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Post by albermarle on Aug 6, 2017 18:49:49 GMT
Having invested in LC for the first time recently , I was concerned about some of the negative comments about them on here from 'old hands' , so have trod more carefully since. However when I see similar comments about other similar P2P firms ( REBS for example and many others ) I wonder if it is a case of 'give a dog a bad name'
As I understand it LC business model is similar to the much bigger Funding Circle.
LC has a significant proportion of loans with no security ( although < 50% ) .
From my research FC takes no security on loans < £100K and sometimes higher .
LC bad debt rate is probably around 4 to 5% , FC is 3 to 4 % ( IF not for one big solicitors debt in a much smaller loan book for FC, then probably the default rates would be pretty much the same )
Fees are 1% for both.
So I guess the main issues for LC are perceived poor recovery rates /slow SM compared to the much larger FC .
On the other hand you can invest in a IFSA with LC but not FC .
Is my analysis correct or am I missing something significant ?
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adrianc
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Post by adrianc on Aug 6, 2017 19:14:40 GMT
Is my analysis correct or am I missing something significant ? Well, past performance, an' all that... But these are my figures for FC and for LC: FC - 6.67% XIRR LC - 8.75% XIRR Sounds great, doesn't it? But... Defaults (less recoveries) relative to income: FC - 31.3% (6.5% recovery, certain to be more to come) LC - 131.8% (0% recovery, unlikely to be any to come) Eh? More lost than received, yet still a positive XIRR? Oh, yes. That'll be the 15% welcome/referral bonus, then. Without that, it'd be -ve. LC and FC are the only platforms I've withdrawn all my investment from. I don't regret signing up to FC - it's just that they changed, and the return vs risk dropped. LC, otoh...
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annie
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Post by annie on Aug 7, 2017 18:00:51 GMT
I have no experience of FC. I am also in the process of withdrawing from P2P completely as it seems imo to be losing some of its sheen. I am planning to leave most LC loans to maturity because 1. I have good rates. 2. Only had one loss on bridal wear. 3. Was able to do DD on loans.
My disappointment is in part with the sector which is chasing ISA funds and seems overcrowded with suppliers so I think will see a shakeout in the short-term. Not LC specific.
Negative comments about LC from me revolve around short time bids where you can't do DD and poor quality offerings where there is no security and/or no owner stake in the business.
In summary, LC frustrates me but I think is actually one of the better providers.
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Post by albermarle on Aug 8, 2017 8:19:04 GMT
Just out of interest very recently ( in the last couple of weeks) the new loans have all been up for a few days again . So time to do your own DD and ask questions , although whether you get an answer or not is another matter I guess. Anyway if there is no response that would be a warning sign in itself I suppose. Otherwise the usual mixed bag of borrowers, some with security, some not.
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Post by Butch Cassidy on Aug 8, 2017 8:50:26 GMT
I use both LC & FC mainly because I like to support SME lending & see it as a broader diversification strategy both across platforms & sectors. I have a much larger portfolio on FC both as it was my earliest platform, so plenty of legacy loans & it's much higher volume allows great selectivity in choosing new loans whilst also reducing cash drag. Communication has always been pretty poor & recovery used to be but when a new man took over a couple of years ago things improved significant & those standards have been maintained. In fact along with AC I think they have one of the best recovery procedures across all P2P, obviously as most loans are unsecured it doesn't always result in actual funds being recovered but I am in no doubt all avenues are exhaustively pursued to chase errant borrowers.
LC on the other hand also has pretty poor communication but will eventually respond to e-mails, not always with anything useful but they appear to have no recovery process at all from what I can see & borrowers can simply stop paying, liquidate any assets & walk away with lenders funds whilst LC do precisely nothing about it, see other threads for examples. Like adrianc I have taken advantage of the generous cashback bonus, so this gives a good buffer to accept some degree of losses, current promotion of £150 for £2500 invested is an immediate 6% return before any interest is included so I continue to participate in selective loans but factor in a zero recovery for anything that might hit trouble.
I had high hopes that LC would provide a mini me FC but they have never lived up to expectations & continue to be a minor player in my portfolio but with both platforms I would suggest lender beware as platform DD is fairly basic & any mistakes in choosing loans will result in potential losses so take plenty of time assessing borrowers & if in doubt avoid & move on.
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Post by albermarle on Aug 9, 2017 9:57:24 GMT
Thanks for the replies, as someone with much less history with the platform(s), it is useful to get a better picture. I joined LC as I already have an IFSA with Lending Works ( pretty safe I think) and a few thousands with property loans with AC ( on the manual investment account, not the black boxes) . So I thought some exposure to SME loans in a IFSA would be a good balance, and only choice was LC ( as far as I am aware) .
Also from my own background I feel more comfortable/familiar with dealing actual businesses, P& L accounts etc than property development/bridging loans etc
So despite the default/recovery history I am going to continue and despite some initial hesitation I will be taking up the £150 Summer offer , which will approx double the current investment. I think I can find about 15/20 loans that look quite OK in the SM plus maybe three or few new ones ( bidding at the last minute ) during the month. Then I will probably not invest anymore for a while to see how it is going.
So fingers crossed that the bonus + not paying any tax + some effort to try and pick the better loans , will work out !
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pip
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LC vs FC
Aug 14, 2017 18:44:00 GMT
via mobile
Post by pip on Aug 14, 2017 18:44:00 GMT
I know four people will a lc account. For all the defaulted money (when you take into account loans that clearly are defaulted but they haven't booked as such) is in excess of interest received. Do I need to go on with my review?
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kaya
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Post by kaya on Aug 14, 2017 19:17:18 GMT
Without the promotional cashbacks available to early investors, Lending Crowd would have been a loss-maker for me, with losses from defaults exceeding interest earned. Eventually you just have to take the hint and give up and quit, though like many others I had really hoped that it would be a good place to invest. Take away the cashback, and it easily rates as my worst investment so far. If the rate of future defaults is similar to past results, then you may yet regret your investment here. Perhaps they have steadied the boat, but I won't be coming back. FC we often love to hate, but it still delivers a consistent return for me ( I suppose  ) |
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Post by albermarle on Aug 15, 2017 17:06:35 GMT
From various posts it seems some people have done badly with LC , but others are cruising along OK . I guess it comes down to the relatively low number of loans, which means luck plays a larger part.
For me FC is no go, because no IFSA , so all returns are minus tax .
Also I like the bidding auction facility for new loans on LC.
As you are probably not registered with LC anymore you might be interested in the latest arrears + default figures ( or not !)
Loans originated in 2015 - 5%
Loans originated in 2016 - 6%
Loans originated in 2017 - 0%
Or another way to look at it >
Originating In 2015 + 2016 - approx 100 loans - 8 in arrears /loss.
Originating in 2017 - 81 loans so far- zero in arrears/loss but obviously early days for most of these loans.
I do not know info about any recovery rates but general consensus seems to be zero so far , which is obviously a big weak spot .
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pom
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Post by pom on Aug 16, 2017 7:57:57 GMT
From various posts it seems some people have done badly with LC , but others are cruising along OK . I guess it comes down to the relatively low number of loans, which means luck plays a larger part. For me FC is no go, because no IFSA , so all returns are minus tax . Also I like the bidding auction facility for new loans on LC. As you are probably not registered with LC anymore you might be interested in the latest arrears + default figures ( or not !) Loans originated in 2015 - 5% Loans originated in 2016 - 6% Loans originated in 2017 - 0% Or another way to look at it > Originating In 2015 + 2016 - approx 100 loans - 8 in arrears /loss. Originating in 2017 - 81 loans so far- zero in arrears/loss but obviously early days for most of these loans. I do not know info about any recovery rates but general consensus seems to be zero so far , which is obviously a big weak spot . I'd be wary of reading too much into the lack of 2017 defaults (so far), LC have been very slow to default loans in the past - at least one was over a year late in making payments before it was finally defaulted. So unless you can now see all loans that are late rather than just your own, you won't be seeing the whole picture.
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Post by albermarle on Aug 16, 2017 10:47:16 GMT
You can download the whole loan book now( maybe was not possible in the past ) . For sure this issue about not defaulting loans for a long time is an issue, ( but not just with LC ) and in fact the figure I quote for 2016 is actually the arrears figure , which I have assumed will eventually default , with no recovery .
The loan book for 2017 shows no loan in arrears ( >45 days late) . I am assuming that now they are playing by FCA rules and having to quote arrears and defaults in a standardised way, ( I think they are following the P2P association reporting guidelines even though they are not a member ) they would be on thin ice if they were not declaring loans in arrears that were 45 days late. That's the theory anyway.
I think to be honest it is too early to judge for this year , as the loan pipeline only really picked up from April , so it is still very early days . As usual , time will tell...
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