Back in July I opened an account with Lending Club to make some money. The banks aren’t paying squat with interest and even CDs aren’t paying that much. Right now I’m staying away from the stock market after losing money over the last several years.
After doing some research I found Lending Club compelling and decided to initially open an account with $5,000. However, I added another $5,000 when Lending Club offered a $200 bonus for new accounts with at least $10,000 (after watching their webinar – presentation via the Web). Lending Club also offered to help me with lending the loans. I just had to tell them what risk level I was comfortable with. I also found this compelling because I didn’t have to worry about whom to choose to lend to.
For those not familiar with Lending Club, it is a social lending network that brings together investors and creditworthy borrowers to lend money that cuts out the middle man; traditional banks. The process is sometimes referred to Peer-to-Peer lending (P2P). Lending Club takes a small 1% commission from lenders to conduct business. Borrowers pay a processing fee depending on their creditworthiness which range from 0.75% to 3.5% of the loan value. (Read more here about how Lending Club works).
In August/September most of the $10,200 was loaned to 85 individuals. So the average loan is about $120. To date my account total is $10,521.53 with payments to date of $373.87 ($290.50 principal, $84.37 interest, $0 late fees). To date that’s a 5.2% return (includes the $200 bonus). Without the bonus the return is 3.2%. Not bad at all! Lending Club has calculated that my net annualized return should be 11.05%. Where can you get that type of return today? This assumes of course that the loans are all repaid. (See screen shots below)
Lending Club Account Summary
Lending Club ranks borrowers from A to E. A being the lowest credit risk, however, with the lowest interest rate. E is the highest risk, however, with the highest interest rate. Starting out I was conservative and only loaned to A and B borrowers. According to Lending Club no A borrower has ever defaulted on a loan. Over the next several months I’ll post updates of my Lending Club account performance.
For more information visit LendingClub.com.