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As banks have cut the amount of lending that they do, individuals are increasingly turning to peer-to-peer lending companies, such as Prosper and Lending Club, as a source to get a personal loan from. Meanwhile, individual investors are taking advantage of the loan demand on Prosper and Lending Club as a new class of an investment. Since these firms have gotten a lot of press lately, we thought it made sense to do an in-depth review of Lending Club’s peer-to-peer lending service, so here’s our Lending Club Review.

About the Company:

Lending Club was founded in 2006 and currently has 21 employees. Renaurd LaPlanche is the company’s Chief Executive Officer and the firm has originated more than $70 million in loans to date. Lending Club is based out of Sunnyvale, CA. The company has received $22 million during two rounds of venture capital and has had over $744 million in loan demand.

How The Peer-to-Peer Lending Process Works

If a borrower wants to get a loan from Lending Club’s investors, they simply go through Lending Club’s online application process and then Lending Club will provide instant approval and state an interest rate that the borrower can get a loan at. After the borrower completes their loan application, the loan will go into a 2 week funding period where individual investors can opt to partially fund part of the loan. After the loan is fully funded, the borrower will receive the funds and repay the loan across 36 equal payments. Lending Club takes care of the payment processing and distributes the borrower’s payments back to the participating lenders.

Lending Club Review from a Lenders Perspective

Investors that have decided to do their own Lending Club review have earned between 9% and 12% on their money. A few investors have even earned as high as an 18% rate of return on their money, but they are few and far between.

Lending Club provides a great way to diversify one’s investment portfolio outside of stocks, bonds and real estate. Before you begin investing, make sure to understand how the process works and understand the risks involved. Start out with a small loan portfolio and be ready for some trial and error before figuring out a good mix of loans to invest in.

Here’s how to get started investing:

1.            Open an account online—it’s easy and it’s free. (Open an account from this link, and you’ll receive a $25.00 deposit bonus for signing up through our Lending Club Review)

2.            Deposit funds (via ACH, wire, check or PayPal).

3.            Easily build a portfolio of loans based on your criteria.

4.            Receive monthly payments of principle and interest. There are no maintenance fees.

Lending Club Review From a Borrowers Perspective

If you’re interested in getting a personal loan between $1,000 and $25,000, Lending Club might be an excellent way for you to get an unsecured loan with interest rates much lower than you would be charged if you simply borrowed on your credit card or got an unsecured loan from a bank. Lending Club loans amortize fully over a period of 3 years and you’ll be paying an interest rate between 7% and 25% depending upon your employment history and your credit score. You’ll need at least a 660 credit score to get a loan on Lending Club

Here’s how to get started as a borrower:

1.            Apply online—it’s free and takes just a few minutes

2.            Get quick approval on a fixed-rate, 3-year loan from $1,000 to $25,000

3.            Once approved, most loans fund in less than 2 weeks

4.            Pay interest and principal monthly automatically from your bank account

Our Verdict

There’s a lot of opportunity for investors to put money into Lending Club loans, but remember that it’s an alternative investment and should not make up the bulk of your investment plan. If you’re a borrower, Lending Club is an excellent way to get an unsecured loan, but make sure that you can repay the loan before taking it out.

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