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Opinions and analysis of Marketplace Lending, Online Lending, and Peer to Peer Lending.

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Lending Club Secondary Market: Profitability of Trade and Recovery Rate with Loan Status at Listing

Best Practices for Automated Lending on Lending Club and Prosper Platforms through PeerCube


Earlier this year, PeerCube introduced automated portfolio analysis and automated lending on both Lending Club and Prosper Platforms using APIs of both platforms. Since the introduction, we received several queries about these new features and different ways to leverage them to improve lending on Lending Club and Prosper platforms.

This post is our attempt to communicate how-to automate lending through PeerCube. While majority of the post discusses the automated lending on Lending Club platform, the best practices and procedures are somewhat similar for automated lending on Prosper platform.

In our opinion, the automated lending is appropriate for lenders:

  • who do not want to spend time manually reviewing the available loans.
  • who want to deploy available cash quickly.
  • who believe that desirable loans are funded quickly after being released on the platform.
  • who has the defined lending strategy that doesn't require manual review.

Lending Club and Prosper API Credentials

Lending Club generates and displays the API key on My Profile page. Once you login to your Lending Club account online, navigate to Settings, and look for API Settings section.

Prosper requires you to select a separate password for API access at API Settings page. Once you login to your Prosper account online, navigate to Settings, and look for API box in the right column. As a best practice for security reasons, the password for Prosper API access must be different from the one that you use for web access. You may need to request access to API and agree to a few terms and conditions.

Once you retrieve API key from Lending Club web site or create API password on Prosper web site, you need to provide API credentials on PeerCube site.

Why should you consider providing API credentials to PeerCube?

We encourage all users to enter their API credentials on PeerCube.

  1. Lending Club and Prosper API access is limited to retrieving information about your portfolio notes and placing orders on primary platforms. There is virtually negligible security risk of someone misusing your API credentials, for example, to liquidate your portfolio and drain cash from your account.
  2. The API access allows PeerCube to automatically update information about your notes and portfolio. This enables you to analyze your Lending Club and Prosper portfolio without the need of manual upload of your notes to PeerCube.

Though the automated lending through API is an exclusive feature for Pro Plan Subscribers, Free Plan Users can also benefit from automated portfolio update through API.

Lending Club

The screen capture below shows the Lending Club API Credentials section of Lending Club Automated Account Management page on PeerCube. Lending API credentials for all accounts that you like to track using PeerCube need to be entered in this section. All API credentials already entered are also displayed in this section.


Screen Capture - Lending Club API Credentials
Screen Capture - Lending Club API Credentials

  • Account Number is displayed after My Account # on Lending Club Account Summary page.
  • API Key is shown on Settings page. PeerCube uses entered account number and API key to retrieve information about your account from Lending Club. Warning: Any time you press Refresh button on Settings page, it will generate a new API key and disable old ones. Please make sure to update the API key on PeerCube after each refresh.
  • Account Name and Associated Email are used to identify the account. You are encouraged to use the account holder’s name and the email associated with that account on Lending Club for future-proofing in case Lending Club introduces new API functionality or PeerCube introduces new features that may require these fields.

After entering the requested information, press Add button to save API credential. In the background, PeerCube makes a quick API call to confirm the validity of entered credentials. If there are any issues, the error message will be displayed and your credential will not be saved. The displayed API credentials can be modified by re-adding the same account with new API key. You can remove any of the displayed account and credentials by pressing Remove button displayed next to that entry.

PeerCube can automatically track and manage up to Five Lending Club accounts for each user.

Lending Club Automated Lending Settings

The screen capture below shows the Lending Club Automated Lending Settings section of Lending Club Automated Account Management page on PeerCube. This section lists all accounts for which automated lending is configured and the loan filter that will be used to select loans.


Screen Capture - Lending Club Automated Lending Settings
Screen Capture - Lending Club Automated Lending Settings

  • Account Number: All Lending Club Account Numbers added to Lending Club API Credentials section are available in drop down menu. Select the account for which you want to set up automated lending.
  • Lending Amount per Note: A list of predefined lending amount from $25 to $1,000 is available in drop down menu. Select the amount you want to lend to each loan.
  • Lending Club Loan Filter: All Loan Filters associated with your PeerCube account are available through the drop down menu. Select a loan filter that you want to use with the specified Lending Club Account Number.
  • Minimum Cash Balance to Maintain: A list of predefined minimum cash balance from $25 to $1,000. This field enables you to maintain a certain level of cash balance in your account.
  • Portfolio Name: Lending Club provides the capability to assign notes to a portfolio. By providing the name of an existing portfolio on Lending Club or a new name for the portfolio, PeerCube will assign all loan orders to the specified portfolio. If PeerCube detects the portfolio name that doesn’t exist in your Lending Club account, it will automatically create a new portfolio with specified name on Lending Club when you add the automated lending setting.

The process of adding, removing and modifying the automated lending settings is same as described above for Lending Club API credentials.

You can set up a combination of five accounts and five loan filters for automated lending for maximum of Five automated lending settings. For example, you can have two accounts with two filters each and another account with one filter for the total of Five automated lending settings.

Automated Lending Transaction History for Lending Club

The screen capture below shows the Automated Lending Transaction History for Lending Club section of Lending Club Automated Account Management page on PeerCube. This section lists all the orders placed through automated lending and order response from Lending Club.


Screen Capture - Lending Club Automated Lending Transaction History
Screen Capture - Lending Club Automated Lending Transaction History

  • Account field displays the account number for the account for which order was placed.
  • Loan Filter field displays the loan filter that selected the ordered loan.
  • Cash field displays the available cash before the loan order was placed. Automated lending process checks for available cash just before an order being placed. An order for multiple loans will display the same value for available cash for each loan entry in the table.
  • Order Date field displays the date and time when the order was placed.
  • Trans. ID field displays the transaction confirmation ID received from Lending Club for the order. If the order failed for any reason, there will be no entry for transaction ID. An order for multiple loans will display the same value for transaction ID.
  • Loan ID field displays the loan ID for which the order was placed. A hyperlink to PeerCube loan detail page is provided to further review the loan.
  • Requested field displays the lending amount requested for each loan in the order by automated lending process.
  • Invested field displays the lending amount actually lent. This value is received from Lending Club in response to placed order. When the funding amount remaining for a loan is less than the requested amount, Lending Club automatically lowers the invested amount.
  • Order Status field displays the order status responses received from Lending Club in response to placed order. This is a good way to monitor whether the orders are being placed successfully and ordered loans are being added to portfolio.

Guidelines

  1. You can create or modify the loan filters through Lending Club Loan Filters section. All changes to loan filters in loan filter section are automatically propagated to loan filter used in automated lending.
  2. You can have multiple loan filters for the same account. The automated lending process randomly picks the order of loan filters to execute when new loans are detected.
  3. You can use the same loan filter for multiple Lending Club accounts. The past automated orders placed through PeerCube across all configured accounts are checked to avoid lending to the same loan multiple times across multiple accounts.
  4. The automated lending process will only place orders of new loans when the cash balance in account goes above the specified minimum cash balance in account plus the specified lending amount per note.
  5. You can use Minimum Cash Balance to Maintain field to manage a minimum cash balance in your account so that you can use the cash for regular withdrawals or for purchasing notes on FOLIOfn secondary platform.
  6. If minimum cash balance is set to $0, automated lending process will lend to new loans meeting specified loan filter criteria as soon as additional cash becomes available through receiving repayments, addition of new funds, or return of funds due to loans not being issued. This option is good for lenders who wants their cash to be fully invested at all times.
  7. You can also use the minimum cash balance to trigger a second loan filter when the account cash balance exceeds the threshold specified with Minimum Cash Balance to Maintain field. This is a very useful trick during the low new loans inventory periods and/or when not enough new loans are available meeting your first loan filter criteria.
  8. The automated lending process only lends to new loans on the platform when a certain number of new loans are detected on the platform, mostly around the new loan release time of 6:00AM, 10:00AM, 2:00PM, 6:00PM, 10:00PM and 2:00AM PT.
  9. The automated lending process only checks against the previous orders made through the process to make sure the same loans are not being lent to multiple times. It eliminates duplicate lending to the same loans due to presence of such loans in multiple specified loan filters and/or across multiple Lending Club accounts associated with one PeerCube accounts.
  10. Lending Club automatically adjusts the lending amount for a loan downward if the remaining funding amount for the loan is less than the requested amount. You may want to select the maximum amount you want to lend to a loan in Lending Amount per Note field.
  11. If you don’t see enough orders being placed by automated lending process, consider loosening your filter criteria.
  12. All automated portfolio updates are performed once a day. Your portfolio update may take up to 24 hours to appear on Portfolio Analysis page.

If you are subscriber, please try the automated lending and let us know your feedback and suggestions for improvement. If you are not a subscriber, we will encourage you to subscribe to support the long term viability of PeerCube platform and receive access to value-added features in loan selection, secondary platform listings, portfolio analysis, and automated lending.

Comments: (3)

michael | Tuesday March 31, 2015, 6:17 pm

is there a limit to how much we can invest using peercube automated investing?

 

Anil Gupta | Tuesday March 31, 2015, 9:54 pm

@Michael, there is no limit on total dollar amount or total number of notes that can be lent to using PeerCube Automated Lending.

Dave O | Monday April 18, 2016, 5:07 am

Please explain how this stated paragraph does not contradict itself?   Am I missing something?

"Lending Club and Prosper API access is limited to retrieving information about your portfolio notes and placing orders on primary platforms. There is virtually negligible security risk of someone misusing your API credentials, for example, to liquidate your portfolio and drain cash from your account."

Let's say I have 5000 notes all current with $11 principle remaining,  what safeguard is in place to prevent selling all 5000 notes at a $1 each thus a liquidation of all my notes ( using my encrypted API I foolishly provided with blind trust). 

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