Lend Smart and Prosper - Lending and Defaulted Loans

Defaults by Credit Grade

Percent of Defaults

Shown is a chart of the Defaulted loans on Prosper.com broken out by Credit Grade.

Loan Status

	AA	A	B	C	D	E	HR
Current	1147	1130	1514	2147	2172	1549	1518
Late	0	0	0	1	2	8	18
1 month late	10	14	21	47	59	77	166
2 months late	4	6	19	31	56	86	121
3+ months late	11	25	39	94	131	248	418
Defaulted (Delinquency)	0	0	5	7	5	13	29
Repurchased	10	3	4	1	2	4	13
Paid	221	126	124	134	124	94	55
Total	1459	1365	1788	2553	2644	2173	2469

Return on Investment (ROI)

Predicting Return on Investment (ROI)

Predicting the return on investment of a loan is difficult because it is trying to see into the future. We use past performance and assume the future loan performance will be similar. Presented here is the ROI if you invested equally in all the loans on Prosper.com. It is the average interest rate, less the Prosper Fee, and any interest lost from currently late or defaulted loans.

Table: ROI based on Average Interest Rates

	AA	A	B	C	D	E	HR
Average Interest Rate (%)	9.4	11.5	14.0	16.8	19.9	23.5	23.5
ROI (%)	7.3	8.2	9.3	10.5	11.7	6.7	-1.0

Note this model is a work in progress and is predicting higher returns then the Prosper.com model. Be very careful when using this data, it is an estimate.

Histogram Analysis

What is a histogram chart? A histogram chart groups data into equal sized bins. This is useful because it graphically summaries data in a way that is easy to understand. There are two sets of charts presented below. The first set is loans that are current or have been paid off (shown in yellow). The second set is loans that are late, defaulted, or defaulted and have been resold (shown in red). The numbers shown on the y-axis are a count of the loans that fall into that category. The numbers on the x-axis (across the bottom) are the middle value of each group. For example if the bar above '10' on the interest rate chart is 400 high, that shows there are 400 loans that have interest rates between 7.5% and 12.5%.

How to use this chart
These charts at useful in showing differences between successful and failed loans. Do high interest rate loans fail more then low interest rate loans? Look at the relative distribution of the interest rate charts, what does that tell you?

Please Select a Credit Grade: