Do the cashback listings sway your investing in one way or another?
Nope. I believe it's designed to help sway those away from their self-established criteria. I think it works for Prosper, and especially for the newer investors.
I don't even look at them, and at times I find myself investing in one without even knowing it.
I have used it and enjoyed the nice bonus it provides, however I only recommend buying a position in the loan if the rest of the information meets your existing criteria/filters. Don't reduce your standards in order to get the 3 - 4% bump because it is only a one time payout whereas you are "marrying" that borrower for 1 - 5 years. Overall, if the loan does meet your criteria, the cash back bonus can be a nice hedge against future defaults reducing a little bit of portfolio risk. I wish LC would do the same.
I stick to my investing criteria, but I look to see if those loans fit in first. 1 loan so far.
The 3% cashback has me thinking though.
Lets look at the numbers.
My investment criteria sees about a 3.5% default rate.
Assume 3% cashback.
If I invest in 3% cashback loan that has a default rate of 6.5%, shouldn't my return be exactly the same? And actually it might be a bit better since I get the 3% immediately if the loan closes.