CommunityLend Launch

CommunityLend which will be the first Canadian social lending site is due to open their doors for person-to-person lending very soon. The site will enable visitors to launch lending communities within the site to share financial experience, knowledge and goals. Reports on rates, regulations, and fees will follow.

Lending Club Borrower Interest Rates

Lending Club determines a borrower's loan grade through factors which include a borrower's credit history, current situation, income, debt., and amount of loan. Each loan grade is then assigned a corresponding interest rate as listed below:

Lending Club Rates:

Loan Grade A1: 7.37%
Loan Grade A2: 7.68%
Loan Grade A3: 8.00%
Loan Grade A4: 8.32%
Loan Grade A5: 8.63%
Loan Grade B1: 9.45%
Loan Grade B2: 9.76%
Loan Grade B3: 10.08%
Loan Grade B4: 10.39%
Loan Grade B5: 10.71%
Loan Grade C1: 11.03%
Loan Grade C2: 11.34%
Loan Grade C3: 11.66%
Loan Grade C4: 11.97%
Loan Grade C5: 12.29%
Loan Grade D1: 12.61%
Loan Grade D2: 12.92%
Loan Grade D3: 13.24%
Loan Grade D4: 13.55%
Loan Grade D5: 13.87%
Loan Grade E1: 14.18%
Loan Grade E2: 14.50%
Loan Grade E3: 14.82%
Loan Grade E4: 15.13%
Loan Grade E5: 15.45%
Loan Grade F1: 15.76%
Loan Grade F2: 16.08%
Loan Grade F3: 16.40%
Loan Grade F4: 16.71%
Loan Grade F5: 17.03%
Loan Grade G1: 17.34%
Loan Grade G2: 17.66%
Loan Grade G3: 17.97%
Loan Grade G4: 18.29%
Loan Grade G5: 18.61%

New Borrowing Terms from Prosper

Prosper has announced the ability to set a national maximum lender rate at 36% (well above the previous maximum rate in some states which was set at 6% or lower) by using WebBank. Prosper has this to say about their loan origination program:

"All loans originated through the Prosper marketplace are made by WebBank, a Utah-chartered Industrial Bank. Prosper provides services to WebBank in connection with the origination of such loans and Prosper services loans made to Prosper borrowers on behalf of registered Prosper lenders who purchase such loans. All loans are fixed rate, unsecured, 3-year, fully amortizing with simple interest."

The new Prosper Borrowing Terms are listed below:

Loan amount:
$1,000 - $25,000

Maximum interest rate:
36%*

Closing fee:
($25 minimum)

AA: 1% closing fee
A - B: 2% closing fee
C - HR: 3% closing fee

Late fee:
(15-day grace period)

The greater of 5.00% of the unpaidinstallment amount, or $15**

Failed payment fee:
$15

* Texas residents are limited to 10% interest for personal use loans and 18% for business use loans. South Dakota residents cannot borrow at this time.
** Texas residents' late fee is 5% of the unpaid installment amount.

News from Lending Club

Lending Club has ceased accepting new lender registrations or new commitments from existing borrowers effective immediately. The borrowing side of Lending Club continues to function as it has in the past. The announcement issued by Lending Club is below:

Lending Club has started a process to register, with the appropriate securities authorities, promissory notes that may be offered and sold to lenders through our site in the future. Until we complete the registration process, we will not accept new lender registrations or allow new commitments from existing lenders. We will continue to service all previously funded loans during this period, and lenders will be able to access their accounts, monitor their portfolios, and withdraw available funds without changes. The borrowing side of our site will remain generally unaffected by this registration process; borrowers can continue to apply for loans and new loans posted after April 7, 2008, will be funded and held only by Lending Club. Until the registration process is completed, the company will undergo a quiet period and will not be able to respond to press and other inquiries about Lending Club or the registration process during that time.

Lending Club Performance Data

The latest data from Lending Club indicates lenders are currently being paid and mostly on time. The data derived from Mat 24, 2007 to March 28, 2008 shows a default rate of 0.00% and a late loan rate of 0.64%. A late loan is defined as payments over 45 days old. Even more revealing is that the percentage of late loans for loans graded "A" stands at 0.00%. The highest percentage of late loans was for loans graded "C" which came in at 1.61%. The Lending Club platform has not yet stood the test of time or economic recession, but the early returns for lenders are solid.

Zopa Lowers Lender's Rate

Zopa lowered the benchmark lending rate for Zopa lenders from 4.25% to 3.75%. The rate applies as the benchmark credit union deposit rate from which Zopa lenders must pick Zopa borrowers to donate a portion of their interest towards. Zopa lenders rate of return is still above the national average on bank savings accounts.

Prosper Performance Update

Performance Data from Prosper

Loans Originated from January 1, 2007 to March 27, 2008

AA-rated Credit Loans

97.38% current
0.21% defaulted

A-rated Credit Loans

95.49% current
0.70% defaulted

B-rated Credit Loans

92.23% current
0.37% defaulted

C-rate Credit Loans

90.04% current
2.32% defaulted

LoanBack Formalizes Personal Loans

LoanBack creates promissory notes to formalize private loans between borrowers and sellers for unsecured and secured loans. Their LoanBuilder ($14.95) or Loan Forms ($9.95) product can be purchased online from their site.

From the LoanBack website:

Why should I use your service?

The first step to ensuring a successful personal loan between two individuals is to clearly define a loan agreement. Will the borrower pay interest? If so, how much? When does the lender expect to be paid in full? Will the borrow defer repayment for a certain amount of time? Will the loan be amortized and have regular level payments or be paid back in one lump sum? Will the loan be secured with collateral? All of these questions need to be negotiated between the borrower and the lender and more importantly, they need to be clearly documented. Using LoanBack, you can easily customize your own loan and generate a professional Promissory Note that clearly defines your agreement. Doing so will help ensure that your personal loan is successful.

Does LoanBack support secured and unsecured loans?

Yes. LoanBack supports both types of loans. If you want to secure your loan with collateral, LoanBack allows you to input information about the collateral so that it gets included in your Note. If you are creating a secured loan, you may want to consider filing a UCC form to record the security with your state.

Is your Promissory Note a legal document?

Yes. The LoanBack Promissory Note is a legally binding contract between the borrower and lender and is enforceable in a court of law. We've spent thousands of dollars on legal fees so you don't have to; all of our Promissory Note forms were created by professional attorneys. Of course, we hope you never have to enforce this contract. In fact, we believe that using LoanBack to create a Promissory Note increases the likelihood that the loan will be a success and never require legal enforcement.

How does LoanBack use the information I enter?

LoanBack uses the information you enter to create your custom loan document. We do not sell or give away any of your personal or loan information to any third parties. Read our privacy policy for more information.

How do I ask a specific question?

Contact us with any specific question you have about our company or service. We'll answer as fast as we can.

How do I provide any feedback or suggestions to you?

Contact us with any feedback or suggestions you have about our company or service. We really appreciate feedback and will do our best to incorporate as many suggestions for product enhancements as we can.

Where can I go to learn more about other people's personal lending experiences?

We've created a LoanBack Blog to provide an easy-to-use forum for those of you who want to share your personal lending experiences, read about other peoples experiences or ask questions.

Zopa Lender Rates

Lenders at Zopa have their funds invested in a one year credit union CD insured by the National Credit Union Association. Lenders are required to set aside a portion of their interest to lower the interest rates charged to Zopa borrowers.

Zopa CD Details

Term: 1 year.

Annual Percentage Yield ("APY"): Set by you, up to today's maximum of 4.25%

Rate guarantee: Provided by each of our partnercredit unions

Dividends: Paid at maturity

Early withdrawal: Possible, but with penalty of 3month's dividends

Insurance: Up to $100,000 per Zopa member

Minimum: $500

Renewal: Set your preferences when you apply

Lending Club Fees

Borrower Processing Fee

Lending Club assesses a Processing Fee for providing the services of underwriting the loan and matching lenders to borrowers. This Processing Fee is determined by the final loan grade of the listing as displayed in the following table:

Loan Grade A: 0.75%
Loan Grade B: 1.00%
Loan Grade C: 1.50%
Loan Grade D: 2.00%
Loan Grade E: 2.00%
Loan Grade F: 2.00%
Loan Grade G: 2.00%

This Processing Fee is included in the Annual Percentage Rate calculation and is subtracted from the loan proceeds prior to disbursement. For example, the final amount credited to the borrower's bank account for a $5,000 loan with a 1.00% Processing Fee of $50 will be $4,950. Lending Club does not receive any Processing Fee if the loan listing does not close and fund.

Unsuccessful Payment Fee

When an automatic payment fails and is rejected by the borrower's bank, an Unsuccessful Payment Fee may be charged to the borrower to cover the cost Lending Club incurs on the transaction. This could happen if there is insufficient balance in the borrower's bank account, the bank account has been closed or if the account is otherwise suspended. Each attempt to collect the monthly payment is considered a separate transaction, so an Unsuccessful Payment Fee may be assessed for each failed attempt. The amount of an Unsuccessful Payment Fee is $15.

Late Payment Fee

When a borrower's payment is late after a 15-day grace period, a Late Payment Fee may be assessed on the 16th day to compensate lenders for the delay. This fee is prorated and then passed on to the lenders. Lending Club does not receive any proceeds from Late Fees. The amount of a Late Payment Fee is the greater of 5.00% of the unpaid installment amount, or $15. This fee may be charged only once per late payment.

Prosper Lending Rates Update

Recent Interest Rates on Prosper (30-day average)

Credit Grade AA

7.73% $1,000 - $5,000
8.29% $5,001 - $9,999
11.53% $10,000 - $25,000

Credit Grade A

10.02% $1,000 - $5,000
13.15% $5,001 - $9,999
15.13% $10,000 - $25,000

Credit Grade B

14.88% $1,000 - $5,000
14.32% $5,001 - $9,999
16.63% $10,000 - $25,000

Credit Grade C

16.15% $1,000 - $5,000
17.60% $5,001 - $9,999
21.15% $10,000 - $25,000

Credit Grade D

21.41% $1,000 - $5,000
19.73% $5,001 - $9,999
28.25% $10,000 - $25,000

Credit Grade E

27.51% $1,000 - $5,000
25.50% $5,001 - $9,999
35.00% $10,000 - $25,000

Credit Grade HR

27.25% $1,000 - $5,000

Prosper Fees Update

Prosper Borrower Fees

1-3% closing fee

If you are a borrower and your loan is funded, you will be charged a percentage of the amount borrowed or $25, whichever is greater, depending on your credit grade:

AA: 1% closing fee
A - B: 2% closing fee
C - HR: 3% closing fee

For example, if you are a borrower with a B credit grade and you take a loan for $5,000 to help pay for your wedding, you will be charged $100. The 2% is taken from your loan immediately, so in this example your loan is for $5,000 and you'd receive $4,900 in cash deposited into your bank account. This means that if you're using Prosper to purchase something specific (like a wedding dress), make sure you ask for enough to cover the dress and the closing fee.

1% Non-electronic payment charge (optional)

Borrowers who elect to pay their loans through bank drafts, rather than the free electronic payment service through ACH, will have 1% of additional interest added to their loan's interest rate. This added interest will be paid to Prosper for processing bank draft payments, not to lenders.

Prosper Lender Fees

0%-1% annual loan servicing fee

The annual servicing fee is accrued daily, and is based on the current outstanding loan principal. This fee is accrued the same way that regular interest is accrued on the loan. The amount of the servicing fee depends on the borrower's credit grade:

AA: 0% annual loan servicing fee
A - HR: 1% annual loan servicing fee

For example, on a $5,000 A credit grade loan at 10% interest, the servicing fee would be $80.70 over its full 3 year length. Because the servicing fee is based on the daily principal balance (which is an amortized value), it will change on a monthly basis, and the servicing fee for a loan will vary based on the interest rate and the length of the loan (if the borrower happens to pay it back in less than 3 years).

Collection agency recovery fee

In the event that one of your loans becomes more than 1 month late, Prosper will assign a professional collection agency to attempt to collect the overdue amount. Each collection agency has its own fee structure, but will only collect a fee for their services if funds are recovered.