and didn’t see that ending any time soon.
If a portfolio comprised of mostly prime loans cannot beat a high-yield savings account, I don’t see the advantage of continuing to invest money there. Further, I think that one of the attractive reasons to invest money in Prosper loans was the idea that this investment would prove to not correlate with stock market returns has proven false, so far.