In the past, I’ve extensively covered the advantages of LendingClub as I’m drawn to the concept of peer-to-peer lending. Despite this, I exercise caution when investing, opting only for established and credible online P2P lending platforms. Within the sector, Prosper and LendingClub are the titans, and of these two, I have a special affinity for LendingClub. This article offers a review of LendingClub’s website and offers insight into why I am such an ardent supporter.
THE SCOOP ON LENDINGCLUB
Before diving into LendingClub’s operations, it’s worth highlighting its significant recognition. The Harvard Business Review listed the company among the top 20 “Breakthrough Ideas for 2009”. Also, The Industry Standard recently recognized it as one of the “Top 100 Innovators.” Several other commendations underline LendingClub’s reputation, but let’s now explore what it actually does.
LendingClub, with a motto of “Better Rates. Together.”, identifies itself as an online financial community. It is committed to connecting creditworthy borrowers with investors prepared to fund their personal loans. The platform effectively displaces banks, substituting a minor fee for each loan funded to maintain the platform’s operation.
BECOMING A PART OF LENDINGCLUB
Joining LendingClub is straightforward. I signed up in less than five minutes. You have the option to join as an investor, as I did, or as a borrower. As a prospective borrower, you can apply and receive an immediate quote for your potential loan rate prior to making a loan request.
As an investor, which is the aspect of the platform I find most captivating, you just need to authorize a couple of small deposits to verify your bank account. This process takes about three to four days. Currently, I am exploring loans and planning to build my portfolio. The prospect of earning a higher interest rate than offered by savings accounts or traditional CDs is exhilarating. It’s private, real-time, and you can monitor your loans daily if you choose, something I am likely to do—no judgments, please!
POINTS TO PONDER
By the close of August 2012, LendingClub had financed $875,419,700 in loans—with $60,067,825 funded in the preceding month alone. More impressively, since inception, the company has paid investors $75,212,804. Not a figure to sneer at.
But, if you’re serious about LendingClub, there are key considerations. First, risk reduction can be achieved by diversifying through funding numerous loans of nominal amounts—say, at $25 each— to absorb inevitable defaults. Second, spreading your investment across loans of varied credit grades can help buffer your investment. Maintain a balanced portfolio and you should witness considerable returns. That’s my aim, at least. Best of luck!
