P2P Forum

Lending Club Discussion => Investors - LC => Topic started by: PhilGD on July 14, 2016, 11:00:00 PM

Title: Why does LC limit loan term to 36 or 60 months?
Post by: PhilGD on July 14, 2016, 11:00:00 PM
I received another direct mail solicitation from Discover Personal Loans today and I noticed that Discover offers loan terms of 36, 48, 60, 72, and 84 months. So I was wondering if there's a reason why marketplace lenders like LC and Prosper only offer terms of 36 or 60 months? In other words, if the underwriting tech at LC is as good as they claim then why not compete across all loan terms?
Title: Why does LC limit loan term to 36 or 60 months?
Post by: jheizer on July 14, 2016, 11:00:00 PM
Simplicity sake maybe?  Less options = less confusing.
Title: Why does LC limit loan term to 36 or 60 months?
Post by: bobeubanks on July 14, 2016, 11:00:00 PM
I suspect that Discover only makes those offers to established customers with a good payment history.
Title: Why does LC limit loan term to 36 or 60 months?
Post by: rawraw on July 15, 2016, 11:00:00 PM
It used to be only 36 months.
Title: Why does LC limit loan term to 36 or 60 months?
Post by: Fred on July 15, 2016, 11:00:00 PM
from: PhilGD on July 15, 2016, 08:34:03 PM
Title: Why does LC limit loan term to 36 or 60 months?
Post by: Fred93 on July 15, 2016, 11:00:00 PM
from: PhilGD on July 15, 2016, 08:34:03 PM
Title: Why does LC limit loan term to 36 or 60 months?
Post by: GS on July 15, 2016, 11:00:00 PM
I needed a loan recently, and looked into both LC, Discover and BofA. As a borrower, Discover was better than LC, hands down.  Discover had no origination fee, and a better interest rate.  And I'm not nor have I ever been a discover hard holder.  I think LC was 17% for me and Discover was 11%.
Title: Why does LC limit loan term to 36 or 60 months?
Post by: TravelingPennies on July 15, 2016, 11:00:00 PM
from: GS on July 16, 2016, 03:53:13 PM
Title: Why does LC limit loan term to 36 or 60 months?
Post by: justice42 on July 16, 2016, 11:00:00 PM
from: GS on July 16, 2016, 03:53:13 PM
Title: Why does LC limit loan term to 36 or 60 months?
Post by: Edward Reid on July 25, 2016, 11:00:00 PM
I go for the simplicity argument. Those additional terms don't really offer much more, especially since picking the right term involves predicting one's future finances rather accurately. In the case of 48 months, one can always take a 60-month loan and make extra payments. Those capable of predicting that 48 months is better for them than 36 or 60, are also capable of figuring out how to make additional payments.

Monthly payments for a $10,000 loan at 10%:

1 year, $879
2 year, $461
3 year, $323
4 year, $254
5 year, $212
6 year, $185
7 year, $166

Just looking at those numbers, it seems to me that 3 and 5 cover most of what 4, 6, and 7 cover. The real advantage to borrowers would be in 1-yr and 2-yr loans, for those with current cash flow problems which they will be able to fix soon. But again, people who can predict that, can take a 3-yr loan and make extra payments.

Edward