Lending Club, a US-based peer-to-peer lending network, has earned the highest satisfaction ratings in the financial services industry. As many online lending communities, Lending Club operates at a lower cost than traditional bank loan programs and passes the savings on to borrowers in the form of lower rates and to investors in the form of attractive, risk-adjusted returns returns. Everything is done online, so the whole process is fast, convenient and private.
Lending Club is very caution about an approval of loan application and confirms no more than 10% of them, thereby greatly increasing the chances of successful return to investors.
The main functions of Lending Club platforms are:
- to collect and publish applications specifying the desired terms of loans from both potential lenders and borrowers;
- to transfer funds through a global network on the specified terms.
If you’re looking for medical financing, you can apply online or through our network of more than 10,000 providers across the country.
How it works
Customers interested in a loan complete a simple application at LendingClub.com
Lending Club will perform some level of verification on every borrower. If the borrower passes verification the loan is approved for investors and will be issued to the borrower if fully funded. If the borrower fails verification the loan will not be issued. It will be deleted from the platform and all money that had been invested will be returned to the respective investors.
Qualified applicants receive offers in just minutes and can evaluate loan options with no impact to their credit score.
Investors ranging from individuals to institutions select loans in which to invest and can earn monthly returns.
A loan can stay on the platform for up to 14 days. Most loans are funded much quicker than that and once funded the loan will be deleted from the platform.
Borrowers are categorizing into seven different loan grades: There are seven different loan grades: A through G. Each loan grade is divided into five sub-grades. So, there are 35 total loan grades for borrowers — from A1 down to G5. Borrowers with A1 grade get the lowest interest rate.
Interest rate ranges from 6.78% to 27.99%. Borrowers can apply for a loan from $1,000 to a maximum of $35,000. The interest rate is fixed for the term of the loan. There are three and five-year loans available.
Lending Club is the largest and most successful p2p lender in the world. They have a long track record now of providing excellent returns to investors. This is why I have over $100,000 of my own money invested in Lending Club and continue to add to that amount. If you want to take the plunge and open an account then just click the link in the box below.
Lending Club Pros
Higher Returns – Here you can get higher returns than other types of traditional fixed income investments.
Many Filtering Options – Thise option allows to determine which notes to invest in or which to pass on.
Automated Investing – If you don’t have the time or the knowledge you can hire Lending Club to do the leg work for you and invest your money automatically. You can also automatically invest based upon the custom filters you create. A plus is this costs nothing additional.
Lending Club Cons
Untested Investment – While the notes are similar to consumer credit card debt which we do have a lot of data on it’s still a new type of investment.
Long Term Investment – Because notes are not liquid and the secondary market is just ok, it’s a slow in or out of Lending Club investments.
Returns Are Not Fixed – Unlike a bank CD, returns are not fixed over the life of the note. Typical investors yield higher returns the first 1-2 years as notes mature. Note defaults will decrease returns.
Not Everyone Can Invest – Unfortunately Lending Club is not available in every state or you must have specific income and net worth in order to participate.
Gains Taxed As Ordinary Income – This is perhaps the biggest issue especialy if you are in a high tax bracket. You are best to place Lending Club investments in an IRA account since you are taxed at ordinary income rates.
1% Annual Fee – Lending Club charges 1% annually per note you own within their marketplace.