I’ve always been fascinated with peer-to-peer lending, and I’ve talked about the benefits of LendingClub quite a bit. I’m careful with where I invest, sticking to reliable and well-known online P2P lending platforms. Prosper and LendingClub are the big names in this space, and I’ve got a soft spot for LendingClub. In this article, I’ll share why I like LendingClub so much and what their platform offers.
GETTING TO KNOW LENDINGCLUB
LendingClub has garnered quite a bit of positive attention. For instance, the Harvard Business Review listed it as one of the top 20 “Breakthrough Ideas for 2009,” and The Industry Standard named it one of the “Top 100 Innovators.” There are many other recognitions, but let’s focus on what LendingClub actually does.
LendingClub operates under the slogan “Better Rates. Together.” They position themselves as an online financial community that connects creditworthy borrowers with investors who are willing to fund personal loans. Essentially, they cut out the banks, charging a small fee for each loan to keep the platform running.
JOINING LENDINGCLUB
Signing up for LendingClub is quick and easy—it took me less than five minutes. You can join as either an investor or a borrower. If you’re looking to borrow, you can get an immediate quote on your potential loan rate before making a formal request.
As an investor, which is the part I’m most excited about, you need to verify your bank account with a couple of small deposits, a process that takes about three to four days. I’m currently exploring various loans and planning to build my portfolio. The chance to earn a higher return than traditional savings accounts or CDs is really exciting. It’s all very private and real-time, and you can check on your loans daily, which I’ll probably do—no shame in that!
THINGS TO KEEP IN MIND
By the end of August 2012, LendingClub had funded $875,419,700 in loans, with $60,067,825 funded just the previous month. Since it started, the company has paid investors $75,212,804—not too shabby.
If you’re serious about investing in LendingClub, there are a few important things to consider. To minimize risk, you can diversify by funding many small loans—say, $25 each—to offset any that might default. Additionally, spreading your investment across loans with different credit grades can help balance your portfolio. With a well-diversified investment, you’re likely to see good returns, which is exactly what I’m aiming for. Good luck!