Your guide to peer to peer lending

Buy a Pool, Get a Loan With Lending Club

by Peter Renton on March 7, 2011

The Final Product

Investors browsing loans on Lending Club in the past couple of weeks may have noticed a few home improvement loans for backyard pools. This may become a growing trend because last month Viking Pools, based in West Virginia, has teamed up with Lending Club to offer financing for their customers buying a pool.

It is an interesting addition to their p2p lending platform and a logical extension from a marketing perspective. By working with retailers who provide financing for their customers Lending Club can ensure a steady flow of qualified borrowers coming to their site. I expect to see more partnerships like this one being announced in the coming year. CommunityLend in Canada has partnered with for car loans, I think car financing would be a logical extension for Lending Club as well, although definitely far more competitive than pool loans.

As of this writing there are four loans on Lending Club for pool financing. They range in rates from this three year A grade loan at 7.66% to this five year F grade loan at 19.36%. Would I invest in these kinds of home improvement loans? If they met my other investing criteria I would (neither of these loans met that criteria). What do others think? Is this a good idea for Lending Club to partner with retail companies for major purchases? Be interested to hear your feedback.

Photo courtesy of James Fee

{ 9 comments… read them below or add one }

Peter P March 7, 2011 at 1:49 pm

I would stick to your lending criteria…
My new criteria is to exclude AR, CA, FL, GA, IL, MD and NV from loans, Borrowers must have a D to I Ration of less than 20%, Grade C &D’s and must own a home…I only invest in Credit Card refinancing….Pools are such a bad investment anyway…anyone looking for a loan to put one in can’t be that bright…they should have buried in their mortgage when building….

Peter Renton March 7, 2011 at 5:16 pm

@Peter, thanks for your comment and sharing your investment criteria. I imagine most of these people aren’t putting a pool in for the investment, but rather for their personal enjoyment. Although I think a five year loan at 19.36% is too high a price to pay for enjoyment.

Dan B March 7, 2011 at 5:40 pm

Unless you plan on living more than this one lifetime, there’s no such thing as too high a price to pay for enjoyment.

In fact I’m thinking of starting a p2p lending platform that specializes in a revolving credit line for brothel customers. Interest rates from 18.98% to 29.98%. Instead of a monthly automatic withdrawal, I’d have a flexible plan whereby the payment schedule is determined based on a pattern of how often the customer frequents the establishments. So if he or she goes only once a month, then it’d be that. If it’s once a week then we’d do an ACH the following week & weekly after that etc etc. I’m calling this my “Customers Always COME First Policy”.

Aaron March 7, 2011 at 6:28 pm

@Dan. Jesus………

@Peter Am I correct to assume that with this deal with lending club, Viking Pools is going to offer the pool at a lower price? Or is this a matter of Viking Pools just throwing business LC’s way? I would find it odd that people would be willing to wait two weeks to get approved for financing for any other reason. At first glance it looks like a good deal to investors in the form of more consumer traffic. In this age of instant oatmeal, drive thru restraunts, and youtube, I don’t think many “good” borrowers will leap at the chance to have to wait two weeks for financing. I don’t know. The pool thing might just be at the perfect price range where it’s a tad too expensive to put on plastic, but we don’t want to tie the item to the HELC. I would pay the 7.66% if it was me though. 19% is just crazy.

As for car lending, I will never invest in that in an UNsecured capacity. I would consider it when the car is secured, but that would involve a large amount of overhead for the p2p site. Collections, searching for borrower, repo-man, auction, legal fees, etc.

Interesting development though.

Mike March 7, 2011 at 6:30 pm

OK, somebody has to make a bad pun about this…
I hope these loans don’t go underwater.

Now back to your regularly scheduled programming.

Peter Renton March 8, 2011 at 6:39 am

@Dan, Let’s keep it PG-13 rated here on the blog. I don’t want to offend anyone.

@Aaron, My understanding is that there is no break on price from Viking Pools. Obviously, they believe that the wait for approval will be fine with their customers, otherwise they wouldn’t have signed up. I think if you don’t want to put a pool on a credit card, and have no alternative financing arranged, then waiting a couple of weeks for your loan to fund is probably not a deal breaker.
Interesting comments about the car loans. I will have to check in with CommunityLend and see if these loans are in fact secured. They certainly will be more appealing to investors if they are.

@Mike, Indeed.

Dan B March 9, 2011 at 8:04 am

That was PG-13.

Xin He October 25, 2011 at 4:24 am

And hilarious. But seriously, 19.36%? Wonder how that guy’s doing right now…

Peter Renton October 25, 2011 at 10:06 am

@Xin He, I guess some people just really want a swimming pool. I hope he got some enjoyment from it this summer because he has 4 1/2 years left on his loan.

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