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  • Dec 9th, 2017 6:41 pm
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[OP]
Jr. Member
Feb 15, 2012
160 posts
16 upvotes

Lending Loop

Has anyone tried using Lending Loop? It is a Canadian P2P lending site that provides a return between an annual return of 6% to about 24% . Having used it for the past two months, I have found the site very fun and interesting to invest a bit of money into. I was wondering if anyone else has tried it out.

https://www.lendingloop.ca
13 replies
Newbie
Mar 30, 2010
78 posts
26 upvotes
Toronto
Yes, I've been using it for more than a year. The crappy thing is that you can't hold it in a registered account, so the returns (while high) are taxed at your marginal rate. Also, it's still a young business and I don't think they've experienced any loan defaults yet, but it's only a matter of time. So while the returns seem high I think the long-term returns could be significantly lower.
Member
Apr 22, 2014
455 posts
210 upvotes
Edmonton, AB
NerdyGreg wrote:
Dec 6th, 2017 9:56 am
Yes, I've been using it for more than a year. The crappy thing is that you can't hold it in a registered account, so the returns (while high) are taxed at your marginal rate. Also, it's still a young business and I don't think they've experienced any loan defaults yet, but it's only a matter of time. So while the returns seem high I think the long-term returns could be significantly lower.
There have been two defaults.
Newbie
May 5, 2012
73 posts
15 upvotes
darrenmak wrote:
Dec 6th, 2017 9:20 am
Lending Loop.... provides a return between an annual return of 6% to about 24% .
https://www.lendingloop.ca
The higher returns than the regular savings or GIC rates represents the risk premiums, e.g., defaults and not covered by CDIC. The borrowers come to Lending Loop because they cannot secure a loan at a lower rate from a traditional financial institution (bank) because of factors like low credit rating, lack of collateral, uncertain future income stream, etc. Therefore, proceed with caution.
Sr. Member
Nov 13, 2013
752 posts
253 upvotes
OTTAWA
te1648 wrote:
Dec 6th, 2017 10:57 am
The higher returns than the regular savings or GIC rates represents the risk premiums, e.g., defaults and not covered by CDIC. The borrowers come to Lending Loop because they cannot secure a loan at a lower rate from a traditional financial institution (bank) because of factors like low credit rating, lack of collateral, uncertain future income stream, etc. Therefore, proceed with caution.
The economy is doing well so the default rate is low considering the return. Imagine a 2008 like recession the default rates could be astronomical on products like this. Doesn't mean avoid but it is a risky investment like the stock market not a corporate bond and certainly not a GIC.
Newbie
May 5, 2012
73 posts
15 upvotes
fogetmylogin wrote:
Dec 7th, 2017 7:17 am
The economy is doing well so the default rate is low considering the return. Imagine a 2008 like recession the default rates could be astronomical on products like this. Doesn't mean avoid but it is a risky investment like the stock market not a corporate bond and certainly not a GIC.
The economy in general so far is doing well does not mean that the borrowers in Lendering Loop are doing well. The fact that these borrowers are willing to pay high interest rates mean that their financial situations are at risks and that banks do not want to lend them funds. Besides, there are uncertainties in the canadian economy at this moment: NAFTA, higher interest rate, etc.

Personally, I would not touch Lending Loop with a 10 ft pole, and prefer to invest in the stock market instead, which generates an average annual return of 10-13%, dividends included, with much favorable tax rates (half taxable for cap gain, and the favourable DTC) than interest earned at Lending Loop. BTW, my average annual return from the stock markets for past 5 years have been about 22%. In additions, the companies listed in the stock exchanges have much better "audited" financial statements and higher credit worthiness than those borrowers in Lending Loop. And, different from Lending Loop that ties up your funds for months or years, I can get in and out of the stock market in minutes and my money starts working in minutes, not days or weeks later as in Lending Loop.
Jr. Member
Jan 2, 2009
108 posts
18 upvotes
Hmm, I also would rather invest in the stock market. Learn myself how to invest and what works and what doesn't. I was curious and went to the FAQ section. This is an excerpt of the question:

What happens if the borrower goes bad?

"....Please note, in a default situation, Lenders should expect a substantial wait as collections processes can take several months before seeing any recovery. It is also unlikely that all outstanding principal will be returned."

Not my cup of tea...
Member
Apr 22, 2014
455 posts
210 upvotes
Edmonton, AB
te1648 wrote:
Dec 7th, 2017 8:18 am
Personally, I would not touch Lending Loop with a 10 ft pole, and prefer to invest in the stock market instead
Why does it have to be one or the other though? I actually agree and prefer the stock market, but I like to diversify. The majority of my holdings are in the stock market, but I also have some bonds, some liquid savings, some Lending Loop, some real estate, and some crypto.
Newbie
May 5, 2012
73 posts
15 upvotes
philland wrote:
Dec 7th, 2017 12:28 pm
Why does it have to be one or the other though? I actually agree and prefer the stock market, but I like to diversify. The majority of my holdings are in the stock market, but I also have some bonds, some liquid savings, some Lending Loop, some real estate, and some crypto.
Guess to each its own, depending on your investment knowledge and risk tolerance. Lending Loop is not a reasonable risk for its returns and the real return is much less than the posted rate after factoring in the defaults and the delays, IMO. I am also of the camp that crypto is a bubble.

I have real estate (house) and then stock portfolio, no bonds, and negligible liquid savings. Diversification is only for those who do not know what they are doing.
Deal Addict
User avatar
Aug 16, 2009
1408 posts
279 upvotes
te1648 wrote:
Dec 7th, 2017 3:23 pm
Diversification is only for those who do not know what they are doing.
Yikes. Keep riding the wave, glad I don't know what I'm doing....
Newbie
May 5, 2012
73 posts
15 upvotes
smokescreen15 wrote:
Dec 7th, 2017 3:39 pm
Yikes. Keep riding the wave, glad I don't know what I'm doing....

In a rising tide, every boat goes up. Since 2009, anybody can easily get the all time high with their diversified stock portfolio. However, if a person knows what s/he doing in investment (past experiences or industry knowledge), the investment portfolio will be more selective based on prospects and risks, and the returns would be much higher.
Member
Apr 22, 2014
455 posts
210 upvotes
Edmonton, AB
te1648 wrote:
Dec 7th, 2017 3:23 pm
Guess to each its own, depending on your investment knowledge and risk tolerance. Lending Loop is not a reasonable risk for its returns and the real return is much less than the posted rate after factoring in the defaults and the delays, IMO. I am also of the camp that crypto is a bubble.

I have real estate (house) and then stock portfolio, no bonds, and negligible liquid savings. Diversification is only for those who do not know what they are doing.
This kind of stuff is super easy to say 7+ years into a bull market.
Deal Addict
Sep 23, 2009
3976 posts
1142 upvotes
I am not sure why someone would compare Lending Loop to the stock market?

A better comparison would be to a bond fund.

At this point in time, it seems that it is too early to say what a true return is. Maybe in 2020 we could start talking about if the return is comparable.

It does seem that returns are abnormally high as the majority of loans are in good standing.

To be honest, I feel that most Canadian businesses are only utilizing these lenders to build a history .... so they can go to a bank and get a much lower rate.

They turn to Lending Loop today at say 14% so that in 3 years someone will give them a chance at 6 or 7%

I think that this is a different story than say Lending Club in the US.

Of course, I could be wrong and it is just as bad. But, I feel like the majority of the companies have good intentions as they want a better rate in the future.

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