In the past, I’ve talked a lot about the perks of LendingClub because I’m really into the idea of peer-to-peer lending. Even so, I’m careful about my investments and only go for well-established, reputable online P2P lending platforms. In this field, Prosper and LendingClub are the big players, but I have a soft spot for LendingClub. This article is a review of LendingClub’s website and explains why I’m such a big fan.
**What’s the Deal with LendingClub**
Before getting into how LendingClub works, it’s worth mentioning its impressive accolades. Harvard Business Review ranked it among the top 20 “Breakthrough Ideas for 2009.” Also, The Industry Standard recognized it as one of the “Top 100 Innovators.” These awards highlight LendingClub’s strong reputation, but let’s see what the company actually does.
LendingClub positions itself as an online financial community with the motto “Better Rates. Together.” It aims to connect creditworthy borrowers with investors who want to fund personal loans. The platform essentially takes over the role of banks, charging a modest fee for each loan to keep things running.
**Getting Started with LendingClub**
Joining LendingClub is a breeze. I signed up in less than five minutes. You can choose to join as an investor, like I did, or as a borrower. If you’re looking to borrow, you can get an instant quote on your potential loan rate before you make a request.
As an investor, which is the part of the platform I find most exciting, you just need to authorize a few small deposits to confirm your bank account. This takes about three to four days. Right now, I’m browsing through loans and planning to build my portfolio. The idea of earning a higher interest rate than what savings accounts or traditional CDs offer is thrilling. It’s private, real-time, and you can check on your loans daily if you want to, and I probably will—don’t judge!
**Things to Think About**
By the end of August 2012, LendingClub had funded $875,419,700 in loans, with $60,067,825 funded in the previous month alone. Even more impressive, since it started, the company has paid investors $75,212,804. That’s not a number to scoff at.
But, if you’re serious about LendingClub, there are a few important points to consider. First, you can reduce your risk by spreading your investment across many smaller loans—like at $25 each—to handle any defaults that may happen. Second, diversifying your investment across loans with different credit grades can help protect your money. Keeping a balanced portfolio should lead to good returns. That’s my plan, anyway. Best of luck!