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Last week's post on P2P lending traffic prompted several comments on how worthless website traffic is as a metric, especially when the two major players make their loan-production numbers public. With that in mind, I present the Q1 total loan production for Lending Club and Prosper.
While Prosper still had twice the overall loan volume of Lending Club in Q1 ($21 vs. $10 million), Lending Club is closing the gap in the prime/near-prime market (FICO 640+) originating two-thirds the volume of Prosper in March ($4 vs. $6 million). But if you take into account Lending Club's more stringent debt-to-income requirements (max 30%), the newcomer actually surpassed Prosper in these lower-risk loans ($4.1 vs. $3.7 million in March).
While the two-horse race is an interesting sidelight, the more important statistic is industry growth. In Q1, Prosper and Lending Club combined for more than $30 million in originations, up $10.7 million (55%) compared to about $20 million in Q1 2007. Only $3.4 million of the Q1 total (17%) was subprime, compared to $7.0 million (36%) a year ago.
Loan originations doubled in the prime/near prime (Prosper grades AA to C and all of Lending Club) ending the quarter at just under $27 million.
Why so much attention to a tiny sliver of the $2.5 trillion U.S. consumer loan market? It's new. It's different. It's social. And it's an experiment in online finance we get to watch in real time thanks to the transparency of the lenders. For more info on the market, see our recent Online Banking Report on P2P lending.
Q1 2008 Loan Volume: Prosper vs. Lending Club
in $ millions (U.S. only)
| Prosper All Grades | Prosper AA-C* | Prosper AA-C Low DTI** | Lending Club*** | Total | |
| Q1 2008 | $20.5 | $17.1 | $10.7 | $9.8 | $30.3 |
| March | $7.3 | $6.0 | $3.7 | $4.1 | $11.4 |
| Feb | $6.0 | $4.9 | $2.9 | $2.9 | $8.9 |
| Jan | $7.2 | $6.1 | $4.0 | $2.8 | $10.0 |
| Q1 2007 | $19.6 | $12.6 | $8.0 | n/a | $19.6 |
| '08 vs. '07 | +$0.9 | +$4.5 | +$2.7 | -- | +$10.7 |
| % change | +4.6% | +36% | +34% | -- | +55% |
Source: Online Banking Report compilation of company data, 2 April 2008
*Loans made to Prosper grade AA through C borrowers (FICO 640+)
**Loans made to Prosper grade AA through C borrowers with debt-to-income (DTI) less than 30%
***Lending Club only makes loans primarily to the "prime/low DTI" segment (FICO 640+, DTI <30%)
Note:
1. These prime/near prime/subprime distinctions can help financial institutions compare their prices to the marketplace rates.
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Comments (3)
Jim
This rocks. Thanks for this post. I'm going to see about one of my new bloggers posting it or interviewing you at the content portal i'll leave unnamed here. Very cool, though.
TJ
Posted by q4sales | April 2, 2008 9:01 PM
Posted on April 2, 2008 21:01
This is some great analysis.
Prosper uses Experian Scorex PLUS credit score instead of FICO so it is hard to make an exact comparison but I'm sure it's pretty close.
Thanks for putting this together.
Posted by Tom | April 7, 2008 5:53 PM
Posted on April 7, 2008 17:53
Here's my problem with Prosper and similar sites.
If you get into a problem with your credit and you have a damaged credit record, no one INCLUDING Prosper will even let you post your need for a loan BECAUSE your credit is damaged.
I was in an auto accident last year in April and could not walk nor work for a month. Then I got robbed at gunpoint in August and had major stress issues for 2 months.
I got behind on my credit cards in April and 2 of them were charged off.
I would have liked to get a small loan of $ 3-500 so I could get caught up on my remaining cards, yet Prosper says BECAUSE your credit is bad, you can't even ASK for a loan.
The people with the deepest problems, even if they are temporary, don't even get a chance to try to get back on their feet.
Falkie
Posted by george senda | April 21, 2008 2:29 AM
Posted on April 21, 2008 02:29