In my last peer-to-peer lending update, I noted that the returns and cash flow were still strong, but that it was almost impossible to find good loans to lend on anymore.
Turns out the “professional” p2p lenders are all using automated software that snaps up the most attractive loans in seconds. My old-fashioned method of logging into the site at 9am and 5pm when new loans were released was not going to cut it.
I had researched one software solution called DeckTech (now PeerTrader), but found it complicated to use, and missing several key features.
They have some pre-built filters you can apply, including a sliding scale on loan popularity. I really like that one because it crowdsources the investing wisdom for you. If a certain batch of loans is flying off the shelf within seconds of going live, it must be a good one; otherwise why would all these seemingly savvy institutional and individual investors be buying it?
Note: Prosper has their own automated solution called AQI, Automated Quick Invest. The only problem is, it doesn’t seem to run until 20 minutes after the new loans go live, and all the best ones are already fully funded.
UPDATE: If you join Lending Robot through my referral link, you’ll earn an extra $5k of free management, and I will as well.
LendingRobot charges an annual fee of 0.45% of the amount they invest for you, billed monthly.
I’m looking at it this way. Based on my filters and past results, I expect to be able to earn 12-13% or better with the loans using their service, and so even after their fee I’m still coming out ahead of what I could do on my own.
The Sign Up Process
The sign-up process was REALLY fast and easy to link up your Prosper account (and I assume a similar process for Lending Club).
One thing I thought was weird is they ask for your credit card information right off the bat, but don’t tell you how much they’re going to charge. In fact, they aren’t going to charge you anything right now — they just need it for your file to levy your account fee if and when you use their service to execute purchases.
The interface is super-easy to use. You can set the exact criteria of loans you’re looking to invest in using their checkboxes and sliders. The estimated availability updates in real time.
You control how much they invest in each loan, and how much cash buffer to leave sitting in your account.
Initially I didn’t give them much to play with because I didn’t know how it would work, but I’m increasing my amounts now as my comfort level grows.
Use their pre-built filters or create your own. To get an idea of which factors have the biggest impact on returns, play around with the historical performance data over at NickelSteamroller.
LendingRobot’s customer service is not awesome. I sent them an email asking a simple question about their pre-written lending filters, and it took a couple weeks to get a response.
Not a good sign if you want a little more hand-holding, but the good news is they never touch the money — it all stays in my Prosper account.
I’m only a month or so into my experiment with LendingRobot, but I’m happy to see them buying high-potential loans on auto-pilot on my behalf. I’ll be sure to report back in a few months or next year with some concrete results.
What do you think? If you could automate and outsource your peer-to-peer investments, would you be more likely to jump into the market?