This is my sixth month of making loans through Lending Club, a peer-to-peer lending website that matches individual lenders with borrowers who need loans. I wanted to test the company and its service out for myself before I recommended it to you (like I did with PineCone Research), and I have to say that I am very impressed with the company and the service it provides to investors looking for a higher return in today’s turbulent market and borrowers who are having trouble securing loans for their needs such as business expansion, new car loans, weddings, etc.
Every month, I transfer $50 from my personal checking account to my Lending Club account and then go shopping for loans to make. I have really gotten a kick out of being my own banker. I am careful when I review people’s request for loans. I like to make loans to business owners, brides planning their wedding, etc. I am always skeptical of people who need money for bill consolidation loans. They are just shifting the debt around and not addressing the main problem of running up the debt.
Anyway…I digress. Lending Club is great. You should check their website out. It is a very simple process to sign up and begin loaning people money. I have averaged a combined 15.5% annual return so far on the ten loans that I have made. Lending Club’s default rate is only 2.7% where credit cards for prime borrowers are defaulting at a rate of nearly 5.5%. Lending Club’s rate of return for investors lending to the best credit risks is 7.88%. Bank rate for personal loans, on average, is over 13%. Through Lending Club, a credit-worthy borrower gets the money faster and for much less interest. If you are willing to take on riskier borrowers, you can earn up to a 19% annual return on your money. Not too bad given today’s crazy stock market and economy.
While there is always a risk of default with any loan, I really feel good about all the investigation that Lending Club conducts on the lenders behalf. Lending Club asks borrowers to provide personal details such as education, employment history, salary, and reason for explaining the need for the loan. Lending Club runs its own credit checks, defines borrowers by default risk, and comes up with the interest rates that borrowers must repay. The company also handles turning in defaults to the credit bureaus to keep people honest.
Peer-to-peer, or social lending, is a grass roots effort to help those people who cannot get a conventional loan for whatever reason. And, heaven knows that even great borrowers are having trouble in today’s economy.
Still not convinced?
• You can loan as little as $50
• You are a member of a group of people making the loan
• Lending Club is registered with the Securities and Exchange Commission (SEC)
• You receive monthly payments of principle and interest from your loans
Check back here over the next few weeks when I keep you updated on how the loans I have made on Lending Club are doing and how much return I’m making on the investment too!
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