Charts

Peer-to-Peer Lending and Crowdfunding

The Charts on the left include loan data from two of the biggest Peer-to-Peer lending websites in the U.S.: Prosper.com and Lendingclub.com. Both of these sites started around 2005 and are pioneers of the Peer-to-Peer Lending movement, offering investors higher returns and borrowers lower rates, while taking back banking from the too-big-to-fail banking system.

The "Loans Originated" show by month the loans originated on both the Lending Club and Prosper platforms, with Lending Club originations accelerating compared to the slow and steady growth seen at Prosper.

In the "Loans by Rating," you can see that if you want a higher return, you should invest on the Prosper platform, since across the board, all interest rates are higher compared to Lending Club.

Similar to the "Loans by Rating," the "Loans by Term" show that if you want the highest interest rates, its best to invest in Prosper 1 and 3 Yr notes, versus any other Prosper or Lending Club products.

The 12 month "Loan Aging" charts show that Prosper has more chargeoffs than Lending Club, indicative of slightly lower lending standards and higher interest rates. For an almost risk free investment, its best to invest at Lending Club.

Interesting to note that as home ownership nationwide continues to decline, the number of loans given to borrowers to own as opposed to rent has increased on both Prosper and Lending Club platforms. This simply shows that people who own tend to have more financial collateral and higher FICO scores than those who rent, and are thereby more likely to qualify to get a loan on these P2P platforms.

Notable differences in the "Debt to Income Ratio" graphs is that Lending Club has no loans with a DTI above 40%, whereas Prosper has many above that range, with some approaching 100%. Investors should be cautious, as these loans are most likely the cause for the higher chargeoffs seen in the other graphs.