Need Series: Initial Findings

Let's look at my initial findings:

2005-2006 Loans	Total Loans	Never Recovered	Recovered	Paid
Title contains "need"	652	46.9%	52.8%	51.2%
Title does not contain "need"	5321	37.0%	62.9%	61.4%

2007 Loans	Total Loans	Never Recovered	Recovered	Paid
Title contains "need"	1092	47.7%	52.3%	50.6%
Title does not contain "need"	10387	37.3%	62.7%	61.5%

2008 Loans	Total Loans	Never Recovered	Recovered	Paid
Title contains "need"	861	34.8%	48.9%	48.6%
Title does not contain "need"	10704	30.3%	55.0%	54.3%

It's worth pointing out that not all 2008 loans will have completed yet, so we expect the percent Paid to increase--for both "need" and not "need" loans--as the year goes on. Still, for loans which have reached their conclusion (2005-2007 loans) we see roughly a 10% difference in number Paid between the groups.


Now 312lender and frinxor pointed out on the prospers.org forum that use of the word "need" could be directly correlated with credit score and, hence, non-payment rate. Let's take a look at those numbers for all loans which originated between 2005-2007:

Credit Score	Paid With "Need"	Paid Without "Need"	Difference
AA	79.6%	87.0%	7.4%
A	76.3%	76.2%	-0.1%
B	60.5%	69.3%	8.8%
C	57.1%	62.3%	5.2%
D	53.0%	60.0%	7.0%
E	45.4%	49.3%	3.9%
HR	32.3%	37.0%	4.7%

So it would seem that almost every credit grade has a difference between the groups. Now it's interesting to note that only 5% of A loans used the word "need" in the title and nearly 15% of HR loans used the word "need" in the title. This may, in fact, be relevant when we do more in-depth statistical analysis later on.

Initially, however, it still looks like we're on to something.

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All Articles in the Needs Series
An Introduction
Initial Findings
Correlation Matrix
Comparing to Lending Club
What We Fund