Since, I haven’t posted on here in a while, you probably didn’t even know that I was using Lending Club, but now you know!
What is Lending Club?
I’ll give you a brief intro on Lending Club if you are unfamiliar. Lending Club is a site that facilitates peer to peer lending. Here is a common loan story on lending club:
John has got himself into a situation where he owes a lot of money at high interest rates on his credit cards. He has decided that he wants to take control of his life and pay off his credit card debt, but a bank won’t give him a loan to pay it off. He goes online to Lending Club and requests a loan from his peers that is much lower than the interest rate on his credit cards. His online peers can choose to invest in his loan in increments as small as $25. He pays off all his credit cards and now only has 1 monthly payment to Lending Club at a lower interest rate than he previously had.
This is a very common situation on Lending Club, but people can actually get loans for all kinds of reasons such as home improvement, starting a business, etc.
So what is this bot for?
Anyway, Lending Club has grown in popularity over the past few years since I started investing. Large institutional investors have started dumping millions of dollars into these loans and have started acquiring the best loans as soon as they are available for investors to put money in. Since the loans were getting snatched up so quickly, I was left with all of the loans that historically performed the worst. (I will have to write another post on how to analyze what loans perform the best.) This was really frustrating so I decided to use the same techniques that the large investors were using and built a bot that automatically invested in loans that historically have good performance.
The other advantage of having a bot to invest is that whenever a loan payment is received, the bot will automatically reinvest which means that money is never just sitting around getting no return.
How did I build it?
Building the bot was actually fairly easy, Lending Club posts new notes on their website 4 times per day at 6 AM, 10 AM, 2 PM, and 6 PM PT. I found a developer online who built a python API that works by screen scraping. He also had an auto investor tool, but his autoinvestor tool was using Lending Club’s portfolio builder tool which typically results in adding some poor loans.
I just setup a cron job to run at 6:02, 10:02, 14:02, and 18:02 that bought loans that historically had excellent performance. These loans should return over 10% on average return after defaults.
What are my current returns?
I created my Lending Club account in October of 2012. My net annualized return is currently at 13.28%. This number will drop over the next year or two as more defaults start rolling in and a large amount of my initial loans were not really the best.
That’s it for now, let me know what you think…