Lending Club Review

Lending Club - An Investment Alternative

Disclaimer - This is an sponsored link to lending club.  I do get a fee if someone signs up for an account, but I would not recommend it if I didn't use it myself and didn't think it was a good investment.

Lending Club is one of many peer-to-peer lending sites.  Returns from the stock market has been rather volatile in the last 15 years while Lending Club has enjoyed some very good and steady statistics.  

Lending Club is also a great place to go for a loan if you can't qualify for a standard loan from a regular bank.

Like any loan, there are defaults so if you spread your money out to many different borrowers you are more likely to do well.  You can invest in $25 increments so it isn't hard to spread out your money.


Rates

The creditworthiness of the borrower is graded on an A-G system and this is how the loans have historically performed

- As I said before, volume is better - here are statistics if you invest $20,000 or more

91.78% of Lending Club investors with 800+ Notes earn returns between6% and 18%. 800 Notes can be purchased with a minimum investment of$20,000

The breakdown is as follows:

- If you invest less than $5,000, the average return is 7.01%

- $5,000-$10,000 averages 8.22%

- $10,000-$15,000 averages 9.15%

- $15,000-$20,000 averages 10.41%

- $20,000+ averages 11.08%

There is a strategy to get even higher rates.  They break down the statistics of returns depending upon the stated goal of the borrower when he receives his funds.  Here are the categories in order of average return.  If you stick to the top categories, you should get even more money

- Credit Card payoff - 10.57%

- Home Purchase - 10.06%

- Home Improvements - 9.47%

- Wedding - 9.41%

- Other 8.55%

- Car Financing - 8.28%

- Major Purchase 8.14%

- Green/Solar - 5.30%

- Training/Learning - 2.14%

Funding

You can fund your account via your checking account or via paypal.  This means you can get even better returns!  If you use paypal through your credit card, you can get your normal cashback from your card as well.  This means that if you have a Fidelity AMEX (my favorite general credit card), you will automatically get an extra 2% return on your loan before you start or whatever percentage you normally get from your credit card.  There is a minimum of $250 with paypal and a maximum of $5,000 with paypal.

You can argue whether this is ethical or even possibly stealing, but you can also get "free" money in this way.  You can fund via paypal and then withdraw the money to your checking account and you are left with your rewards for your credit card without spending anything.  This can also allow you to reach spending thresholds for credit card sign up bonuses, which can sometimes be very high.  You need to transfer electronically to a bank account for a free transfer.  If you have a check sent, there is a $15 fee.