Didn't Lending Club state either at the end of last year or early this year that they would be introducing something big this spring? I half expected to maybe see an announcement tied into the LendIt conference, but nothing. Any more ideas on what it may be or when it may happen? I seem to remember speculation around car financing or something similar. Does anyone expect it will be something that will be available to retail investors?
They announced it'll be launched at their investor day or earnings release, can't remember which . I keep thinking it was May 13 but likely wrong
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I think during lendit one of their people casually mentioned something come on June 4th? June something. I forget exactly what he said now though.
Laplanche announced at LendIt that new product would be revealed on June 13th.
Whats it going to be? Auto loans? Mortgages? Or tuition for clown college?
Maybe it will be a Certificate of deposit? And LC will get into the banking business to lower their cost of capital.
Credit card.
Edited to add: Those red jackets are kinda nice. Perhaps its a clothing line.
So boat loans then
Auto refinance
The way it was being hyped and the secrecy around other marketplace lenders seems like it will be some type of new credit product, like their small business "use what you need," credit line product and not just adding a traditional credit product to the mix.
Why would they touch auto loans? I am still seeing 2% on car loans. How bad a risk would a debtor have to be before you would be able to get a decent return as an investor? I don't think I would touch them.
From a borrower standpoint I can see some sort of "line of credit" product being attractive, whether a consumer credit card or a business credit line, etc. But I have a hard time picturing how to fractionalize it from a lender standpoint....you can't have several people all willing to loan someone money on a moment's notice. Unless hundreds of lines of credit are aggregated into a fund with institutional ownership. I can't see that being something us little guys can invest in.
Subprime auto currently yielding around 24%, plus you can always repossess .
That is the current rate. Unfortunately there is more money available than borrowers at this time and most of the investors are very big institutions and family offices. That's why you haven't seen it being offered anywhere.
Subprime auto would probably be one of the worst products for LC to enter. Part of the reason I'm involved in LC because I think the management is good. If that was the product announcement, I'd immediately start to reduce the size of my LC account.
I know it is the rate (I'm good friends with one of the largest banks in the subprime industry), but I should've been more clear. I couldn't tell if you reducing subprime auto to easy lending because you can repossess the car. I assumed that was sarcastic.
Years ago I interviewed with a "deep" subprime auto lender. During the process I got to learn about their operations.
-They primarily wrote "recourse" loans to small (read, really small) auto dealers. Under these loans, they would pursue the dealer, not the borrower, for the deficiency balance
-A substantial portion of the interest went to the car dealership
-They would underwrite an $8000 loan for a $6000 car, because the dealer would sell the $6000 car for $8000
-All you needed to get a loan was a verified income source- including disability. That and no repos in the last 6 months.
-You didn't need to have a social security number
-They did so many repos (about 20-30%) that they owned their own tow trucks. For in-county repos, they would do the tow themselves
-They had a walk-up window where you could pay in cash. A substantial number of their payments came through this window, and this was in the mid-2000s
-Many of their loan contracts forbid you to drive the car outside of a small radius.
-They were very aggressive debt collectors. They would appeal in person at your job, or have your car salesman knock on your door. The better business bureau complaints were hilarious.
Does this sound like Lendingclub to you? Subprime auto is probably THE most expensive debt to service. The loan servicer and the lender should be the same person- so the loan servicer can cover the enormous overhead with the enormous interest.
I think maybe off-prime car loans might be a better fit. Id be willing to invest in someone with decent or new credit being charged 4-10% for an auto loan. But I'll leave subprime auto to the professionals.
I loved the movie Repo Man. Especially loved the philosophical bums who worked for the repo company. I think I grew up with those guys.
Since we are making predictions I'm going to say boring old student loan refi. They think it is cool as they are branching out. Maybe they'll have some good partnership to announce with it or something that makes it more exciting.
It could have something to do with Title III of the JOBS act:
https://en.wikipedia.org/wiki/Jumpstart_Our_Business_Startups_Act.
The act allows for loosening of rules on equity crowdfunding and becomes fully effective on May 16, 2016. The act will allow non-accredited investors to invest in new startups in the pre IPO stage, as well as other equity market investments. It seems that it would be a good fit for LC to allow investors to get involved in seed funding rounds for startups.
My guess LC will start lending for drugs and hookers. /s
@AnilG Weren't you aware those are already core LC product lines?
Also, I miss the days of Q&A.