Lending Club Review

Investors are always looking for ways to diversify their investment portfolio, earn higher returns and even have fun with their investments. For these reasons, more and more investors are turning to peer to peer lending to meet their needs and achieve their goals with p2p lending strategies. In the United States, the most popular way to invest in this manner is with Lending Club. Lending Club is the largest peer to peer lender in the country and has issued billions in loans over the past eight years. The next largest player in this market is a company called Prosper. In this post, I will provide a review of Lending Club from an investor perspective.
Lending Club Review

What Does Lending Club Do?

Lending Club performs all of the same tasks that other lenders do, including 1) Accepting loan applications from borrowers, 2) Reviewing and then approving or declining the applications, 3) Collecting payments from borrowers, and 4) Using collections methods when a borrower stops paying on their loan. The difference with Lending Club is in how they get the money to lend. Under their model, any individual can invest in loans. An investor must have $1,000 to open an account. After that, they can invest as little as $25 in a loan. Lending Club provides information from the borrower applications for investors to review and decide which loans they want to invest in.

How Can I Invest in P2P Loans?

As mentioned above anyone can invest in Lending Club loans. However, there are a few basic guidelines. First, you must live in the United States. Second, you must have at least $1,000 in your account. Third, you need to decide if your account will be traditional, IRA, a trust or one of a few other options. Fourth, you need to decide on how you will invest in loans. You can pick them yourself or use the automated investing feature provided by the lending platform.

Is Lending Club a Good Investment?

The answer to this is yes and no. On average, lenders have received returns of approximately 5% per year during the 10 years that Lending Club has existed. This may seem low compared to the stock market, but you need to understand that peer to peer lending investing is a must less risky investment. While some investors lose money, it is usually a very small amount or only 1% or 2% of their portfolio value. The stock market can lose 10% or even 20% in a single year. The upside for P2P lending investing is that some investors make up to 12% per year. This is an excellent return especially considering it is not too risky.

What Are Some Tips for Investors?

Much has been written about lending club strategies but here are some of our secrets to success. The first and biggest tip is that you must diversify your loan portfolio. This means that you should put a little money in each loan so that you can buy many loans. In general, you should have at least 100 different loans. If you do this it is very unlikely that you will lose money. The other thing you need to do is select loans wisely. You should review the information provided and avoid borrowers with bankruptcies and unpaid loans in their past.
Is peer to peer loan investing right for you? If you have the time and energy to manage your investment and are satisfied with the risk and return outlook, then yes, Lending Club is a good investment for you.

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