Can Lending Club = Free Car?

Back in the Clinton Era I worked as a financial analyst. My job was to make numbers dance on a computer while the masters of all things corporate made their decisions. It was brutally boring work. But when you’re only 23, you figure this rite of passage is just part of being a grunt before finally making it headlong into middle management.

I hit the middle management level a little over a year later, and then took a LOT of time off. Two hour lunches. Random walks in the middle of the day. I created Excel macros for most of my work and left the rest to other grunts in the corporate machine. I focused my spare time towards three things: cars, social life, and investing.

The first two were naturally interesting. The final one was about seizing opportunities and figuring out where, beyond Wall Street, I could develop a niche.

Since then I’ve made hundreds of loans and finance deals. Cars, new businesses, even real estate. It’s worked out well… but that’s only because I usually insist on collateral.

Lending Club has a different methodology. All of their loans are unsecured. Want to build on your home? If your credit is good enough, you can get the money… without the usual risk of a foreclosure.

Need a car loan? You may pay a few percentage points more than the 0% and 1.9% factory deals that are available for super-prime consumers. But there is no lien on your car. None. No lien means no immediate opportunity for the lenders to retrieve the car if you default on the loan.

What are the costs should you default on your loan? Well, I would consider it the same as when you have a douchebag ex-partner. Except in this case you are that douchebag. The cost comes with a nice big thunk on your credit history and, if you operate a business, you will have higher expenses for those things that are based on your credit rating. You will also be a de facto thief, a degenerate, a lowlife, a schmuck and a parasite of the modern world.

But for some folks, that’s a small price to pay for a free car. Come to think of it. That’s a small price to pay for some folks who still work in the corporate world.