One of my alternative income streams that I am currently working on is participating in P2P (peer-to-peer lending) through Prosper. Each month I post the status of my lending account. My current loan activity includes -
- Number of Loans – 46
- Average Interest Rate – 16.63%
- Daily Interest Accural – $.95
- Number of Late Loans – 5
I have increased the number of loans from 45 to 46 over the past month and have 1 current bid on another loan which would bring my total number of loans up to 47. My average interest rate per loan dropped a little from 16.79% to 16.63% compared to last month. The daily interest accrual remained constant at $.95 which would bring in around $28.50 in interest income each month. My goal is to still bring the daily interest accrual up to $1.66 which would allow me to earn $50 per month in interest income which would fund 1 new loan. If I am able to get to the $1.66 mark, the plan is to no longer transfer $100 per month from my checking account and allow the existing Prosper loans to fund new loans.
Concerns
While I am please with the number of loans that I have funded, along with the daily interest accrual, I am starting to have some concerns over the number of late loans I have in my portfolio. As I noted above, I have 5 late loans out of 46 in my portfolio which is around ~10%. I currently have 1 loan in Late (<15d) status, 1 loan in Late status, 2 loans in 1 month late status, and 1 loan in 2 months late status. The loan that is over 2 months late is obviously the biggest concern at this point. There has not been one payment made on this loan yet and I fear there will be no money collected on it. I will be closely monitoring these 5 loans over the course of the next month, along with any others that fall into a late status. If I continue to see issues with an increasing number of late loans, I will start to alter my criteria for bidding on loans.
