Comments on: Better rates for better borrowers

By: Renaud Laplanche

Renaud Laplanche — Mon, 11 Jun 2007 16:57:58 +0000

Fred, Good point; we will be making additional information
available in the next few weeks regarding specifically how rates
are being calculated. At a high level, we set a "base rate", which
is currently 7.12%. Then for each incremental loan grade (A1, A2,
A3..), we add the expected default percentage (based on data
provided to us by the credit bureaus and available at
https://secure.lendingclub.com/info/historical-defaults.action) and
a premium for additional risk / volatility. The whole formula will
be made public and posted on https://secure.lendingclub.com
shortly. The base rate is calculated as a discount to the best
available rate from banks for comparable loans (for borrowers) and
a significant premium to the average rate of return of Certificate
of Deposits. Hope this helps! More than happy to hear your feedback
on this; and again more data / formulas will be made available
soon. Best, Renaud

By: Fred93

Fred93 — Mon, 11 Jun 2007 09:05:35 +0000

How do you folks at lendingclub set the interest rates on
lendingclub loans? I see a table of rates, but I have no idea what
theory you used to choose them. Lenders need to know this.

By: Branden Tarlow

Branden Tarlow — Mon, 11 Jun 2007 03:37:38 +0000

I always send the back the business reply envelop empty or stuffed
with other trash. It cost them $0.63 for a first class letter
envelope. Others should fight back this way as well to raise the
cost of sending the annoying letters.