Finding a Loan

At Prosper.com, consumers with good credit ratings can successfully apply for a loan. Loans can be used for any reason and borrowers commonly request funding for auto loans, home remodeling projects, educational costs, and personal debt consolidation.

The process for applying for a Prosper.com P2P loan is simple and can be done online. Applicants can share as little or as much information about their loan request as they wish and investors who are open to funding loan requests will be able to review the applicant’s information before deciding to fund the loan.

Borrowers choose a loan amount between $2,000 and $25,000. They fill out the application and include the purpose for the loan. Investors will review the listings for loan requests and make decisions as to which requests meet their funding criteria. Borrowers will receive a direct deposit of the money when the loan has been funded. Repayment is set up in fixed, monthly payments which are then distributed to the loan’s investors.

Loan Types

Unsecured loans are available in terms of one year, three years, and five years. Credit scores will be determined by Prosper and assigned a Prosper rating based on consumer credit history. For instance, credit scores of 720-759 receive an A grade that lenders use to analyze funding opportunities.

The interest rate on the loan is subject to credit scores of the borrower as well as other past credit history information and the ability to repay the loan. Excellent credit ratings will result in low interest rates and past credit problems will dictate a much higher interest rate for a loan.

There are no prepayment penalties for Prosper.com loans. Penalties are assessed for late or missed payments. There are also closing fees associated with each loan and the amount varies as it includes a percentage of the amount borrowed as well as the Prosper credit rating score. The closing fee is deducted from the loan before funds are transferred to the borrower. Borrowers will need to apply for a loan greater than their needs to ensure the closing costs are covered.

Peer-to-peer lending has its drawbacks, mostly for the investor. Late or defaulted loan repayments are the biggest risk as investors will not get their high returns back on the money invested. Overall, peer-to-peer lending from Prosper gives borrowers an alternative place to seek financing for the funds they need for a multitude of reasons with more flexible terms and potentially lower interest rates than with conventionallenders and big financial operations.

If you want to do your own Prosper.com review, visit Prosper.com

Prosper.com Review: Loans Offered By Prosper.com was created by and is property of American Consumer News.

Comparing the Leaders

Lending Club is notably one of the largest peer-to-peer lending sites in theUnited States. It facilitates millions of dollars in loans between borrowers and investors each month. Prosper.com also enjoys similar success with its lending practices and is currently Lending Club’s biggest competitor in the peer-to-peer lending market.

Both sites offer investors the opportunity to diversify their investment portfolios outside the traditional stocks and bonds. Investors can fund loans requested by borrowers and in turn enjoy a relatively good rate of return for the efforts. The borrower benefits by skipping the lengthy process of qualifying for loans through a bank and enjoys the flexible terms and typically low interest rates for the loans.

For the Borrower

Loan terms differ between sites. Prosper.com offers one, three and five year terms with loans ranging between $2,000 and $25,000. Lending Club offers unsecured loans ranging from $1,000 to $35,000. Both offer interest rates that are comparable, which Prosper.com’s rates just slightly lower than Lending Club’s. Interest rates will vary based on the credit history of the borrower.

When it comes to eligibility requirements for loans with Lending Club versus Prosper.com, Prosper.com allows customers with lower credit scores the opportunity to have loan requests approved. For the investor, Prosper also allows for higher returns but the risks are higher. Defaults on loans total around 20% for Prosper.com and only 3% with Lending Club participants.

For the Investor

Investors may also find Prosper.com more complicated to participant in loan funding. Investors must provide personal information upfront including driver’s license information and have a credit check performed right away. There is a period of wait time between when money is transferred from your bank to your account before investors can begin funding loans. Lending Club does not have such initial activity for investors who want to get started. The company’s sign up process is known to be simple and straightforward.

Lending Club has stronger credit requirements than Prosper.com. Borrowers are analyzed by credit history and will receive a credit grade from the company that helps inform investors of the borrower’s credit standing. Lending club requires better credit histories from borrowers than Prosper.com so the risk of default is less with Lending Club as far as investors are concerned.

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P2P Risks in General

Peer-to-peer lending in general comes with risks, mostly for the investor. Borrowers are known to default on their loan repayments, leaving the investor with no return on their money. While this is true of any loan, investors may be more affected by this fact than the bigger banking institutions.

Summarizing Complaints

To date, there have been limited complaints directly aimed at Lending Club. There have been some concerns with the clarity with which the investor’s rate of return is being explained. The high rate of return for investors that the website boasts is true but only because the majority of loans average 14 month terms which calculates a higher rate of return.

Another issue that springs complaints from Lending Club members is about the investing process. Investors say they often have money left sitting in their account that isn’t earning interest. This money comes from loan repayments that are being distributed but the investor has not had the time to reinvest the funds. When investors place a bid on a loan, the money is the account is then held for up to two weeks before the loan process is completed.

Some suggestions to improve Lending Club including paying the investors a fixed rate of interest like a money market fund for the uninvested funds left sitting in accounts, similar to the way PayPal offers interest payments on balances in the accounts. Another suggestion is to provide a method of investing fixed amounts of cash and have the ability to fund new loans automatically while investors collect the minimum to fund a loan partially.  Right now, Lending Club has an automated typed investment option where the Club will invest the cash for investors but the option is only available to those investors putting in $10,000 or more.

Overall, Lending Club’s methods seem to work for both investors with the money and the borrowers who are seeking a loan outside the regular network of lenders. Interest rates and terms for the loans may be more borrower-friendly through peer-to-peer lending operations. While there are risks, the percentage of delinquencies and defaults averages around 10% of all loans made. Despite the small list of complaints and suggestions for improvements, Lending Club continues to generate over $6 million in loans each month.

Lenders and borrowers who have an interest in a peer-to-peer lending setup may be interested in checking out the process of Lending Club’s lending website. Peer-to-peer lending is an increasingly popular method for facilitating loans and raising investment capital for those looking to diversify their portfolios.

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At the end of the day, it’s a numbers game. To pay off your debt, you need to minimize the interest that you pay and send in large principal payments on a recurring basis. If you are in a large amount of credit card debt or other consumer debt, you’re going to have to significantly reduce your monthly spending so that you aren’t increasing your credit card balances each month. You’ll also have to cut back to the point where you can make extra principal payments on your loan each month. It’s not easy, but it will be well worth it at the end of the day.

Another thing that you can do is consolidate your debt at a lower interest rate. This alone won’t be enough to get you out of debt, but it will reduce the amount of interest that you pay, ensuring that more of your monthly payments go to your principal balance. Two peer-to-peer lending companies, Lending Club and Prosper.com, are offering reasonable interest rates on unsecured loans. Many debtors have made use of these two services to lower the interest rates they’re paying on their debt.

The loans offered by Prosper and Lending Club are unsecured fixed-rate loans, with one year, three year or five year repayment schedules. The loans are fully amortizing, meaning that at the end of your loan period, your debt is fully paid off. These loans do have a small up-front origination fee, but there are no other hidden fees.

The interest rates offered by Prosper and Lending Club are extremely competitive because the loans are funded by individual investors rather than by banks. Borrowers with great credit can get loans with interest rates as low as 7%. The average interest rate that borrowers pay ends up being around 9% and borrowers that are extremely high credit risks can pay up to 20%. The idea is that if you have credit cards with interest rates of 20%, 25% or 30%, you can consolidate those into a peer-to-peer loan and save dramatically on the interest.

At the end of the day, paying debt off is not an easy thing to do, but after all of the hard work’s been done and you’re debt free, you’ll find that it was well worth it.

How to Use Peer-to-Peer Loans to Manage and Eliminate Debt was created by and is property of American Consumer News.

How it Works:

Prosper, Lending Club and other firms sidestep the banking industry by creating an alternative means for borrowers to get loans. On Prosper, customers hoping to get a loan make a request to borrow a certain amount of money with a one, three or five year loan term. Prosper Loans reviews and verifies information about its borrowers, such as their credit history and personal information and lets the borrower know what interest rate that they can qualify for a loan at. If the borrower is happy with the rate, they can continue to the origination process where other members of Prosper.com can fund part of the borrower’s loan. After the loan is fully funded, the borrower receives their money. The loans on Prosper.com have no prepayment penalty. Prosper.com generates its revenue by collecting a one-time fee from borrowers and by charging its lenders a loan servicing fee.

Borrowing From Prosper:

Borrowers on Prosper.com are paying slightly lower interest rates than those of Prosper Loans’ competitor, Lending Club. The interest rates that borrowers pay are much lower than what they would get by registering for a personal loan at a bank or putting a loan on a credit card. Borrowers can borrow money for any number of reasons and the interest rate that they pay will vary from 5.9-20% depending on their credit score. Borrowers interested in getting a loan from prosper can do so at http://www.prosper.com/loans/.

Investing with Prosper:

Many investors that funded loans when the company first launched in 2006 and 2007 have had a very bitter taste in their money from Prosper. Prosper.com did not place any limits on who could apply for a loan and what interest rates investors could agree to pay when first launching their service. As a result, many investors lost money by choosing to invest in loans that weren’t profitable. The company has since revamped their credit risk policies to only loan to qualified borrowers. The company also now sets the interest rates that borrowers pay to lenders to make sure that lenders do not bid too low on a loan.

The experience for an investor on Prosper.com is now very similar to that of Lending Club. Lenders can simply choose the loans they would like to fund and put a set dollar amount toward that fund. The service previously used an auction model, but has since scrapped the process in favor of a more streamlined method.

Investing in Prosper loans is still very much an alternative investment. Peer to peer loans are a relatively new financial product and do not have a long track record. Essentially, an investor is creating their own collateralized debt obligation (CDO). Investing in peer to peer loans should not take the place of your retirement plan. Like any investment, there is risk involved.

Investors looking to lend through Prosper.com can do so at http://www.prosper.com/invest/

Prosper Loans Review 2011: What You Need to Know About Prosper.com was created by and is property of American Consumer News.

About the Company:

Lending Club was founded in 2006 and currently has 48 employees. Renaud Laplanche is the company’s founder and Chief Executive Officer and the firm has originated more than $200 million in loans to date.  The other man behind Lending Club is Rob Garcia who has been responsible for product strategy and social media marketing. Lending Club was originally based out of Sunnyvale, CA, but moved to Redwood City, CA in early 2010. The company has received several rounds of venture capital and has seen an explosion in their business in 2010 with over $2 billion 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 or 60 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

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.  Lending Club publishes the platform average net annualized return in real time, which in 2010 was consistently over 9.5%. Although it’s hard to pin down a magic number for an initial investment, it appears that investors who invest in 100 loans or more ($2,500 minimum investment) experience more stable portfolio returns (diversification is key).

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 or five years (depending on what you choose). You will pay an interest rate between 5.42% and 21.14% depending upon your employment history and your credit score.  There is also an origination fee (service fee to issue the loan) that ranges from 2% to 5% of the loan amount.

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 in 2011, Lending Club is an excellent way to get an unsecured loan, but make sure that you can repay the loan before taking it out.

Lending Club Review 2011: A Review of LendingClub.com’s Peer to Peer Lending Service was created by and is property of American Consumer News.

Whether you’re the owner of a small business or a consumer looking to take a loan, you might find yourself disappointed with traditional lenders. Fortunately, there’s a Plan B–peer to peer lending.

Peer to Peer lending, which is under the category of social lending, is a way of taking out a loan online from other people. Two of the major sites in the United States are Lending Club. There’s also some niche sites targeted at students looking for student loans such as People Capital and Green Note.

Companies like Prosper and Lending Club have been around for a few years, but have gained notoriety during the last couple of years because of the relative ease of getting a loan through the service compared to a bank. Lending Club has seen significant growth during the last year. The company had monthly loan originations of $2.15 million during February of 2009 and hit more than $10 million during May 2010.

The primary advantage of using a peer to peer lending service to take out a loan is the interest rate that you’ll pay. The average borrower gets a loan at about 9%, much better than credit cards and unsecured loans which can easily be above 20%. Investors benefit by having an investment which provides some diversity to stocks, bonds and real estate. Lending Club boasts that its investors have earned a 9.64% net annualized return since 2007.

If you’re a borrower, know that you’ll still need to have a credit score of at least 640 (or 660 for Lending Club) to get a loan. You’ll also need to be able to have an income and some level of employment history. There’s also some fees involved, as you would pay with any bank. Peer to peer lending companies are in the business to make money, so borrowers can expect to pay an origination fee of 1-4%

The Basics of Peer to Peer Lending was created by and is property of American Consumer News.

Own the Dollar looks for borrowers with “C” credit ratings or lower, longevity in the borrower’s job and borrowers that request smaller loan amounts. He also looks for borrowers with low credit utilization ratios and doesn’t invest more than $50.00 in each loan. Steadfast Finances doesn’t place more than $25.00 in each loan and accepts borrowers that have credit scores of 679 or above and are taking out loans for specific purposes. He also looks for borrowers with job security and a low amount of existing debt. Five Cent Nickel has posted his own lending criteria.

Most Lending Club investors will eventually settle on their own strategy for finding the best borrowers to loan money to, but what if you could find the best loans without digging through the 300+ loan listings which are on Lending Club at any given time? By using the correct selection criteria, you can find the loans that Lending Club lenders are most excited to invest in.

The easiest way to see which loans have expressed the most investment interest from lenders is to compare what percentage of the loan has been funded versus how much time in the lending process the loan has left. If a loan is more than 90% funded and there’s still more than a week to go on the loan listing, there’s probably a reason why investors have been quick to fund the loan. To find these notes, go to the “Browse Notes” section in your Lending Club account, and sort by “% funded” descending and you’ll see a list of which notes have the highest percentage funding. You can than see loans that have a large number of days in the “time left” column to find notes which also are already close to being completely funded.

Finding popular loans isn’t the only criteria that you should use when choosing Lending Club loans to invest in. However, using this sort mechanism can be a good way to find some of the “cream of the crop” loans to review.

How to Outsource Your Lending Club Investment criteria was created by and is property of American Consumer News.

The industry that enables savings account holders to cut the bank out of the lending process is called “peer-to-peer lending.” Instead of indirectly loaning money to borrowers through the bank, there are now a number of peer-to-peer lending marketplaces that allows savers to take the money they would have placed in savings accounts and loan it directly to borrowers. Although there is some risk involved if the borrower does not repay, many savers that have moved their money to peer-to-peer lending services are making between 8% and 12% back on their money.

It’s not a fair comparison to say that the interest rates that you get by making loans directly to other people through peer-to-peer lending marketplaces is the same as loaning money to the bank. When you put money into a bank, your money is FDIC insured and there’s no risk that you will lose money on the investment. When you “become a bank” and lend money to borrowers via a peer-to-peer lending marketplace, you are taking on all the risk of default that a bank would when they make a loan.

Some of the early investors in Prosper Marketplace, the largest peer-to-peer lending marketplace, did end up losing money because the company as accepting very high-risk borrowers at the time. These lax standards combined with an increasing unemployment made “becoming a bank” a less profitable venture for some than they had originally expected. Fortunately, more recent investors in Prosper Marketplace and its primary competitor, Lending Club, have fared much better as the two companies tightened their lending standards to reduce default rates.

If you are interested in “becoming a bank” your first step is to visit one of the websites for two major peer-to-peer lending marketplaces. If you are located outside the U.S., there may be a peer-to-peer lending marketplace specifically to your country. In the United States, Prosper Marketplace and Lending Club are the two companies that serve as an exchange for savers that want to “become a bank” and borrowers that would like to take out a loan.

After creating an account on Prosper or Lending Club’s services, you can then transfer funds in just as you would with any brokerage account. After you have money in your account, you can then start looking at loan listings and choosing which borrowers you would like to loan money to. In this part of the process, you are literally acting as a “loan officer” for the bank that you have just become. You need to look at each borrower’s listing and decide if you would like to fund a portion of their loan.

Common strategies that investors use to determine how risky a borrower is include looking at the person’s employment history, their credit rating, their amount of late payments, and the reason for their loan. Some choose to look at riskier loans in hopes of making higher rates of return and others play it safe and only invest in “A” quality loans.

No one is sure whether or not these peer-to-peer lending marketplaces will survive and thrive long enough to become a major part of the lending industry, but for now they are an interesting way for savers to take on a bit more risk and earn a much better rate of return than one would get on a savings account.

How to Become a Peer to Peer Lender was created by and is property of American Consumer News.

Typically peer to peer lending companies such as Lending Club, Prosper and others start out with the borrower. A person will come to one of the company’s websites looking to take out a three-year or five-year unsecured loan. The borrow will complete an application form and the peer to peer lending company will check the borrower’s credit. If the borrower has a credit score of 660 or above and meets certain other requirements, their loan listing will be placed on the peer to peer lending marketplace and a funding process will begin.

After a loan is listed on a peer to peer lending marketplace, other members of the site with investor accounts will be able to browse the loan. The investor will be able to see key credit information as well as see information about the borrower’s employment situation and a description as to why the borrower wants to take out the loan. If they believe that the interest rate that will be charged to the borrow is sufficiently high for the amount of risk they believe they are taking out on the loan, they can choose to fund part of the loan.

Typically a loan to a borrower will be funded by dozens of investors, each investing amounts ranging from $25.00 to $500.00. After the borrower’s loan is fully funded, Lending Club or Prosper will transfer the loan amount to the borrower. When the first payment is due, the company will draft the funds out of the borrowers account, and distribute the payment to investors that funded the loan. After thirty-six or sixty months, the loan will be repaid by the borrower and the investors will, if the borrower meets their commitment, receive their principal back plus interest.

In the event that a borrower does not pay, the peer to peer lending company, whether it’s Lending Club or Prosper, will engage in a collections practice to try to bring the loan back to current. Lending Club has a well-developed collections strategy, but Prosper.com has previously been criticized for not doing enough to collect on delinquent accounts. The percentage of borrowers that default on their loan depends largely on the marketplace because of the differing credit requirements that each site has.

How Peer to Peer Lending Websites Work was created by and is property of American Consumer News.

If you’re not familiar with Lending Club, it’s a marketplace which allows users of its website to make loans to one another. Instead of putting money into a savings account and indirectly loaning it to other people through the bank and earning a paltry 1% rate of return, Lending Club allows savers to loan money directly to people wanting to take out loans without the bank taking a large percentage of the rate of return off the top.

As an investor, you can choose which borrowers you would like to loan money to and how much you would like to loan to them. You can view information about their credit history, employment situation and why they want to take out a loan. Loans are typically given interest rates between 9% and 20%, allowing you to earn a very competitive rate of return on your money.

From time to time, Lending Club’s marketing department will offer a bonus, typically in an email to existing investors, which will allow you to earn anywhere from a 1% to a 5% bonus on your money. In a recent bonus email which was sent out, investors that deposited $1,000 received a $50 bonus on their deposit, resulting in an instant 5% rate of return for the first year.

You can get in touch with Lending Club’s investor services periodically and ask them when any bonus offers might be coming via email. Typically Lending Club offered bonuses via email every few months, so it may pay to wait until a bonus email comes around to make additional lending club investments.

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The answer depends largely on the company that you’re dealing with. Applying for a financial product to a major bank online will be no different than applying in person, but if you’re not dealing with a name you recognize, you should be careful. Small finance companies have been setting up operations in every major city, often in lower income areas, and have made a lot of money by offering  short term financial products that come with high interest rates, such as payday loans, cash advance loans, and loans on car titles. Be very careful in dealing with these companies, more often than not the terms are stacked against you and you would likely be able to get a better rate somewhere else.

This can also be true for companies that provide loans online. Some companies that offer loans online are simply another arm of a respected bank or credit union, but there are also a number of finance companies online that you should stay far away from. Make sure to read reviews of what a bank of finance company’s customers say about them before taking out a loan with a company. Your best bet is to find a few companies that you already know and respect and see if they offer online options if you want to get a loan online.

Another option that is becoming increasingly popular is peer to peer lending. Prosper Marketplace and Lending Club allow borrowers to place loan listings online, then individual investors can choose to partially fund those loans and take the interest that you pay on your loan as their rate of return. Peer to peer lending companies essentially take the bank and the profits that banks take out of the picture, resulting in a better rate for borrowers and sometimes a better rate for investors. These companies have done a good job of keeping their regulatory ducks in a row and customers have reported relatively positive experience with both companies.

If you’re looking to get a loan, make sure that you can easily handle the payments and make sure to consider the total cost of the loan rather than the monthly payments. Also make sure you are signing up with a reputable company online and make sure that you’re getting the best rate and terms.

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If you are paying more than a 21% interest rate on your credit card and want to get out of debt, there might be a better way that you can reduce the amount of interest you’re paying so that you can get out of debt faster. Many have successfully taken out loans through peer to peer lending websites such as Prosper.com or Lending Club to consolidate their debt into fixed rate loans which pay off quickly.

If you’re not familiar with the idea of debt consolidation, you are basically taking all of your high interest debts and taking out a loan at a lower interest rate to pay them off. Let say that you had $20,000 in credit card debt and the average interest rate was 19.99% APR. You would be paying $4,000 in just interest in each year on that debt. If you took out a peer to peer loan from Lending Club and received a loan at 9% (that’s the average rate that borrowers are getting), you would be savings $2,200 per year or $183.33 per month in interest that could be going to pay down your principal balance which will help you get out of debt much faster. Every month that you pay down the principal balance, you are reducing your monthly interest charge, accelerating the process.

The other main benefit of taking your high interest credit card debt and consolidating it into a peer to peer loan through Lending Club or Prosper.com is that the term and interest rate are fixed. Instead of paying an interest rate which could skyrocket at any minute, you’re guaranteed the rate that’s quoted to you for the like of the loan. Lending Club and Prosper both offer fixed payment terms, meaning that once you have made all 36 or 60 payments (depending on what type of loan you choose), you are completely out of debt. There’s no getting stuck in minimum-balance hell from a credit card which will leave you in debt for more than 20 years.

Both Prosper.com and Lending Club offer these loans with interest rates starting at about 7%. For high risk borrowers, the interest rate can be as high as 20%, but the average interest rate that borrowers pay is about 9%, so you can expect to get an interest rate at about that rate. Loans from Prosper.com and Lending Club are available in most states, and you can get either a 36 month or a 60 month repayment term, depending on what works best for you. With these two websites, you can take out a signature loan for any reason as long as you have a credit score of 660 or above.

In order to apply for a peer to peer loan, you can visit Prosper.com’s website and Lending Club’s website. It might be worth it for you to apply on both sites and see which company will offer you better terms on your loan.

How to Consolidate Credit Card Debt with Lending Club or Prosper.com was created by and is property of American Consumer News.

If you need some extra money to pay off other debt or want to make a major purchase, you can get an unsecured loan at a very competitive interest rate (as low as 7%) from a peer to peer lending site such as Prosper.com or Lending Club if you have a credit score of 660 or above.

Often people that want to take out a small amount of money as a loan go through a finance company in their town, this can be a mistake. Depending on which company you work with, the terms of your loan and the interest rate that you pay can vary dramatically. Instead, consider taking out a loan through a peer to peer lending website such as Prosper.com or Lending Club. From your perspective, the loan is just like taking out a loan from a bank of finance company, but at a much lower interest rate.

The money that’s lent to you from a peer to peer loan actually comes directly from individuals, rather than through an intermediary such as a bank or finance company. Since you’re borrowing money directly from other people, you can very often get a much better interest rate than you would from a bank or finance company.

Both Prosper.com and Lending Club offer signature loans with interest rates starting at about 7%. For high risk borrowers, the interest rate can be as high as 20%, but the average interest rate that borrowers pay is about 9%, so you can expect to get an interest rate at about that rate. Loans from Prosper.com and Lending Club are available in most states, and you can get either a 36 month or a 60 month repayment term, depending on what works best for you. With these two websites, you can take out a signature loan for any reason as long as you have a credit score of 660 or above.

In order to apply for a peer to peer loan, you can visit Prosper.com’s website and Lending Club’s website. It might be worth it for you to apply on both sites and see which company will offer you better terms on your loan.

How to Secure an Unsecured Loan if You Only Have “Decent” Credit was created by and is property of American Consumer News.

Online unsecured loans are considered t obe signature loans. If you’re not familiar with the term signature loan, it simply means that you are taking out a loan and the only guarantee that the bank has that you will pay off the loan is your signature, making it a signature loan. Another name for a signature loan is an unsecured loan. These loans have slightly higher interest rates than secured loans, but do not require collateral and are still much better than what you would be paying on a credit card loan.

Often people that want to take out a small amount of money as a loan go through a finance company in their town, this can be a mistake. Depending on who you work with, the terms of your loan and the interest rate that you pay can vary dramatically. Instead, consider taking out a loan through a peer to peer lending website such as Prosper.com or Lending Club. From your perspective, the loan is just like taking out a loan from a bank of finance company, but at a much lower interest rate.

The money that’s lent to you from a peer to peer loan actually comes directly from individuals, rather than through an intermediary such as a bank or finance company. Since you’re borrowing money directly from other people, you can very often get a much better interest rate than you would from a bank or finance company.

Both Prosper.com and Lending Club offer signature loans with interest rates starting at about 7%. For high risk borrowers, the interest rate can be as high as 20%, but the average interest rate that borrowers pay is about 9%, so you can expect to get an interest rate at about that rate. Loans from Prosper.com and Lending Club are available in most states, and you can get either a 36 month or a 60 month repayment term, depending on what works best for you. With these two websites, you can take out an unsecure online loan for any reason as long as you have a credit score of 660 or above.

How to Get an Unsecured Online Loan through Peer to Peer Lending Marketplaces was created by and is property of American Consumer News.

Both Lending Club and Prosper.com allow people to take out loans for major purchases, including Christmas gifts. Prosper.com even has a one-year loan option which might be a great choice if you need to borrow some money on a short-term basis for Christmas presents.

Getting a loan through a peer to peer lending company is a bit different than going down to the local bank and applying for a loan. Instead of your money coming from indeterminate sources at the bank, other people are providing the funds for your loan. As you make your payments through your peer to peer lending marketplace of choice, your funds are distributed back to the other people on the site that helped fund your loan.

Because your money is being funded by other people, rather than by a bank, you can often get a much better interest rate than you would on a credit card or through a personal loan at a bank. Borrowers with perfect credit can get interest rates as low as 7%. Some higher risk borrowers may be asked to pay as high as 15% or 17%, but the average interest rate that borrowers pay is between 9% and 10%. Like other loans, you’ll have to pay an origination fee to the service between 1% and 4% to cover their costs.

Many people have taken advantage of these services to cut the interest rates they are paying on credit card debt. Instead of paying variable interest rates as high as 29% to credit card companies, borrowers can move their debt into a fixed-rate loan with a lower interest rate which will be completely paid off over 3 or 5 years. Credit Card companies would like you to continue to make minimum payments on your credit card and keep you in debt forever, but with a fully-amortizing fixed-rate loan, you are guaranteed to get out of the debt if you make all of your payments. Neither website requires borrowers to have a specific reason, such as buying a car or a home, to take out a loan.

Lending Club and Prosper offer loans between $1,000 and $20,000 over terms that are either three years or five years in length. Those interested in taking out a loan through either service can visit Lending Club or Prosper’s websites.

How to Get a Loan to Buy Christmas Presents from Prosper.com or Lending Club was created by and is property of American Consumer News.

Lending Club is a company that offers such consolidation loans. Lending Club offers three-year and five-year fixed rate loans to borrowers that want to consolidate their debt into a single loan with a lower interest rate. Because the loan you get from Lending Club is fully-amortizing, after making either 36 or 60 payments (depending on which loan type you choose), your debt will be fully paid off. There’s no getting stuck in a cycle of only paying the minimums and finding yourself in debt forever.

You can usually get a better interest rate form Lending Club than you could if you were to borrow money from a bank and you’re definitely getting a better interest rate than you would otherwise pay on high-interest credit cards. Lending Club offers loans as low as 7% to borrowers with great credit. The average interest rate that borrowers pay is around 9%, which is a great deal compared to the 29% interest rates that mega-banks are charging consumers on credit cards. Since you’ll be paying a lower interest rate, more of your payment will be going toward the principal balance making it so that you get out of debt faster.

In order to qualify for a debt consolidation loan with Lending Club, you’ll need a credit score of at least 660. Lending Club also lists the following requirements on their website: “at least 3 years of credit history, showing no current delinquencies, recent bankruptcies (7 years), open tax liens, charge-offs or non-medical collections account in the past 12 months, no more than 10 inquiries on your credit report in the last 6 months, a revolving credit utilization of less than 100%, and more than 3 accounts in your credit report, of which more than 2 are currently open.” Borrowers from the following states cannot currently get a loan on Lending Club: Iowa, Idaho, Indiana, Maine, Mississippi, North Dakota, Nebraska, and Tennessee.

To get started with a Lending Club debt consolidation loan, visit Lending Club’s website.

How to Eliminate Your Debt with a Lending Club Debt Consolidation Loan was created by and is property of American Consumer News.

“The addition of Simon Williams to our Board of Directors will further strengthen our risk management infrastructure and institutional relationships,” said Renaud Laplanche, CEO of Lending Club. “Simon’s background in banking and investment management will be particularly useful in the next few years as we continue to extend our reach and add new loan and investment products.”

“Lending Club is a fast growing company that has taken one of the most consistent and profitable investments – consumer debt – and made it available to individual and institutional investors while reducing intermediation costs,” said Williams. “Lower costs also mean that consumers may be able to obtain personal loans at a lower rate. I believe Lending Club is well positioned to capture a large share of the U.S. banking and investment market over the next five to ten years.”

According to a statement from Lending Club,”While at Citigroup, Williams also served as Executive Vice President for the company’s International Retail Bank and its Global e-Business Unit, which provided comprehensive, integrated, e-commerce solutions for clients in the areas of working capital management, liquidity management, cash management, and trade finance capabilities. Prior to that, Williams headed the Citibank Latin America consumer business and the Citibank Asia/Pacific consumer business, which encompass all consumer activities from Australia to Japan. Before joining Citigroup, Williams held various senior management positions at GE Capital. Williams is a member of the Institute of Chartered Accountants in England & Wales. He graduated with a degree in Mathematics from Exeter University and holds an MBA from INSEAD in France, where he graduated with distinction.”

Lending Club uses the power of the internet to remove the cost and complexities that exist in the traditional bank lending process. By connecting investors with creditworthy borrowers at LendingClub.com, Lending Club eliminates these costs and complexities and passes the savings on to borrowers and can provide investors a better return.

Lending Club Names Former Citigroup (NYSE: C) Executive as Board Member was created by and is property of American Consumer News.

The California-based lender announced that they had met the regulatory requirements of the two states last week on its blog. Borrowers can now get loans from Lending Club in 42 states. The only states that borrowers can not currently borrow from include IA, ID, IN, ME, MS, ND, NE, or TN. The loans that are issued by Lending Club re issued by WebBank, an FDIC insured bank based out of Salt Lake City.

“We’d like peer-to-peer lending to be available in all States,” Rob Garcia, Sr Director of Product Strategy at Lending Club, told American Banking News, “so that all creditworthy Americans may have access to personal loans at lower rates.”

Lending Club also announced that it had recently set a new record for the second straight month during the month of September, setting up more than $12 million worth of loans between borrowers and lender son its platform. Investors on Lending Club’s website issued $12,039,675 across 1189 loans to borrowers, up slightly from the month of August when $12,021,775 was issued in loans to borrowers across 1204 loans. The company also announced on its blog that it has paid out more than $12 million in interest to investors since beginning operations in 2007.

About Lending Club
Lending Club is a peer lending network bringing together investors and creditworthy borrowers.  Lending Club eliminates the high cost and complexity of traditional bank lending to offer borrowers better rates and investors better returns.  Lending Club was recently recognized as one of the 20 “Breakthrough Ideas for 2009″ by Harvard Business Review, has been nominated for “Top 100 Innovators” by The Industry Standard, is on the JMP Hot 100 list, and the AlwaysOn Global 250 Top Private Companies list.  In addition Lending Club won the Webby Award in 2008 for the “Best Banking Website”. Founded in 2006, Lending Club is headquartered in Redwood City, CA. More information is available at: http://www.lendingclub.com.

Loans are not issued in IA, ID, IN, KS, ME, MS, NC, ND, NE, or TN. Loans are issued by WebBank, an FDIC insured Utah chartered industrial bank located in Salt Lake City, Utah. Borrowers must be US citizens or permanent residents and at least 18 years old. Valid bank account and social security numbers are required. All loans are subject to credit approval.

Additional information about Lending Club is available in the prospectus for Lending Club’s notes, which can be obtained on Lending Club’s website at https://www.lendingclub.com/info/prospectus.action.

Lending Club Expands to Kansas and North Carolina was created by and is property of American Consumer News.

Some consumers have taken the extreme act of filing bankruptcy, which does eliminate debt because, but will irreparably harm your credit score for nearly a decade. If there’s any way that you can reasonably work through your debt, you probably should.

Other consumers will turn to debt management services. These services have historically been very mixed as to the level of service you’ll get. Some of them, such as CCCS, offer great advice to consumers to help them pay down their debt. Others charge a large up front fee and don’t actually work to reduce a borrower’s debt. Fortunately, the financial reform law has clamped down on some of the less scrupulous debt management services and the industry will likely improve.

There are also lots of plans to work through your debt promoted by popular personal finance gurus such as Suzie Orman, Dave Ramsey or Clark Howard. They often suggest that debtors work extra and focus on a single debt at a time. Some such as Dave Ramsey would recommend that debtors snowball their debt, listing their debts from smallest to largest. With that method, borrowers put all of their extra focus on their smallest debt and pay minimum payments on the rest. Once the first debt is paid off, debtors take the payment they were making on the smallest debt and add it to the payment of the second smallest debt along with any other money they can scrape up. They suggest repeating that process until one’s consumer debt is paid off.

Others suggest that consumers pay off their highest interest rate debt first, suggesting that the mathematics works better. Yet others, such as Suzie Orman, suggest that you should build a large emergency before working to pay off debt because of the uncertainty in the economy.

Regardless of what method you use, you may want to work to reduce your interest rates by surfing your high interest debts such as credit cards to lower interest rate loans. Peer to Peer lending sites such as Lending Club and Prosper.com have become an increasingly popular means of getting debt consolidation loans which allow borrowers to their interest rates and pay more money toward the principal.

Getting Out of Debt: What Method is Best was created by and is property of American Consumer News.

Here’s the terms and conditions of the deal, “To receive your bonus, all funds must be newly transferred to your account within 45 days of your registration date, continuously maintained in your Lending Club account and fully invested on the Lending Club platform within 45 days of your registration date. Your bonus, if any, will be deposited in your Lending Club account within 15 business days following the determination of your eligibility. This offer may be discontinued at any time without notice. Transactions in the secondary market (the trading platform operated in by FolioFN) do not count as “investing funds” or towards unlocking the bonus. This bonus payment is taxable so please consult with your personal tax advisor. You are responsible for any taxes related to this offer. Void where otherwise prohibited. This offer may not be combined with any other offer.”

About Lending Club: Lending Club is a peer lending network bringing together investors and creditworthy borrowers.  Lending Club eliminates the high cost and complexity of traditional bank lending to offer borrowers better rates and investors better returns. Lending Club won the Webby Award in 2008 for the “Best Banking Website” and has been nominated for “Top 100 Innovators” by The Industry Standard. It was recently recognized as one of the 20 “Breakthrough Ideas for 2009″ by Harvard Business Review. Founded in 2006, Lending Club is headquartered in Redwood City, CA. More information is available at: http://www.lendingclub.com.

Lending Club Offering $100 Bonus to New Investors was created by and is property of American Consumer News.

Prosper COE Chris Larsen said that the new levels of notes as well as its “Note Trading Platform” will attract consumers that have a greater range of needs, such as debt consolidation. The company believes that five-year loans will be a good solution for borrowers looking to consolidate their debt because it reduces monthly payments and helps them reduce their interest rates.

The company said that its aiming one-year loans at younger borrowers, new homeowners and small business owners as a way to make large-item purchases, cover security deposits and handle short-term business expenses.

According to the company, “Prosper is America’s largest peer-to-peer lending marketplace with over 850,000 and $185 million in loans. It pioneered peer-to-peer lending, which allows people to invest in each other in a way that is socially and financially rewarding. Prosper’s auction model provides an open and transparent way to get a personal loan or invest in loans on terms that are favorable to everyone involved in the transaction. People and institutions list and bid on loans using Prosper’s online auction platform. Borrowers can list loan requests between $1,000 and $25,000 on Prosper and set the maximum rate they are willing to pay an investor for the loan, and tell their story. People and institutional investors register on Prosper as lenders, then set their minimum interest rates, and bid in increments of $25 to $25,000 on loan listings they select. In addition to criteria commonly used by institutional lenders, such as credit scores and histories, Prosper lenders can consider borrowers’ personal stories, endorsements from friends, and community affiliations. “

Prosper.com Now Offering Expanded Terms on Peer to Peer Loans was created by and is property of American Consumer News.

The rate decrease reflects the underlying credit quality of the borrowers getting personal loans of up to $25,000 at LendingClub.com to do things like refinance their debt, make major purchases, cover medical expenses or re-invest in their small business. The new starting APR of 6.78 % on 36-month term loans at LendingClub.com is nearly half the average starting APR of 13.15% offered on credit cards to similar borrowers(2).

“Interest rates on credit cards have reached a nine-year high, while overall interest rates on everything from mortgages to treasuries are at all-time record lows,” said Renaud Laplanche, Chief Executive Officer of Lending Club. “The new rates reflect the marketplace dynamic, the excellent performance of loans to date, and our desire to pass the savings directly on to credit-worthy consumers.”

Laplanche continued, “By reducing APRs on all unsecured personal loans, we’re providing better value for new borrowers and satisfying investor demand for high-quality consumer debt.”

Here is how Lending Club works:

* Prime borrowers come to Lending Club searching for low personal loan rates on loans up to $25,000.
* Applications are reviewed and approved based upon bank underwriting criteria. Lending Club assigns a borrower’s grade, interest rate and APR. Once a loan is assigned a grade based upon the credit policy, the loans are listed on the website as available for investor funding.
* Investors indirectly fund small fractions of hundreds of these loan requests.
* As consumers pay back the loans, investors collect the principal and interest and they have the option to reinvest their returns.

Additional Information

(1) 36 month loan of $1,000 to the highest rated borrower (Grade A1), $20 origination fee, 5.42% interest rate, $980 net proceeds, 36 payments of $30.16 at a 6.78% APR.  Actual APR depends upon credit score, loan amount, loan term, and credit usage & history.

(2) Source for average starting credit card APR for consumers with “Good to Excellent Credit” calculated using headline rates on Credit Cards offered to borrowers with “Good to Excellent Credit” at www.creditcards.com as of 9/30/10

About Lending Club

Lending Club is an online platform that enables the issuance of and investment in consumer loans.  Lending Club brings together investors and creditworthy borrowers — eliminating the cost and complexity of traditional bank lending — to offer borrowers better rates and investors better returns.  Lending Club was recently recognized as one of the 20 “Breakthrough Ideas for 2009″ by Harvard Business Review, has been nominated for “Top 100 Innovators” by The Industry Standard, is on the JMP Hot 100 list, and the Always On Global 250 Top Private Companies list.  In addition Lending Club won the Webby Award in 2008 for the “Best Banking Website”. Founded in 2006, Lending Club is headquartered in Redwood City, CA. More information is available at: http://www.lendingclub.com.

Loans are not issued in IA, ID, IN, ME, MS, NC, ND, NE, or TN. Loans are issued by WebBank, an FDIC insured Utah chartered industrial bank located in Salt Lake City, Utah. Borrowers must be US citizens or permanent residents and at least 18 years old. Valid bank account and social security numbers are required. All loans are subject to credit approval.

Additional information about Lending Club is available in the prospectus for Lending Club’s notes, which can be obtained on Lending Club’s website at https://www.lendingclub.com/info/prospectus.action.

SOURCE Lending Club

Read more: Personal Loan Performance Drives Lending Club to Decrease Starting APR to 6.78% – Nearly Half the Average Starting Credit Card A – FierceFinance http://www.fiercefinance.com/press-releases/personal-loan-performance-drives-lending-club-decrease-starting-apr-6-78-nearly-half-#ixzz13rAoycxN
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Lending Club Cuts Interest Rates on Peer to Peer Loans was created by and is property of American Consumer News.

The starting APR of 6.78 percent on 36-month(1) loans at Lending Club is almost half the average starting APR of 13.15 percent offered on credit cards to borrowers with similar credit scores(2). Over 17,800 unsecured personal loans have been issued through Lending Club totaling more than $172 million in the past three plus years. North Carolinians can secure loans to refinance their debt, make major purchases, cover medical expenses, invest in their small business or finance other expenses.

“Interest rates on credit cards continue to be extremely high, and savvy borrowers are starting to clue in to the fact that personal loans can provide a less expensive way to finance their debt,” said Lending Club CEO, Renaud Laplanche. “Over $12 million in unsecured loans are being issued through Lending Club to prime borrowers each month. Over the past three-and-a-half years we’ve been working hard to quickly and strategically add new services and new states like North Carolina. As an organization, we’re looking forward to helping residents of North Carolina find loans they can afford with fixed rates and payments, clear terms and no hidden fees.”

What’s Lending Club’s impact in neighboring states?

In Virginia, over $6.3 million in personal loans have been issued through Lending Club.

In South Carolina, over $1.8 million in personal loans have been issued through Lending Club.

In Georgia, over $5.9 million in personal loans have been issued through Lending Club.

How are people outside of North Carolina using Lending Club?

Over $172 million in personal loans have been issued to borrowers through the Lending Club platform for needs ranging from debt consolidation to special events. Thousands of Lending Club borrowers across the country have taken advantage of Lending Club’s fixed-rate loans to pay down credit card debt, fund home improvements and green loans, plan their dream vacations and weddings, buy cars and boats, or re-invest in their businesses.

How many loans has Lending Club issued?

Lending Club has issued over 17,800 unsecured personal loans to meet the following borrower needs:

What makes Lending Club different?

Lending Club is open and transparent. Creditworthy Lending Club borrowers benefit from operational efficiencies, risked-based pricing and transparent underwriting criteria so they understand how the rules apply to their personal loan request. All Lending Club borrowers must have a minimum Credit Score of 660 to apply for 36(1)- or 60(3)-month fixed-rate loans of up to $25,000. Individual investors use the Lending Club platform to indirectly invest in these loan requests at a minimum of $25 dollars per investment.

Is it easy to apply for a loan at Lending Club?

Yes. Creditworthy borrowers in North Carolina can apply for a loan through Lending Club using a simple online form, which removes the inconvenience of applying for a loan in-person at a bank. Lending Club’s application process is free, confidential and secure, and there are no hidden fees or charges. On average, loans are fully funded in five days. Once the loan is funded and issued, the money is deposited in the borrower’s bank account in two-to-four days. Monthly loan payments are automated, making it easy to repay a Lending Club loan.

How does Lending Club provide low interest rates to people of North Carolina?

Lending Club uses the power of the internet to remove the cost and complexities that exist in the traditional bank lending process. By connecting investors with creditworthy borrowers at LendingClub.com, Lending Club eliminates these costs and complexities and passes the savings on to borrowers and can provide investors a better return.

Instant rate quotes to qualified borrowers and more information are available at www.lendingclub.com.

Sources:

(1) 36 month loan of $1,000 to the highest rated borrower for 36 month loans (Grade A1), $20 origination fee, 5.47% interest rate, $980 net proceeds, 36 payments of $30.16, a 6.78% APR. APRs for 36 month loans range from 6.78%-24.95%.

(2) Source for average starting credit card APR for consumers with “Good to Excellent Credit” calculated using headline rates on Credit Cards offered to borrowers with “Good to Excellent Credit” at www.creditcards.com as of 9/30/10.

(3) 60 month loan of $1,000 to the highest rated borrower for 60 month loans (Grade A2), $20 origination fee, 5.79% interest rate, $980 net proceeds, 60 payments of $19.24, a 6.63% APR. APRs for 60 month loans range from 6.63%-23.64%.

All loans made by WebBank, a Utah-chartered Industrial Bank. Your actual rate depends upon credit score, loan amount, loan term, and credit usage and history.

About Lending Club

Lending Club is an online platform that enables the issuance of and investment in consumer loans.  Lending Club brings together investors and creditworthy borrowers — eliminating the cost and complexity of traditional bank lending — to offer borrowers better rates and investors better returns.  Lending Club was recently recognized as one of the 20 “Breakthrough Ideas for 2009″ by Harvard Business Review, has been nominated for “Top 100 Innovators” by The Industry Standard, is on the JMP Hot 100 list, and the Always On Global 250 Top Private Companies list.  In addition, Lending Club won the Webby Award in 2008 for the “Best Banking Website”.  Founded in 2006, Lending Club is headquartered in Redwood City, CA. More information is available at: http://www.lendingclub.com.

Loans are not issued in IA, ID, IN, ME, MS, ND, NE, or TN. Loans are issued by WebBank, an FDIC insured Utah-chartered Industrial Bank located in Salt Lake City, Utah. Borrowers must be US citizens or permanent residents and at least 18 years old. Valid bank account and social security numbers are required. All loans are subject to credit approval.

Additional information about Lending Club is available in the prospectus for Lending Club’s notes, which can be obtained on Lending Club’s website at https://www.lendingclub.com/info/prospectus.action.

Lending Club Now Offering Loans in North Carolina was created by and is property of American Consumer News.

Personal Loan Performance Drives Lending Club to Decrease Starting APR to 6.78% – Nearly Half the Average Starting Credit Card APR of 13.15% Available to Similar Borrowers was created by and is property of American Consumer News.

Investors on Lending Club’s website issued $12,039,675 across 1189 loans to borrowers, up slightly from the month of August when $12,021,775 was issued in loans to borrowers across 1204 loans. The company also announced on its blog that it has paid out more than $12 million in interest to investors since beginning operations in 2007.

Lending Club Senior Director of Product Strategy, Rob Garcia, wrote on the company’s blog, “Looking at these numbers, our members seem to confirm Lending Club delivers on its promise: lower rates to borrowers, better returns to investors.”

The California-based peer to peer lending company also recently lowered the interest rates that it’s charging borrowers from 7.93% to 6.78%. The interest rate change is good news for borrowers on the site, with personal loan rates being 15% lower than their previous levels. The company said in a statement that the rate change is a great way to save on paying credit card interest rates, which are at a 9 year high.

About Lending Club
Lending Club is a peer lending network bringing together investors and creditworthy borrowers.  Lending Club eliminates the high cost and complexity of traditional bank lending to offer borrowers better rates and investors better returns.  Lending Club was recently recognized as one of the 20 “Breakthrough Ideas for 2009″ by Harvard Business Review, has been nominated for “Top 100 Innovators” by The Industry Standard, is on the JMP Hot 100 list, and the AlwaysOn Global 250 Top Private Companies list.  In addition Lending Club won the Webby Award in 2008 for the “Best Banking Website”. Founded in 2006, Lending Club is headquartered in Redwood City, CA. More information is available at: http://www.lendingclub.com.

Loans are not issued in IA, ID, IN, KS, ME, MS, NC, ND, NE, or TN. Loans are issued by WebBank, an FDIC insured Utah chartered industrial bank located in Salt Lake City, Utah. Borrowers must be US citizens or permanent residents and at least 18 years old. Valid bank account and social security numbers are required. All loans are subject to credit approval.

Additional information about Lending Club is available in the prospectus for Lending Club’s notes, which can be obtained on Lending Club’s website at https://www.lendingclub.com/info/prospectus.action.

Lending Club Issues $12 Million in Loans in September, Makes another Record was created by and is property of American Consumer News.

“American families are waking up to the fact that they don’t have to pay astronomical interest rates on credit cards – which are nearing an all-time high,” said Lending Club CEO, Renaud Laplanche in a statement.

“After more than three years in business, we’re very proud to say that more than $12 million per month in unsecured loans to prime borrowers are being issued through Lending Club. We’re excited to be offering loans to the residents of Kansas with low fixed rates and fixed payments, clear terms and no hidden fees.”

Lending Club said in a statement that it has enjoyed doing business with consumers in neighboring states, including Missouri, Colorado and Oklahoma, making more than $7.5 million loans to borrowers in those states.

About Lending Club

Lending Club is an online platform that enables the issuance of and investment in consumer loans. Lending Club brings together investors and creditworthy borrowers — eliminating the cost and complexity of traditional bank lending — to offer borrowers better rates and investors better returns. Lending Club was recently recognized as one of the 20 “Breakthrough Ideas for 2009″ by Harvard Business Review, has been nominated for “Top 100 Innovators” by The Industry Standard, is on the JMP Hot 100 list, and the Always On Global 250 Top Private Companies list. In addition Lending Club won the Webby Award in 2008 for the “Best Banking Website.” Founded in 2006, Lending Club is headquartered in Redwood City, CA. More information is available at: http://www.lendingclub.com.

Loans are not issued in IA, ID, IN, ME, MS, NC, ND, NE, or TN. Loans are issued by WebBank, an FDIC insured Utah chartered industrial bank located in Salt Lake City, Utah. Borrowers must be US citizens or permanent residents and at least 18 years old. Valid bank account and social security numbers are required. All loans are subject to credit approval.

Additional information about Lending Club is available in the prospectus for Lending Club’s notes, which can be obtained on Lending Club’s website at https://www.lendingclub.com/info/prospectus.action.

Lending Club Now Offering Peer to Peer Loans in Kansas was created by and is property of American Consumer News.

The feature which was on the station’s evening news program featured a small business owner that borrowed money from investors through Lending Club’s platform. WUSA also interviewed Lending Club COO John Donovan and highlighted an investor named Don Birk who had 899 loans on Lending Club’s platform.

The California-based peer to peer lending company also recently lowered the interest rates that it’s charging borrowers from 7.93% to 6.78%. The interest rate change is good news for borrowers on the site, with personal loan rates being 15% lower than their previous levels. The company said in a statement that the rate change is a great way to save on paying credit card interest rates, which are at a 9 year high.

Here’s the video:

About Lending Club

Lending Club is a peer lending network bringing together investors and creditworthy borrowers.  Lending Club eliminates the high cost and complexity of traditional bank lending to offer borrowers better rates and investors better returns. Lending Club won the Webby Award in 2008 for the “Best Banking Website” and has been nominated for “Top 100 Innovators” by The Industry Standard. It was recently recognized as one of the 20 “Breakthrough Ideas for 2009″ by Harvard Business Review. Founded in 2006, Lending Club is headquartered in Redwood City, CA. More information is available at: http://www.lendingclub.com.

Lending Club Notes are only offered by a prospectus filed with the SEC which contains the risks and uncertainties related to any investment in the Notes.  Currently only residents of the following states may invest in Lending Club notes: CA, CO, CT, DE, FL, GA, HI, ID, IL, KY (accredited investors), LA, ME, MN, MO, MS, MT, NH, NV, NY, RI, SC, SD, UT, VA, WA, WI, WV, or WY.

Loans are not issued in IA, ID, IN, KS, ME, MS, NC, ND, NE, or TN. Loans are issued by WebBank, an FDIC insured Utah chartered industrial bank located in Salt Lake City, Utah. Borrowers must be US citizens or permanent residents and at least 18 years old. Valid bank account and social security number are required. All loans are subject to credit approval.

Peer to Peer Lending Company Lending Club Featured on CBS News was created by and is property of American Consumer News.

Lending Club’s starting APR of 6.78 percent on 36-month(1) loans is nearly half the average starting APR of 13.15 percent offered on credit cards to borrowers with comparable credit scores(2). Over 17,500 unsecured personal loans have been issued through Lending Club totaling more than $169,000,000 in the past three plus years. Loans are issued to consumers who need to refinance their debt, make major purchases, cover medical expenses or invest in their small business.

“American families are waking up to the fact that they don’t have to pay astronomical interest rates on credit cards – which are nearing an all-time high,” said Lending Club CEO, Renaud Laplanche. “After more than three years in business, we’re very proud to say that more than $12 million per month in unsecured loans to prime borrowers are being issued through Lending Club. We’re excited to be offering loans to the residents of Kansas with low fixed rates and fixed payments, clear terms and no hidden fees.”

What’s Lending Club’s impact in neighboring states?

In Missouri, over $2.7 million in personal loans have been issued through Lending Club.

In Colorado, over $3.7 million in personal loans have been issued through Lending Club.

In Oklahoma, over $1.1 million in personal loans have been issued through Lending Club.

How are people outside of Kansas using Lending Club?

Over $169 million in personal loans have been issued to borrowers through the Lending Club platform for needs ranging from debt consolidation to special events. Thousands of Lending Club borrowers across the country have taken advantage of Lending Club’s fixed-rate loans to pay down credit card debt, fund home improvements and green loans, plan their dream vacations and weddings, buy cars and boats, or re-invest in their businesses.

How many loans has Lending Club issued?

Lending Club has issued over 17,500 unsecured personal loans to meet the following borrower needs:

What makes Lending Club different?

Lending Club is open and transparent. Creditworthy Lending Club borrowers benefit from operational efficiencies, risked-based pricing and transparent underwriting criteria so they understand how the rules apply to their personal loan request. All Lending Club borrowers must have a minimum Credit Score of 660 to apply for 36(1)- or 60(3)-month fixed-rate loans of up to $25,000. Individual investors use the Lending Club platform to indirectly invest in these loan requests at a minimum of $25 dollars per investment.

Is it easy to apply for a loan at Lending Club?

Yes. Creditworthy borrowers in Kansas can apply for a loan at Lending Club using a simple online form, which removes the inconvenience of applying for a loan in-person at a bank. Lending Club’s application process is free, confidential and secure, and there are no hidden fees or charges. On average, loans are fully funded in five days. Once the loan is funded and issued, the money is deposited in the borrower’s bank account in two-to-four days. Monthly loan payments are automated, making it easy to repay a Lending Club loan.

How does Lending Club provide low interest rates to people of Kansas?

Lending Club uses the power of the internet to remove the cost and complexities that exist in the traditional bank lending process. By providing an internet platform that brings investors and creditworthy borrowers together, Lending Club eliminates these costs and complexities and passes the savings on to borrowers and can provide investors a better return.

Instant rate quotes to qualified borrowers and more information are available at www.lendingclub.com.

Sources:

(1) 36 month loan of $1,000 to the highest rated borrower for 36 month loans (Grade A1), $20 origination fee, 5.47% interest rate, $980 net proceeds, 36 payments of $30.16, a 6.78% APR. APRs for 36 month loans range from 6.78%-24.95%.

(2) Source for average starting credit card APR for consumers with “Good to Excellent Credit” calculated using headline rates on Credit Cards offered to borrowers with “Good to Excellent Credit” at www.creditcards.com as of 9/30/10

(3) 60 month loan of $1,000 to the highest rated borrower for 60 month loans (Grade A2), $20 origination fee, 5.79% interest rate, $980 net proceeds, 60 payments of $19.24, a 6.63% APR.  APRs for 60 month loans range from 6.63%-23.64%.

All loans made by WebBank, a Utah-chartered Industrial Bank. Your actual rate depends upon credit score, loan amount, loan term, and credit usage and history.

About Lending Club

Lending Club is an online platform that enables the issuance of and investment in consumer loans. Lending Club brings together investors and creditworthy borrowers — eliminating the cost and complexity of traditional bank lending — to offer borrowers better rates and investors better returns. Lending Club was recently recognized as one of the 20 “Breakthrough Ideas for 2009″ by Harvard Business Review, has been nominated for “Top 100 Innovators” by The Industry Standard, is on the JMP Hot 100 list, and the Always On Global 250 Top Private Companies list. In addition Lending Club won the Webby Award in 2008 for the “Best Banking Website.” Founded in 2006, Lending Club is headquartered in Redwood City, CA. More information is available at: http://www.lendingclub.com.

Loans are not issued in IA, ID, IN, ME, MS, NC, ND, NE, or TN. Loans are issued by WebBank, an FDIC insured Utah chartered industrial bank located in Salt Lake City, Utah. Borrowers must be US citizens or permanent residents and at least 18 years old. Valid bank account and social security numbers are required. All loans are subject to credit approval.

Additional information about Lending Club is available in the prospectus for Lending Club’s notes, which can be obtained on Lending Club’s website at https://www.lendingclub.com/info/prospectus.action.

SOURCE Lending Club

Personal Loans From Lending Club Now Available in Kansas-Rates Starting at 6.78% APR was created by and is property of American Consumer News.

The move comes several months after one of its competitors, Lending Club, began offering five year loans to borrowers. Previously both companies had only offered personal loans that are funded by members on its website with three year terms. Both companies are hoping to broaden the appeal of their products by offering more flexible terms for borrowers.

“The combination our expanded product offering and one-of-a-kind auction based Note Trading Platform, provides Prosper investors with greater diversification opportunities and the broadest selection of investing options available in the peer-to-peer lending industry,” said Chris Larsen, CEO and co-founder of Prosper. “For qualified borrowers, more loan term products provide greater payment and time horizon flexibility.”

Larsen continued, “For debt consolidation borrowers in particular, a 5-year loan term eases their monthly payment burden while at the same time putting them on a clear path to knock out their high interest credit card debt. Young professionals, new homeowners, and small business owners are a perfect fit for a one-year loan, serving as a way to cover security deposits, big ticket item purchases, and unexpected inventory demand requirements. And as always, there are no pre-payment penalties for those who pay off their Prosper loans early.”

About Prosper.com:

Prosper Marketplace Inc. is the world’s largest peer-to-peer lending marketplace with more than 1,000,000 members and over $206,000,000 in funded loans. Prosper allows people to invest in each other in a way that is financially and socially rewarding. On Prosper, people list and bid on loans using an online auction platform. Borrowers list loan requests between $1,000 and $25,000 and set the maximum rate they are willing to pay. Individual and institutional investors bid in minimum increments of $25 on loan listings they select. In addition to credit scores, ratings and histories, investors can consider borrowers’ personal loan descriptions, endorsements from friends, and community affiliations. Once the auction ends, Prosper handles the funding and servicing of the loan on behalf of the matched borrowers and investors.

Prosper.com Begins Offering 1-Year and 5-Year Peer to Peer Loans was created by and is property of American Consumer News.

The California-based peer to peer lending company dropped the starting interest rate from 7.93% for AAA borrowers to 6.78%. Lending Club said in a statement that, “This reduction is in response to the overall economic environment, and in an effort to continue attracting prime and super-prime borrowers, who typically make decisions based on rates and monthly payments.”

The interest rate change is good news for borrowers on the site, with personal loan rates being 15% lower than their previous levels. The company said in a statement that the rate change is a great way to save on paying credit card interest rates, which are at a 9 year high.

About Lending Club

Lending Club is a peer lending network bringing together investors and creditworthy borrowers.  Lending Club eliminates the high cost and complexity of traditional bank lending to offer borrowers better rates and investors better returns. Lending Club won the Webby Award in 2008 for the “Best Banking Website” and has been nominated for “Top 100 Innovators” by The Industry Standard. It was recently recognized as one of the 20 “Breakthrough Ideas for 2009″ by Harvard Business Review. Founded in 2006, Lending Club is headquartered in Redwood City, CA. More information is available at: http://www.lendingclub.com.

Lending Club Notes are only offered by a prospectus filed with the SEC which contains the risks and uncertainties related to any investment in the Notes.  Currently only residents of the following states may invest in Lending Club notes: CA, CO, CT, DE, FL, GA, HI, ID, IL, KY (accredited investors), LA, ME, MN, MO, MS, MT, NH, NV, NY, RI, SC, SD, UT, VA, WA, WI, WV, or WY.

Loans are not issued in IA, ID, IN, KS, ME, MS, NC, ND, NE, or TN. Loans are issued by WebBank, an FDIC insured Utah chartered industrial bank located in Salt Lake City, Utah. Borrowers must be US citizens or permanent residents and at least 18 years old. Valid bank account and social security number are required. All loans are subject to credit approval.

Lending Club Cuts Interest Rates for Borrowers–Now Starts at 6.78% was created by and is property of American Consumer News.

Lending Club is part of a fledgling niche in the financial industry called peer to peer lending, in which a company acts as a marketplace between its members that borrow and lend money to one another. Lending Club boasts that it provides investors much better rates of returns than they would get from a bank and provide better loan rates to borrowers from credit cards or personal loans. The company has been in operation since 2007 and boasts that its investors have earned a net annualized return of 9.66%.

The company said on its website that it delivered $12,021,775 in loans to creditworthy borrowers in August alone, the single largest monthly dollar amount ever. The company issued a total of 1,175 loans with an average amount of $10,231. The average interest rate paid was 12.58% and 50% of all loans were used for debt consolidation.

In a statement on Lending Club’s blog, Rob Garcia, Sr Director of Product Strategy, wrote, “Looking at our growth for the last year, we are very proud to have nearly tripled the volume as compared to August 2009, while showing a steady monthly growth pace.   Cheers to the Lending Club community of investors and borrowers for making this happen.”

According to a statement from Lending Club, “Lending Club is an online platform that enables the issuance of and investment in consumer loans.  Lending Club brings together investors and creditworthy borrowers — eliminating the cost and complexity of traditional bank lending — to offer borrowers better rates and investors better returns.  Lending Club was recently recognized as one of the 20 “Breakthrough Ideas for 2009″ by Harvard Business Review, has been nominated for “Top 100 Innovators” by The Industry Standard, is on the JMP Hot 100 list, and the AlwaysOn Global 250 Top Private Companies list.  In addition Lending Club won the Webby Award in 2008 for the “Best Banking Website”. Founded in 2006, Lending Club is headquartered in Redwood City, CA. More information is available at: http://www.lendingclub.com.”

Lending Club Issues $12 Million in Loans in August was created by and is property of American Consumer News.

Toms previously served as a managing principal for Hilspen Capital Management, a provider of asset market research to institutional investors. Toms also served as chief investment officer for Compass Global Investors. A company statement said that Toms served as a director for London-based RAB Global Mining and Gold funds and that he was an original shareholder at Fisher Investments.

“We continue to grow the Lending Club team, adding key people that will help sustain and accelerate our growth. Joe’s extensive investing background will be a boon to Lending Club as we grow our investor products and services and reach new categories of investors,” said Renaud Laplanche, CEO of Lending Club.

“I am thrilled to join the Lending Club team,” said Toms. “Lending Club is leading the way in helping reduce the debt burden on American consumers while providing strong returns for investors. Over the past three years and through incredibly difficult economic conditions the company has demonstrated they can resolve structural inefficiencies in the market and generate savings for borrowers and returns for investors.

According to a statement from the company, “Lending Club removes inefficiencies from the lending process by providing a platform that enables consumers to obtain fixed rate loans, and investors to capture more of the spread on consumer debt. Since June 2007, investors have earned a Net Annualized Return of over 9.5 percent, and borrowers have obtained loans at rates below marketplace alternatives.”

Lending Club Hires New Managing Director was created by and is property of American Consumer News.

The article described how the peer-to-peer lending process works, in that investors generally choose to fund a part of a loan requested from a borrower on its website. Borrowers apply for a loan as they would from a bank and their information, including information about their credit, is shown to lenders that decide whether or not to help fund a borrower’s loan. Investors can place as little as $25.00 into each loan and borrowers can request loans of up to $20,000.

The WSJ interviewed Jennifer Stitzel who decided to invest her savings into Lending Club after seeing her online savings account interest rate fall to 1%. “It just felt like it was doing nothing. It was as good as putting it under my mattress,” said Stitzel. She said that her investment has gornw about 13% since February. “I’m not a philanthropist. This is an investment for me.”

Lending Club accepts investors from 28 states, since the company must comply with each state’s regulatory environment. Lending Club sets a static interest rate for borrowers between 8% and 25% depending on the borrower’s credit risk. Prosper.com works as a reverse Dutch auction in-which investors bid an interest rate they would be willing to fund at.

The Journal highlighted the secondary trading market for peer-to-peer loans on a platform operated by Folio Investing. Lending Club and Prosper.com both have partnered with Folio Investing to create trading platforms.

Wall Street Journal Highlights Lending Club and Prosper.com was created by and is property of American Consumer News.

Zopa said in a statement that the success of its business model, in which members of its website agree to loan money to one another on their own terms, is partially a reflection of the low interest rate environment that the world is facing. CEO Giles Andrews told the press that he expects the firm to rapidly gain market share in the U.K. lending market to over 1% during the next few years.

Specifically, he said, “There is no reason we can’t have 10 or 20 per cent of the market. There are far more people wanting to borrow than there are lenders.

“We have the best performing loan book in the UK, better than the high street banks with a default rate of just 0.7 per cent. Zopa provides hard evidence that person-to-person lending works and can be hugely beneficial for both borrowers and lenders.”

“Both groups have enjoyed a far better deal than the banks offer. Given the banks show no sign of reducing the huge spreads they charge between borrowing and lending, we are sure this growth will continue.”

Peer-to-Peer Lending Company Zopa Reaches 100m GBP in Loans was created by and is property of American Consumer News.

These two companies offer much better interest rates than what you might be able to find elsewhere online. The reason for this is because the money that Lending Club and Prosper.com get to fund your loan come from other users on their website that are hoping to make money by providing loans to borrowers like you.

These two companies don’t have a lot of the costs that a traditional bank or online financing company would have, because they aren’t actually providing you a loan. Instead, the loans are coming from other people that are hoping to make a better rate on their savings than they would from a savings account. Prosper.com and Lending Club are simply taking a transaction fee for managing the loans that lenders on the site make to you, making the economics much different than it would be if you were borrowing money from a bank. Although these two companies can offer you much better loans than what you would get from a bank on an unsecured loan, it doesn’t mean they are a scam.

Lending Club and Prosper.com are both venture-capital backed firms based out of California and have registered their investments with the U.S. Securities and Exchange Commission. Between the two companies, more than 12 million in loans are originated each month. Lending Club has 38 employees and is based out of Redwood City, CA. The current CEO is Renauld Laplance. Prosper.com is based out of San Francisco, CA and the current CEO of that company is Chris Larsen.

Lending Club.com has an A- rating from the Better Business Bureau. Prosper Marketplace has a slightly lower B- rating from the BBB.

If you’re worried about a LendingClub.com Scam or a Prosper.com scam, you don’t have much to worry about. Both are real companies with real CEOs which are based in California and are backed by well-known VC firms. If you plan on investing with either company, there are some investments risks to consider, but neither companies are a scam.

LendingClub.com and Prosper.com: Not a Scam was created by and is property of American Consumer News.

Secured Loans
A secured loan is a loan that is secured by items of value that can be seized by the lender in the event of a default on the loan. Also called collateral, the items that are used to secure the loan are often examined by the lender before they approve the loan to make sure that the value of the item is as much as the borrower is claiming it to be. It is believed that holding the ability to seize these assets will reduce the chance of the person defaulting on the loan and if the person does default on the loan, the lender has a chance to reduce their losses by selling the assets used as collateral for the loan.

Secured loans are generally made to people that have a blemished credit history or a lower credit score than the lender is comfortable with. These loans have higher interest rates associated with the loan and the amount of money that is loaned under a secured loan is often less than what could be obtained with an unsecured loans. The lender would rather have the loan repaid under the terms of the agreement, but being able to seize the collateral that has been attached to the loan will mean that the losses suffered by the lender under a default will not be as great.

Unsecured Loans
Unsecured loans, such as Payday loans and Cash advances, are typically viewed as the most desirable type of loan available to people today. These loans are typically made to people that have an excellent credit history, a very good credit rating, and have a high enough salary to easily repay the loan without creating a financial hardship. No collateral is required for an unsecured loan because the person has demonstrated that they will be able to repay the loan and the interest with no problems. For people that have a good history with the lender that they are using to obtain their loan, obtaining an unsecured loan can be accomplished in a short period of time.

The type of cash loans which are offered to the person will depend on many different factors. The lender will look at the credit history of the person to determine whether the person has ever had a problem with paying their obligations on time as well as the value of the items put up as collateral for a secured loan. If the lender determines that the person may be a credit risk, the person will be offered a secured loan but if the lender determines that the risk of default is minimal, then the person will be offered an agreement for an unsecured loan.

Unsecured and Secured Loans: How They’re Different was created by and is property of American Consumer News.

Here are the peer to peer lending companies operating in the U.S:

Prosper Marketplace – Prosper.com was the first of the peer-to-peer lending companies in the U.S. to gain exposure and to originate a significant amount of loans. Prosper has originated more than $184 million in loans and are currently originating about $2 million per months in loans. The company faced some legal issues with the SEC in 2008, but has worked those issues out and is now legally operating again.

Prosper’s lending model operates a bit differently than other peer-to-peer lending sites in the United States because investors place bids to partially fund loans at an interest rate that they are willing to lend money at. Its primary competitor, Lending Club, sets a fixed interest rate based on market conditions and the borrower’s credit score.

Lending Club – Lending Club is the fastest growing of the peer-to-peer lending companies in the United States, originating about $11 million in loans each month. This peer-to-peer lending site started out as a Facebook application in 2007, but quickly moved to its own web-portal. Lending Club has originated a total of $150 million in loans since the company began.

Lending Club has been popular with investors because the company has done a better job of collections and has generally provided better rates of return than Prosper. Borrowers tend to like  lending club’s peer to peer lending site because the company tells the borrower what interest rate they will be paying on the loan before going through the funding process.

Fynanz – Fynanz is a peer-to-peer lending website that focuses on peer-to-peer student loans. Students can use their loan money to purchase textbooks, room and board, tuition and other education related expenses. Fynanz offers lending terms of 5, 7 and 10 years, which is longer than what Lending Club and Prosper.com offer. Fynanz also offers the ability for students to defer interest while they are in college.

Green Note – Green Note also focuses on peer-to-peer student loans. This peer-to-peer lending company launched in 2009 and provides loans to students at a flat rate of 6.8% over a period of 10 years. Students can also defer payment while in college and Green Note does not require a cosigner from the borrower.

Kiva – Kiva is also frequently paired with Lending Club, Prosper and other peer-to-peer lending sites, but its operational model is much different than its for-profit contemporaries. Kiva provides micro-finance loans to small businesses around the world in hopes of spurring economic growth and empowering small businesses in situations around the world where funding would otherwise be unavailable.

The Dead Pool

There are a few peer to peer lending companies (p2p lending companies) that didn’t make it. Pertuity Direct went defunct earlier in the year and liquidated its mutual fund and returned invested funds to their investors. Zopa, a major peer-to-peer lending site in Europe, ceased their US operations as well. Virgin Money also appears to have exited the U.S. market after removing most of their services from their website.

Peer to Peer Lending Companies: P2P Lending Companies Doing Business in the U.S. was created by and is property of American Consumer News.

About the Company:

Lending Club was founded in 2006 and currently has 45 employees. Renaud Laplanche is the company’s Chief Executive Officer and the firm has originated more than $150 million in loans to date. Lending Club is based out of Redwood City, CA. The company has received $53 million during three rounds of venture capital and has had over $1.5 billion 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. Our LendingClub.com review concludes that if you’re a borrower, Lending Club is an excellent way to get an unsecured loan.

LendingClub.com Review: A Full Review of LendingClub.com’s Peer to Peer Lending Services was created by and is property of American Consumer News.

Here are the peer to peer lending sites operating in the U.S:

Prosper Marketplace – Prosper.com was the first of the peer-to-peer lending companies in the U.S. to gain exposure and to originate a significant amount of loans. Prosper has originated more than $184 million in loans and are currently originating about $2 million per months in loans. The company faced some legal issues with the SEC in 2008, but has worked those issues out and is now legally operating again.

Prosper’s lending model operates a bit differently than other peer-to-peer lending sites in the United States because investors place bids to partially fund loans at an interest rate that they are willing to lend money at. Its primary competitor, Lending Club, sets a fixed interest rate based on market conditions and the borrower’s credit score.

Lending Club – Lending Club is the fastest growing of the peer-to-peer lending companies in the United States, originating about $6 million in loans each month. This peer-to-peer lending site started out as a Facebook application in 2007, but quickly moved to its own web-portal. Lending Club has originated a total of $69 million in loans since the company began.

Lending Club has been popular with investors because the company has done a better job of collections and has generally provided better rates of return than Prosper. Borrowers tend to like  lending club’s peer to peer lending site because the company tells the borrower what interest rate they will be paying on the loan before going through the funding process.

Fynanz – Fynanz is a peer-to-peer lending website that focuses on peer-to-peer student loans. Students can use their loan money to purchase textbooks, room and board, tuition and other education related expenses. Fynanz offers lending terms of 5, 7 and 10 years, which is longer than what Lending Club and Prosper.com offer. Fynanz also offers the ability for students to defer interest while they are in college.

Green Note – Green Note also focuses on peer-to-peer student loans. This peer-to-peer lending company launched in 2009 and provides loans to students at a flat rate of 6.8% over a period of 10 years. Students can also defer payment while in college and Green Note does not require a cosigner from the borrower.

Kiva – Kiva is also frequently paired with Lending Club, Prosper and other peer-to-peer lending sites, but its operational model is much different than its for-profit contemporaries. Kiva provides micro-finance loans to small businesses around the world in hopes of spurring economic growth and empowering small businesses in situations around the world where funding would otherwise be unavailable.

The Dead Pool

There are a few peer to peer lending sites that didn’t make it. Pertuity Direct went defunct earlier in the year and liquidated its mutual fund and returned invested funds to their investors. Zopa, a major peer-to-peer lending site in Europe, ceased their US operations as well. Virgin Money also appears to have exited the U.S. market after removing most of their services from their website.

Peer to Peer Lending Sites: Companies Which Operate P2P Lending Websites was created by and is property of American Consumer News.

Five Cent Nickel is a personal finance blogger that personally invests in Lending Club. He has talked about the rates of return that he’s earned with Lending Club and about the strategies that he uses to maximize his rate of return. Here’s an article about the selection criteria that Nickel uses to pick out the loans that he invests in on Lending Club. He also recently did a great write-up about using Lending Club’s third party note-platform which can be found by searching online.

Another website which does a great job of covering the world of peer to peer lending is P2P-banking.com. This website does a great job of covering all of the global activity in the peer to peer lending space. The author recently did a great overview of all of the European peer to peer lending companies.

Another author, Fred93, primarily covers Lending Club’s competitor Prosper Marketplace, but has also done some coverage on Lending Club. He is somewhat critical of the peer to peer lending, especially Prosper.com, but provides a good counterpoint to some other peer to peer lending websites. He is part of a larger community, Prospers.org, which has a forum that discusses peer to peer lending in great detail. The community is somewhat critical of the industry as a whole, especially Prospre.com.

There are a few other lending club blogs out there, but many of them have died of inactivity over the years. Between the three resources above, you’ll get a better idea of the peer to peer lending world.

Lending Club Blog: Blogs that Cover Lending Club Online was created by and is property of American Consumer News.

Typically peer to peer lending companies such as Lending Club, Prosper and others start out with the borrower. A person will come to one of the company’s websites looking to take out a three-year or five-year unsecured loan. The borrow will complete an application form and the peer to peer lending company will check the borrower’s credit. If the borrower has a credit score of 660 or above and meets certain other requirements, their loan listing will be placed on the peer to peer lending marketplace and a funding process will begin.

After a loan is listed on a peer to peer lending marketplace, other members of the site with investor accounts will be able to browse the loan. The investor will be able to see key credit information as well as see information about the borrower’s employment situation and a description as to why the borrower wants to take out the loan. If they believe that the interest rate that will be charged to the borrow is sufficiently high for the amount of risk they believe they are taking out on the loan, they can choose to fund part of the loan.

Typically a loan to a borrower will be funded by dozens of investors, each investing amounts ranging from $25.00 to $500.00. After the borrower’s loan is fully funded, Lending Club or Prosper will transfer the loan amount to the borrower. When the first payment is due, the company will draft the funds out of the borrowers account, and distribute the payment to investors that funded the loan. After thirty-six or sixty months, the loan will be repaid by the borrower and the investors will, if the borrower meets their commitment, receive their principal back plus interest.

In the event that a borrower does not pay, the peer to peer lending company, whether it’s Lending Club or Prosper, will engage in a collections practice to try to bring the loan back to current. Lending Club has a well-developed collections strategy, but Prosper.com has previously been criticized for not doing enough to collect on delinquent accounts. The percentage of borrowers that default on their loan depends largely on the marketplace because of the differing credit requirements that each site has.

Lending Club, Prosper and Other Companies: How Peer to Peer Lending Marketplaces Work was created by and is property of American Consumer News.

If you’re not familiar with Lending Club, it’s a marketplace which allows users of its website to make loans to one another. Instead of putting money into a savings account and indirectly loaning it to other people through the bank and earning a paltry 1% rate of return, Lending Club allows savers to loan money directly to people wanting to take out loans without the bank taking a large percentage of the rate of return off the top.

As an investor, you can choose which borrowers you would like to loan money to and how much you would like to loan to them. You can view information about their credit history, employment situation and why they want to take out a loan. Loans are typically given interest rates between 9% and 20%, allowing you to earn a very competitive rate of return on your money.

From time to time, Lending Club’s marketing department will offer a bonus, typically in an email to existing investors, which will allow you to earn anywhere from a 1% to a 5% bonus on your money. In a recent bonus email which was sent out, investors that deposited $1,000 received a $50 bonus on their deposit, resulting in an instant 5% rate of return for the first year.

You can get in touch with Lending Club’s investor services periodically and ask them when any bonus offers might be coming via email. Typically Lending Club offered bonuses via email every few months, so it may pay to wait until a bonus email comes around to make additional lending club investments.

Lending Club Bonus: How to Get a Bonus on Future Lending Club Investments was created by and is property of American Consumer News.

If you’re considering investing in peer-to-peer loans through Lending Club, you’re going to want to do a lot of research and make sure that it’s a good fit for you. You can certainly do a lot of Google-ing and read the experience of individual investors that have put money into Lending Club that have shared their experiences.

There are a few other resources that you should checkout as well before diving into Lending Club. The first is Lending Club Stats.com, which provides statistical information about the rates of returns that lenders have received using Lending Club’s published data. Lending Club publishes this information as well, but Lending Club Stats slices the data in a manner that might be more useful for the individual lender.

There’s also a Lending Club forum in the prospers.org at http://www.prospers.org/forum/. You’ll need to register or an account before you can read most of the posts on the site, but the participants in Prospers.org’s Lending Club Forum have a lot of experience and insight to share that you might not find from a simple Google Search.

Finally, it’s always worth checking out Lending Club’s Wiki page on Wikipedia. There’s no official Lending Club Wiki that’s exclusively about Lending Club, however Wikipedia has a decent article on Lending Club that provides some good history about the company. It’s definitely worth a read if you plan on putting any amount of money into Lending Club.

Like any investment, you’ll want to do research before putting a significant portion of money into Lending Club. From our perspective, we’ve had pretty good luck with our small experiment into putting money into Lending Club, but we suggest you take the time to read about many lenders’ experiences before making a decision as to whether or not you’ll consider this alternative investment.

Lending Club Forum: Where to Discuss Peer to Peer Lending Online was created by and is property of American Consumer News.

These two companies offer much better interest rates than what you might be able to find elsewhere online. The reason for this is because the money that Lending Club and Prosper.com get to fund your loan come from other users on their website that are hoping to make money by providing loans to borrowers like you.

These two companies don’t have a lot of the costs that a traditional bank or online financing company would have, because they aren’t actually providing you a loan. Instead, the loans are coming from other people that are hoping to make a better rate on their savings than they would from a savings account. Prosper.com and Lending Club are simply taking a transaction fee for managing the loans that lenders on the site make to you, making the economics much different than it would be if you were borrowing money from a bank. Although these two companies can offer you much better loans than what you would get from a bank on an unsecured loan, it doesn’t mean they are a scam.

Lending Club and Prosper.com are both venture-capital backed firms based out of California and have registered their investments with the U.S. Securities and Exchange Commission. Between the two companies, more than 12 million in loans are originated each month. Lending Club has 38 employees and is based out of Redwood City, CA. The current CEO is Renauld Laplance. Prosper.com is based out of San Francisco, CA and the current CEO of that company is Chris Larsen.

Lending Club.com has an A- rating from the Better Business Bureau. Prosper Marketplace has a slightly lower B- rating from the BBB.

If you’re worried about a Lending Club Scam or a Prosper.com scam, you don’t have much to worry about. Both are real companies with real CEOs which are based in California and are backed by well-known VC firms. If you plan on investing with either company, there are some investments risks to consider, but neither companies are a scam.

Lending Club and Prosper.com: Not a Scam was created by and is property of American Consumer News.

Fortunately, there’s a new option for borrowers that don’t want to put up collateral and just want to take out an unsecured loan—peer to peer loans. These are loans funded by other people through a peer to peer lending marketplace such as Prosper.com or Lending Club. Instead of borrowing money from the bank, you’re borrowing money from other people, which can result in a great investment for the person lending you money and can save you a lot of money by getting better terms and a lower interest rate than you would be able to get at a bank.

Both Prosper.com and Lending Club offer unsecured loans with interest rates starting at about 7%. For high risk borrowers, the interest rate can be as high as 20%, but the average interest rate that borrowers pay is about 9%, so you can expect to get an interest rate at about that rate. Loans from Prosper.com and Lending Club are available in most states, and you can get either a 36 month or a 60 month repayment term, depending on what works best for you. With these two websites, you can take out a signature loan for any reason as long as you have a credit score of 660 or above.

In order to apply for a peer to peer loan, you can visit Prosper.com’s website and Lending Club’s website. It might be worth it for you to apply on both sites and see which company will offer you better terms on your loan.

Peer to Peer Lending Companies: The Best Unsecured Loan Lenders was created by and is property of American Consumer News.

If you’re not familiar with the idea of debt consolidation, you are basically taking all of your high interest debts and taking out a loan at a lower interest rate to pay them off. Let say that you had $20,000 in credit card debt and the average interest rate was 19.99% APR. You would be paying $4,000 in just interest in each year on that debt. If you took out a peer to peer loan from Lending Club and received a loan at 9% (that’s the average rate that borrowers are getting), you would be savings $2,200 per year or $183.33 per month in interest that could be going to pay down your principal balance which will help you get out of debt much faster. Every month that you pay down the principal balance, you are reducing your monthly interest charge, accelerating the process.

The other main benefit of taking your high interest credit card debt and consolidating it into a peer to peer loan through Lending Club or Prosper.com is that the term and interest rate are fixed. Instead of paying an interest rate which could skyrocket at any minute, you’re guaranteed the rate that’s quoted to you for the like of the loan. Lending Club and Prosper both offer fixed payment terms, meaning that once you have made all 36 or 60 payments (depending on what type of loan you choose), you are completely out of debt. There’s no getting stuck in minimum-balance hell from a credit card which will leave you in debt for more than 20 years.

Both Prosper.com and Lending Club offer these loans with interest rates starting at about 7%. For high risk borrowers, the interest rate can be as high as 20%, but the average interest rate that borrowers pay is about 9%, so you can expect to get an interest rate at about that rate. Loans from Prosper.com and Lending Club are available in most states, and you can get either a 36 month or a 60 month repayment term, depending on what works best for you. With these two websites, you can take out a signature loan for any reason as long as you have a credit score of 660 or above.

In order to apply for a peer to peer loan, you can visit Prosper.com’s website and Lending Club’s website. It might be worth it for you to apply on both sites and see which company will offer you better terms on your loan.

How to Pay Off High Interest Debt Faster with Lending Club was created by and is property of American Consumer News.

Often people that want to take out a small amount of money as a loan go through a finance company in their town, this can be a mistake. Depending on who you work with, the terms of your loan and the interest rate that you pay can vary dramatically. Instead, consider taking out a loan through a peer to peer lending website such as Prosper.com or Lending Club. From your perspective, the loan is just like taking out a loan from a bank of finance company, but at a much lower interest rate.

The money that’s lent to you from a peer to peer loan actually comes directly from individuals, rather than through an intermediary such as a bank or finance company. Since you’re borrowing money directly from other people, you can very often get a much better interest rate than you would from a bank or finance company.

Both Prosper.com and Lending Club offer signature loans with interest rates starting at about 7%. For high risk borrowers, the interest rate can be as high as 20%, but the average interest rate that borrowers pay is about 9%, so you can expect to get an interest rate at about that rate. Loans from Prosper.com and Lending Club are available in most states, and you can get either a 36 month or a 60 month repayment term, depending on what works best for you. With these two websites, you can take out a signature loan for any reason as long as you have a credit score of 660 or above.

In order to apply for a peer to peer loan, you can visit Prosper.com’s website and Lending Club’s website. It might be worth it for you to apply on both sites and see which company will offer you better terms on your loan.

How to Get an Unsecured Loan if You Have a Credit Score of 660 Or Above was created by and is property of American Consumer News.

If you’re not familiar with the term signature loan, it simply means that you are taking out a loan and the only guarantee that the bank has that you will pay off the loan is your signature, making it a signature loan. Another name for a signature loan is an unsecured loan. These loans have slightly higher interest rates than secured loans, but do not require collateral and are still much better than what you would be paying on a credit card loan.

Often people that want to take out a small amount of money as a loan go through a finance company in their town, this can be a mistake. Depending on who you work with, the terms of your loan and the interest rate that you pay can vary dramatically. Instead, consider taking out a loan through a peer to peer lending website such as Prosper.com or Lending Club. From your perspective, the loan is just like taking out a loan from a bank of finance company, but at a much lower interest rate.

The money that’s lent to you from a peer to peer loan actually comes directly from individuals, rather than through an intermediary such as a bank or finance company. Since you’re borrowing money directly from other people, you can very often get a much better interest rate than you would from a bank or finance company.

Both Prosper.com and Lending Club offer signature loans with interest rates starting at about 7%. For high risk borrowers, the interest rate can be as high as 20%, but the average interest rate that borrowers pay is about 9%, so you can expect to get an interest rate at about that rate. Loans from Prosper.com and Lending Club are available in most states, and you can get either a 36 month or a 60 month repayment term, depending on what works best for you. With these two websites, you can take out a signature loan for any reason as long as you have a credit score of 660 or above.

How to Get a Signature Loan Online through Peer to Peer Lending Marketplaces was created by and is property of American Consumer News.

Here’s how Lending Club describes its note trading platform, “The Note Trading Platform is an electronic marketplace where individuals and organizations can buy and sell Notes that correspond to consumer loans issued through the Lending Club website… The Note Trading Platform is operated by FOLIOfn.”

Users can access the note trading platform from the “Trading Account” link in their lending club accounts. However, users will have to apply for an account and wait for the account to be activated before it can be used.

There are several advantages in making use of Lending Club’s note trading platform. Investments are made much quicker (24 hours) on the note trading platform compared to up to two weeks through regular platform trading. Investors can also reduce risk by funding loans in which the borrower’s credit score has improved or where the user has consistently made their payments. Sometimes other investors will list notes at a discount because they need liquidity, creating an opportunity to buy notes a discount. Users in the 24 states that Lending Club doesn’t allow investors in because of various state regulations can still purchase notes on the FolioFN platform.

Peer to Peer Lending: Lending Club’s Note Trading Platform was created by and is property of American Consumer News.

Puff Puff is available for $0.99 on the App Store. The application’s listing boasts that 10% of app sales wll be given to support organizations that are dedicated to protecting and restoring the coral reef eco system. The developer is also freely releasing its source code to other developers on its website. The game hopes that other developers build remixes of Puff Puff and that other developers allocate some of their proceeds to help address environmental and social issues.

Peer to Peer lending is an increasingly popular for digitally savvy small business owners. Entrepreneurs that want to borrow a short amount of money typically aren’t a good fit for venture capital firms and banks won’t offer financing to most small businesses. As a result, Prosper.com and Lending Club, have found a niche in providing loans to small business owners and other borrowers as a way to take advantage of this unfilled market need. These two companies get their capital to provide loans from individual investors that choose which loans they want to fund. As the borrower repays his or her loan, the payments are distributed to the investors that helped fund the loan.

Anyone interested in taking out a loan through a peer to peer lending website can visit either Prosper.com’s or Lending Club’s websites.

iPhone Developer users Peer To Peer Lending to Fund Game Development was created by and is property of American Consumer News.

Getting a loan through a peer to peer lending site is a bit different than going down to the local bank and applying for a loan. Instead of your money coming from indeterminate sources at the bank, other people are providing the funds for your loan. As you make your payments through your peer to peer lending marketplace of choice, your funds are distributed back to the other people on the site that helped fund your loan.

Because your money is being funded by other people, rather than by a bank, you can often get a much better interest rate than you would on a credit card or through a personal loan at a bank. Borrowers with perfect credit can get interest rates as low as 7%. Some higher risk borrowers may be asked to pay as high as 15% or 17%, but the average interest rate that borrowers pay is between 9% and 10%. Like other loans, you’ll have to pay an origination fee to the service between 1% and 4% to cover their costs.

Many people have taken advantage of these services to cut the interest rates they are paying on credit card debt. Instead of paying variable interest rates as high as 29% to credit card companies, borrowers can move their debt into a fixed-rate loan with a lower interest rate which will be completely paid off over 3 or 5 years. Credit Card companies would like you to continue to make minimum payments on your credit card and keep you in debt forever, but with a fully-amortizing fixed-rate loan, you are guaranteed to get out of the debt if you make all of your payments.

Lending Club and Prosper offer loans between $1,000 and $20,000 over terms that are either three years or five years in length. Those interested in taking out a loan through either service can visit Lending Club or Prosper’s websites.

How to Get a Loan through a Peer to Peer Lending Website was created by and is property of American Consumer News.

Regarding loan amount changes, the company wrote, “Prosper loan amounts continue to range from $1,000 to $25,000.  However, the maximum loan amount for any borrower is now determined by the borrower’s credit reporting agency score and Prosper score.  Depending on a borrower’s scores, their maximum loan amount may be $7,500, $15,000 or $25,000.  Borrowers should benefit from this change as it will help ensure their loan amounts stay in ranges most likely to be funded through the auction process.  A detailed table of maximum loan amounts and corresponding scores may be viewed here.”

Prosper has also modified the origination fees that it charges borrowers, writing “Origination fees for borrowers with Prosper Ratings of C through HR have increased from 3.0% to 4.5% and the minimum fee is $75 (previously $50). The origination fee for borrowers with A and B Prosper Ratings borrowers remains 3.0%; however, the minimum fee is now $75 (previously $50).  The origination fee for borrowers with AA Prosper Ratings remains 0.5% with no fee minimum.”

The company is offering a lower interest rate to borrowers that take out second or third loans on the website, “Based on a performance analysis, repeat borrowers with on-time payment histories and a Prosper Rating of AA through D will be assigned a lower estimated loss rate.  Details related to the estimated loss rate adjustments for repeat borrowers meeting these criteria may be viewed here.”

Prosper.com Makes Changes to Peer to Peer Lending Borrowing Requirements was created by and is property of American Consumer News.

Here are some key excerpts from the press release:

• There are now more than 40,000 investors on Lending Club
• Lending Club is now funding more than $10 million in loans per month
• Consumers can request loans between $1,000 and $25,000
• Borrowers pay an APR between 7.93% and 25.07%
• Lending Club investors have earned a 9.64% net asset return since 2007

About Lending Club:

Lending Club is a peer lending network bringing together investors and creditworthy borrowers. Lending Club eliminates the high cost and complexity of traditional bank lending to offer borrowers better rates and investors better returns. Lending Club was recently recognized as one of the 20 “Breakthrough Ideas for 2009″ by Harvard Business Review, has been nominated for “Top 100 Innovators” by The Industry Standard, is on the JMP Hot 100 list, and the AlwaysOn Global 250 Top Private Companies list. In addition Lending Club won the Webby Award in 2008 for the “Best Banking Website.” Founded in 2006, Lending Club is headquartered in Redwood City, CA. More information is available at: http://www.lendingclub.com. Loans are not issued in IA, ID, IN, KS, ME, MS, NC, ND, NE, or TN. Loans are issued by WebBank, an FDIC insured Utahchartered industrial bank located in Salt Lake City, Utah. Borrowers must be US citizens or permanent residents and at least 18 years old. Valid bank account and social security numbers are required. All loans are subject to credit approval.

Lending Club By the Numbers was created by and is property of American Consumer News.

The firm mentioned some updates to its automated plans, “To ensure your Automated Plans keep up with changing market conditions and credit policy changes impacting Prosper Scores, all Automated Plans now expire as soon as your initial investment has been successfully invested in notes or after 30 days, whichever comes first.  Notifications and prompts of plan changes and scheduled expirations will make it easy for you to restart or update your plans. Lenders currently using Automated Plans:  Be sure to login into your account to Restart Your Plans Now… any plans that you set up prior to today are inactive and, per the email you received, your plans need to be restarted or your Automated Plan funds will not be bid out.”

The company has also launched an improve prosper score rating, writing, “A new Prosper Score has been developed that incorporates more performance history and more robust credit criteria and analysis.  The improved score replaces the Prosper Base and Prosper Enhanced Scores. “

The company also returned detailed performance information and removed various options on the site, writing “The student loan category, automatic funding option, and retired/part-time employment status are no longer available for borrowers so you will no longer be able to use these in your automated plan and listing search criteria.”

The company has also modified funding options, “Although the automatic funding option (no auction / no bidding down of rate) is no longer available, borrowers can still choose to fund their listing “manually” once it reaches 100% funding.”

Prosper.com Adds New Features to Peer to Peer Lending Site was created by and is property of American Consumer News.

“Lending Club creates a shorter path between the source of capital (investors) and the use of capital (borrowers). Over the past three years we have taken the innovative idea of peer lending and provided proven, clear benefits for both parties involved in the transaction — bringing new opportunities to investors and better interest rates to borrowers,” said Renaud Laplanche, CEO of Lending Club.

The majority of Lending Club loans are made to people that want to consolidate high interest consumer debt such as credit cards with a lower interest rate personal loan. Lending Club offers unsecured loans for interest rates as low as 7.93% for A1 graded borrowers, 53% lower than the national credit card APR of 14.9%. Lending Club has previously stated that the average interest rate borrowers pay is between 9% and 10%. Lending Club users can also take out loans to fund large purchases such as automobiles, weddings or home improvement projects.

Lending Club boasts investor returns of 9.65% net annualized since the company first began offering loans in 2007. Lending Club has more than 40,000 investors which range from “fund managers and financial advisors to retired florists and software engineers”. According to the firm, “Lending Club’s Prime Consumer Notes are attractive to a wide range of investors because of the transparency of the investment and the predictable returns.”

Peer to Peer Lending Site Lending Club Marks Three Year Anniversary was created by and is property of American Consumer News.

Here’s an excerpt from Lending Clubs’ blog about the contest, “Back in March, Lending Club launched its first ever Lending Club Photo Contest to celebrate our new site and brand.  We invited all professional and amateur photographers to submit up to 4 photographs for a chance to win the $1,000 first place prize and many other prizes.  The response was fantastic with more than 250 pictures submitted, and over 300 votes during final face of the contest on Facebook.”

The first place price of $1000 went to J. Griffin Stewart who took a photo called “The Promise” with 103 votes. The second place prize went to Greg Hahner who took a photo called “Mountainside Beauty” with 61 votes and the third place prize went to Michelle C. who took a photo called “Hidden Beach” with 55 votes.

Lending Club first announced the contest in march, writing on its blog “To celebrate our new web site, we’re hosting the first ever Lending Club Photo Contest.  We invite all professional and amateur photographers (as well as anybody who knows a good picture when they see one) to submit one or multiple entries (maximum of 4) for a chance to win $1,000.” At the end of April, Lending Club extended its contest deadline until May 31st. At the time, Lending Club said it received more than 180 photos. The company announced the finalists on June 10^th.

The winning photos are visible on Lending Club’s blog.

Lending Club Announces Photo Contest Winners was created by and is property of American Consumer News.

First, you must know that Lending Club has some requirements for borrowers, but they are not necessarily as strict as what you might see when applying from a loan from a bank. Currently Lending Club requires that borrowers have a credit score of at least 660 to get a loan and a debt-to-income ratio of less than 25%.

Lending Club also lists the following requirements on their website: “at least 3 years of credit history, showing no current delinquencies, recent bankruptcies (7 years), open tax liens, charge-offs or non-medical collections account in the past 12 months, no more than 10 inquiries on your credit report in the last 6 months, a revolving credit utilization of less than 100%, and more than 3 accounts in your credit report, of which more than 2 are currently open.”

Borrowers from the following states cannot currently get a loan on Lending Club: Iowa, Idaho, Indiana, Kansas, Maine, Mississippi, North Carolina, North Dakota, Nebraska, and Tennessee. Borrowers from the other 40 states can get a loan from Lending Club. Lending Club does not accept loans from borrowers outside the United States.

After you meet Lending Club’s requirements, know that lenders will want some information from you as well. Lenders want to know that the information that you’ve provided Lending Club is accurate and that you will indeed repay the loan. Often, lenders will ask you questions about your financial status, including what type of loans you have and what the balances are. Lenders will also often suggest that you verify your income or expedite the credit approval process by sending in appropriate forms to Lending Club. These two things will help make your loan get funded faster and help you get your money sooner.

To apply for a Lending Club loan, visit Lending Club’s website.

Lending Club Borrowers: How to Get Approved for a Lending Club Loan was created by and is property of American Consumer News.

Here’s a note left by one Lending Club lender across many loan listings:

“NO questions asked; NO answers required. Email ONLY FYI. After Lending Club Home Office < $1 deposit verifies bank account, NEXT step borrower Employment- Income verification aka “Credit Review”. Employment – income verifications independent of one another. Home Office Credit Reviewer contacts you by email or telephone. Reviewer tells you for loan category and $ value what income documents to submit- 2 Earning Statements, Direct Deposit receipts, the 2009 IRS 1040, or if self-employed or small business owner, an IRS Form T4506 Request For Copy Income Tax Return. Reviewer provides Fax Machine telephone number and will indicate doc, or pdf format if documents sent via email. When Credit Review completed the application lenders see reflects Credit Status “Approved” for $ funded loans bank deposit. An Approved Credit Status benefits borrower because: (1) Loan attract lenders waiting until review process completed before committing $. (2) After completed, funding pace will quicken. (3) After loans funded, net $ is deposited quickly into already verified bank account. Credit Review the “KEY” for borrower’s loan funding. Consider Credit Review proactive; it can be completed quickly if borrower initiated. CREDIT REVIEW SHOULD BE COMPLETED EARLY-ON. WAITING UNTIL LISTING’S END CREATES CHAIN-REACTION DELAY IN APPROVAL, FUNDING, DEPOSITING $. Credit Reviewers goal to complete required borrower Credit Review within 3-days after loan listed. If a Credit Reviewer does N-O-T contact you within 2-days after loan’s list date, AFTER verifying < $1 deposit posted bank account, ASAP initiate contact with Credit Review. Refer to “CONTACT US” link located bottom Home Page. Member Support Department open Mon – Fri 8AM – 5 PM (support@lendingclub.com 866-754-4094). Home Office closed Sat, Sun, CA, US Holidays for live telephone calls; answering machine available 24/7. Fax Machine is available 24/7. Earlier a Credit Review finished, loan “Approved” for issue, means sooner loan attracts lenders who commit their $ to fund it. Borrowers who take excessive time for Credit Review to be completed because of their procrastination, then their loan’s $ funding lags F-A-R BEHIND loans listed same day, but Credit Review quickly finished in 1 day and loan Approved for later issue. The lenders role is exclusively to fund selected loans; and to ask necessary clarifying questions. A Home Office Credit Reviewer only person who conducts borrower’s employment  and income verification. They are only person to whom borrower sends ALL required income documents. “

Lending Club Loans: What Investors Like to See was created by and is property of American Consumer News.

Can this person afford to repay the loan?

At the end of the day, one of the two most important questions to ask about a borrower is whether or not they have the ability to repay. To determine this, I often look at their existing revolving credit and other debt and compare that to their income. How leveraged is the borrower already? I recently reviewed a loan listing where the borrower had excellent credit and had never been late on his loan before, but was up-side down in his mortgage (albeit slightly) and had a high amount of consumer debt relative to his income, thus, I skipped past the loan and went onto the next listing.

You also want to look at the size of the payment that the person will be making compared to their take home pay. If someone wants a loan which would result in a $300 take-home pay and they only make $1,500 a month, chances are, they can’t afford that size of payment each month. Generally, I look for borrowers whose payments will be 10% or less of their monthly income.

Will this person repay the loan?

The other question that lenders need to ask is will the person repay the loan. Many people have the ability to repay a debt, but often don’t do so because they don’t have their act together. One good measure to determine the viability of a loan is to look for past delinquencies and public records. Does this person have a history of not paying their bills? If so, it’s probably best to move onto the next loan listing.

The other way to determine whether or not someone will pay can be found in the loan description and questions section. If the borrower writers a specific reason for the request of money, how they plan to pay off the loan  and can provide concise and accurate information about their financial status, that person probably has their act together and will be able to repay the loan.

Lending Club Investor Questions: What to Consider When Funding a Loan was created by and is property of American Consumer News.

As of the time of writing this article, there are 317 notes listed for funding on Lending Club. Out of those, 162 are requests for three year loans and 154 of them are requests for five year loans. Now, 49% of borrowers are asking for five year loans versus three year loans.

Many Lending Club borrowers state on their loan listing that they like the five year option for the additional flexibility that it affords. Many of them state that they are borrowing on a five year term and plan to pay extra on the note as if they were going to pay it down in three, but that the lower required payment makes it a more flexible option for that. The reality is, that most borrowers probably won’t prepay their loans as they intend, because those types of intentions usually aren’t followed up on.

Lenders can earn up to an additional 3.24% APR on top of the base interest rate for funding a five year loan versus a three year loan. It will take a number of years to before investors know whether or not funding five year loans is a better option than three year loans. The question will be whether the additional default risk is more than made up by the additional interest that they receive.

The Sun’s Financial Diary concisely expressed the concern that investors will have about these notes, “As for the new 60-month loans, I am not sure how much it will improve the return, even though the interest rates are higher. As the Lending Club default rate vs. loan age graph shows, the older the loan, the higher the percentage of default, except for Grade A loans. If the trends for other loan grades hold, then investing in 60-month, low grade loans may not result in better overall return as the number of defaults will also increase. While I like the extra 1.85% yield from 60-month Grade B or lower loans, I am concerned about the possibility of higher default rates. And since 60-month loans are new, there’s no statistics to support the claim of better return.”

Although he expressed concern, he said that he would fund some five year notes. I anticipate this is how most lenders will treat the loans, by cautiously funding a few of them and seeing how they work out.

5 Year Lending Club Loans Gain Popularity was created by and is property of American Consumer News.

Own the Dollar looks for borrowers with “C” credit ratings or lower, longevity in the borrower’s job and borrowers that request smaller loan amounts. He also looks for borrowers with low credit utilization ratios and doesn’t invest more than $50.00 in each loan. Steadfast Finances doesn’t place more than $25.00 in each loan and accepts borrowers that have credit scores of 679 or above and are taking out loans for specific purposes. He also looks for borrowers with job security and a low amount of existing debt. Five Cent Nickel has posted his own lending criteria.

Most Lending Club investors will eventually settle on their own strategy for finding the best borrowers to loan money to, but what if you could find the best loans without digging through the 300+ loan listings which are on Lending Club at any given time? By using the correct selection criteria, you can find the loans that Lending Club lenders are most excited to invest in.

The easiest way to see which loans have expressed the most investment interest from lenders is to compare what percentage of the loan has been funded versus how much time in the lending process the loan has left. If a loan is more than 90% funded and there’s still more than a week to go on the loan listing, there’s probably a reason why investors have been quick to fund the loan. To find these notes, go to the “Browse Notes” section in your Lending Club account, and sort by “% funded” descending and you’ll see a list of which notes have the highest percentage funding. You can than see loans that have a large number of days in the “time left” column to find notes which also are already close to being completely funded.

Finding popular loans isn’t the only criteria that you should use when choosing Lending Club loans to invest in. However, using this sort mechanism can be a good way to find some of the “cream of the crop” loans to review.

How to Crowd Source Your Lending Club Investment Criteria was created by and is property of American Consumer News.

Prosper.com sent the following email to investors on July 7^th, “Just a quick reminder that there’s still time for you to participate in our new Summer Cash Rebate Promotion! Get a 1% cash rebate when you place bids totaling at least $1,000 between July 1st and July 16th on listings that have AA-E Prosper ratings. This is a limited time offer, so start bidding now!”

Here’s the fine print of the offer, “Excludes investments on the Folio trading platform. Cash bonus will be deposited to your Prosper account by August 31st, 2010. Each lender’s first bid per listing will be counted toward the promotion. We reserve the right to disqualify any participant who attempts to abuse this promotion, as determined by us at our sole discretion.”

Prosper.com Offering 1% Deposit Bonus to Investors was created by and is property of American Consumer News.

Lending Club will pay depositors a $50.00 bonus to investors that transfer an additional $1,000-2,499. Lending Club will pay depositors a $100.00 bonus to investors that transfer an additional $2,500-4,499. Lending Club will pay depositors a $150.00 bonus to investors that an additional $5,000 or more.

Existing Lending Club investors were sent an email with a link to receive the bonus with their next investment. New investors can contact investor services at (866) 811-9225 to take advantage of the deal.

Here’s the fine print of the offer:

“To receive your bonus, all funds must be newly deposited between July 7, 2010 and July 31, 2010, continuously maintained in your Lending Club account until August 31, 2010 and fully invested on the Lending Club platform by August 31, 2010 to unlock the bonus for withdrawal. Existing account balances and deposits will not be counted towards satisfaction of the necessary load to earn this bonus. Bonus will be based upon the total net new funds loaded and continuously maintained on the platform during the required period. Bonus will be locked and only available for investing until all of the newly loaded funds are invested on the platform, no later than August 31, 2010, at which point the bonus will available for withdrawal. Your bonus, if any, will be deposited in your Lending Club account by August 13, 2010. One bonus per tax ID. Program may be discontinued at any time without notice. Lending Club reserves the right to withdraw any bonus amount upon violation of these terms. Failure to fully invest the new funds by August 31, 2010 will result in your forfeiture of the bonus amount and its automatic withdrawal by Lending Club. Transactions in the secondary market (the trading platform operated in by FolioFN) do not count as “investing funds” or towards unlocking the bonus. This bonus payment is taxable so please consult with your personal tax advisor. You are responsible for any taxes related to this offer. Void where otherwise prohibited. This offer may not be combined with any other offer.”

Lending Club Offering $150 Bonus to Investors was created by and is property of American Consumer News.

Here’s the press release:

Lending Club, the leading U.S. peer lending network, has been engaged by Mint.com to help consumers get out of credit card debt faster, pay less interest and keep more of their money for what really matters.  Lending Club is a strategic partner in Mint.com’s newly launched Goals feature, which helps Mint users get out of debt and save to meet their other life goals.

Lending Club offers personal unsecured loans for paying off high-interest debt at rates starting at 7.93 percent APR; which is 53 percent lower than the overall national credit card APR of 16.81 percent* and can translate into thousands in savings over the life of a loan.  For example, a three-year loan of $25,000 at the current average credit card APR would cost approximately$3,800 more in interest than a three-year unsecured personal loan from Lending Club at a 7.93 APR**.

“Currently, over 60 percent of Lending Club’s personal loans have been made to people who want to wipe out their high-interest debt, which is often from credit cards,” said Renaud Laplanche, CEO of Lending Club. “Like Mint.com, our goal is to help consumers make the most of their money.  With our simple online application you can get a low-interest rate quote instantly and a personal loan in an average of seven days.”

Lending Club’s personal loans come with a fixed rate for the lifetime of the loan in three or five-year terms and can be paid off anytime.  There are no prepayment penalties and no hidden fees.  The online application process is simple, secure and confidential.  Personal loan money can be deposited in a borrower’s account in less than two weeks.

“We launched Mint Goals to help people get what they want in their lives. For those in debt, getting out from under that burden is the first step they need to take toward achieving the others,” said Aaron Patzer, vice president and general manager of Intuit’s Personal Finance Group and founder of Mint.com. “Helping people get the lowest APR on their outstanding debt can save them hundreds or thousands of dollars that they can then use to save for retirement, buy a home, or reach other life goals.”

Lending Club is the U.S. leader in peer lending, with 85 percent market share. More than 10,000 people are taking advantage of Lending Club’s lower interest rate personal loans to pay off more expensive debt.  Lending Club has issued more than $125 million in loans since it was founded in 2007 and just set a U.S. record for peer lending with $10 million in loans funded in May 2010.

Lending Club Selected as Mint.com Partner to Help Consumers Get Out of Credit Card Debt was created by and is property of American Consumer News.

The key results of the survey included, According to Lending Club:

• The majority of Americans know the rates they are paying on their credit card and their credit rating
• Despite this awareness, they continue to carry high interest credit card debt and many do not know how to improve their credit score.
• Of those who know the rates on their credit cards, 31 percent have an interest rate of 20 percent or more and 64 percent pay 14 percent or more
• 65 percent of credit card users have never tried to negotiate a better interest rate, though 93 percent know it’s possible
• Gender gap: women are less likely to know their credit score and interest rate than men

The full results of the survey are available on Lending Club’s website.

The numbers presented by Lending Club are interesting, given the mantra that consumers are supposedly paying off debt and getting their financial houses in article.  Lending Club’s survey further demonstrates that consumers really haven’t gotten much better with money since the financial crisis. Radio Host Dave Ramsey recently debunked the notion that consumers are getting out of debt in record numbers and demonstrated that the reason consumer debt levels are declining is because banks are writing off loans in unprecedented numbers as consumers default and file bankruptcy.

Lending Club Releases Survey on Consumer Credit Knowledge was created by and is property of American Consumer News.

Debt consolidation loans were by far the most popular reason that borrowers took out loans through the Prosper Marketplace. After debt consolidation, business loans were the second most popular reason for taking out a loan at 12%. Home improvement loans represented 9% of loans funded on Prosper Marketplace. Education loans and automobile loans each represented 4% of the loans that are funded on Prosper. 18% of loans were listed as “other use.”

In the press release, Prosper also said that during the second-half of 2009, the average credit score amongst its borrowers was 742 and the average loan amount was $4,369. These two numbers are especially important to Prosper. The company believes that its loans are less risky than its primary competitor’s (Lending Club) because  Prosper’s average loan size is much smaller. Prosper is also hoping to minimize the perceived risks to investors by advertising the high average credit score of borrowers who get loans fudned.

It’s important to recognize that these statistics only represent loans that get fully funded by Prosper’s borrowers. There are many loan listings from borrowers that make their way onto Prosper’s listings but never get funded because lenders believe they represent too much of a credit risk. A calculation of the average credit score amongst all borrowers that apply for loans and have their loan listings on the marketplace would likely be much lower.

The company also released performance statistics about how well their loans have been performing. Prosper estimates that its lenders will make between 7.74% and 10.63% back on their money. Some have called Prosper’s methodology into question, arguing that the true rate of return that investors will earn should be solely based on loans that have completed their 3 year repayment cycle.

Prosper Statistics: Over Half of Prosper Marketplace Loans are Used for Debt Consolidation was created by and is property of American Consumer News.

In a short blog-post on their site titled “Welcome Quebec,” the company said “Starting today, Lenders and Borrowers from Quebec can now participate in the CommunityLend online lending system.”

Before last week’s announcement, the company was only operating in the province of Ontario. Since each province has unique lending regulations, the company must ensure that it is in compliance with all local lending laws before opening up to lenders and borrowers in that province. This is very similar to how Lending Club and Prosper Marketplace only operate in specific states because of lending legislation which varies on a state-by-state basis.

CommunityLend’s business model is very similar to the two major peer-to-peer lending companies in the United States, Lending Club and Prosper Marketplace.  On CommunityLend’s website, the company describes itself as “an online community where people can lend money directly to other people in a safe and secure way. It is an exciting and unique lending service for Canadians that will revolutionize the way lending works in Canada.”

CommunityLend differentiates itself from Lending Club and Prosper Marketplace by offering users the ability to create and join “communities”.  CommunityLend describes the feature on their website by saying, “in our Community area, you can create Communities which reflect your real life communities and which can help identify your unique community financial needs and Loan performance to interested Lenders.”

Here is a map from CommunityLend’s website about its availability:

Canadian Peer-to-Peer Lending Company CommunityLend Now Available in Quebec was created by and is property of American Consumer News.

Lending Socially.com is our attempt to provide up-to-date and accurate reporting on the fledgling social lending industry, but there are several other sources that provide great information and insight about the world of peer-to-peer lending. There are a number of online communities that have formed around the topic of social lending that are worth checking out if you are considering loaning money to borrowers by means of a peer-to-peer lending website or if you plan on getting a loan from Lending Club or Prosper marketplace.

Here are some of the active peer-to-peer lending forums:

CommunityLend Forum – This is an online discussion forum related to CommunityLend, a Canadian peer-to-peer lending company.

Kiva Friends- This is a forum is an online community of lenders that participate in Kiva’s social lending service. This discussion forum focuses around Kiva’s organization and the issue of microfinance on a broader scale.

MyC4 Forum – This is a forum related around MyC4, a peer-to-peer lending company based in Denmark.

Prospers.org – This is a community for “users of Prosper.com, LendingClub.com and other P2P lending sites.” Some vocal members of this forum are critical of Prosper Marketplace and the peer-to-peer lending industry as a whole, primarily because of the risk associated with investing in peer-to-peer loans. One of its members (fred93) that has a blog titled “fred93’s blog” is worth checking out as well.

Wise Clerk Forums – This is a smaller forum for users of Prosper, Lending Club, Loanio, Kiva, Myc4, Microplace and other peer-to-peer lending services.

Zopa Talk – This is an online community related to Zopa, a peer-to-peer lending company which operates in Japan, Italty and the United Kingdom.

Peer-to-Peer Lending Forums: Where to Discuss Social Lending Online was created by and is property of American Consumer News.

This new round of funding brings Fynanz’s total funding to just over $ 8million. Fynanz says that it will use the new money to expand its credit union and student lending marketplace, as well as for the development of additional lending programs which include financial literacy initiatives.

The company launched in 2008 with the aim of taking the peer-to-peer lending model of Prosper Marketplace and Lending Club to student loans. Students can apply for loans and lenders can help fund those loans. Unlike other peer-to-peer lending sites, Fynanz guarantees each loan. The loans that Fynanz offers are also qualified educational loans, so students can deduct interest from their taxes when they begin repayment.

The company uses a number of factors beyond a traditional credit-score model to determine whether or not a student will repay, including the student’s grade-point-average and what school the student is attending. The loans that Fynanz offers are written to both the student and the school. Fynanz also limits the size of the loan to a student’s tuition and related expenses so that students do not take out more than they need to.

Fynanz says that students benefit from their service because the interest rates Fynanz offers are often 0.5-1.0% lower than what a student would get from a bank or credit union.

Fynanz Receives $6.5 Million in Series-A Funding to Develop Peer-to-Peer Student Lending Programs was created by and is property of American Consumer News.

In a short statement made by the company, Lending Club said commented that “We have reduced our interest rate for borrower loans by 50 basis points, effectively decreasing a borrower’s interest rate by 0.5%.”

Borrowers with “A1” credit ratings can now receive loans with interest rates as low as 6.39% from Lending Club. The new maximum interest rate that Lending Club charges borrowers with “F5” credit ratings is now 19.79%

The change will come as welcome news to borrowers that are considering taking out an unsecured loan. Lending Club and Prosper Marketplace were already offering relatively competitive rates compared other options available for borrowers looking to take-out an unsecured loan. Conversely, lenders will receive slightly lower interest rates from funding loans that are issued under the new rates.

The move comes as members of Lending Club’s leadership team have commented that Lending Club’s marketplace is currently “borrower constricted”, meaning that there’s plenty of money from lenders to fund peer-to-peer loans, but not enough borrowers looking to take out those loans.  Lending Club does have significantly higher loan demand than it funds, but the company turns down many potential borrowers that are believed to be too-high of a credit risk under Lending Club’s underwriting model.

Lending Club’s likely motive for the lowering of rates is to even out the demand between its borrowers and lenders. Lowering interest rates is an obvious way to make using Lending Club’s peer-to-peer loan marketplace more attractive for borrowers and less attractive for lenders.

Lending Club Reduces Interest Rates for New Borrowers by 0.50% was created by and is property of American Consumer News.

Whether you’re the owner of a small business or a consumer looking to take a loan, you might find yourself disappointed with traditional lenders. Fortunately, there’s a Plan B–peer to peer lending.

Peer to Peer lending, which is under the category of social lending, is a way of taking out a loan online from other people. Two of the major sites in the United States are Lending Club. There’s also some niche sites targeted at students looking for student loans such as People Capital and Green Note.

Companies like Prosper and Lending Club have been around for a few years, but have gained notoriety during the last couple of years because of the relative ease of getting a loan through the service compared to a bank. Lending Club has seen significant growth during the last year. The company had monthly loan originations of $2.15 million during February of 2009 and hit more than $10 million during May 2010.

The primary advantage of using a peer to peer lending service to take out a loan is the interest rate that you’ll pay. The average borrower gets a loan at about 9%, much better than credit cards and unsecured loans which can easily be above 20%. Investors benefit by having an investment which provides some diversity to stocks, bonds and real estate. Lending Club boasts that its investors have earned a 9.64% net annualized return since 2007.

If you’re a borrower, know that you’ll still need to have a credit score of at least 640 (or 660 for Lending Club) to get a loan. You’ll also need to be able to have an income and some level of employment history. There’s also some fees involved, as you would pay with any bank. Peer to peer lending companies are in the business to make money, so borrowers can expect to pay an origination fee of 1-4%

What You Need to Know about Peer to Peer Lending was created by and is property of American Consumer News.

In a statement made on Prosper’s company blog, the company commented, “We have hundreds of lenders and borrowers participating in the first auction based peer-to-peer loans platform and welcome our members in Mississippi back to our community.”

Prosper Marketplace says that it is in process of meeting regulatory requirements in the 22 states that it does not currently do business in. Commenting on the company’s ongoing process of meeting state regulations, it noted that “each state has their own process and ultimately Prosper does not control the timeline involved to get approval. Rest assured that this is a priority for us and we will let you know as lending opens up in new states.”

Prosper is currently available to lenders in the following states: California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Louisiana, Maine, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New York, Oregon, Rhode Island, South Carolina, South Dakota, Utah, Virginia, Washington, Wisconsin and Wyoming.

Here is a map of Prosper Marketplace’s current state-by-state availability to lenders:

(Source: Prosper Marketplace Blog)

Prosper Marketplace Now Open to Mississippi Lenders was created by and is property of American Consumer News.

Borrowing money from family members is equally undesirable. Typically loans to friends and family members are handshake agreements and the money is rarely paid on time and in full. Borrowing money from friends and family will often result in a damaged relationship and is probably best to be avoided if there’s another option to get a loan.

Although getting a loan from friends and family or from a bank is becoming increasingly difficult and less desirable, there is another option available for would be borrowers, peer-to-peer loans. If you’re in need of money, you can borrow money through peer-to-peer lending marketplaces including Lending Club or Prosper Marketplace in the United States or from similar companies world wide.

What is peer-to-peer lending?

The premise of peer-to-peer lending is to remove banks from the lending cycle. Traditionally, banks will collect money from their account holders (savers) and then loan that money out at higher interest rates to its borrowers. Lending Club and Prosper Marketplace aim to cut out banks  by allowing savers to loan money to borrowers without a bank or credit union serving as the middle man. The benefit is that borrowers will generally get better interest rates than they would be able to at a local bank and savers (lenders) would be able to earn a better rate of return than if they had left their money in a savings account.

Requirements for Borrowers

One of the primary factors that peer-to-peer lending companies use to determine whether or not you will be approved for a loan is your credit score. Typically the minimum credit score that you would need to get a peer-to-peer loan is 660. If your credit score is at least 660, you will probably be able to get an unsecured loan from a peer-to-peer lending marketplace.

If you’re not sure what your credit score is or if there’s any red marks on your credit report that might need to be fixed to raise your credit score, there are two free sites that will let you review your credit report and score, which are Quizzle.com and CreditKarma.com.

Both Lending Club and Prosper Marketplace have slightly different requirements to determine who will qualify for a loan and who won’t. For example, on Lending Club requires its borrowers to have a 3 year credit history, no active delinquencies and no previous bankruptcies and Prosper Marketplace only requires borrowers to have credit scores of 640, whereas most of its competitors require a 660 credit score.

Types of Loans Available

The loans available from Prosper Marketplace and Lending Club are unsecured loans, meaning that you do not have to put up any collateral to guarantee to the loan. The term of the loans offered on Lending Club and Prosper Marketplace are both for 3 years (36 months). The loans fully amortize over that term, so you will repay the loan in 36 equal payments that total the principal amount that you have borrowed plus the interest. The interest rate you pay will vary between 8% and 20% depending on your credit score.

There are also student loan specific websites that aim to provide students with peer-to-peer loans to pay for their education. The two companies offering student loans are Fynanz and People Capital.

Applying for a Loan

If you are interested in applying for a peer-to-peer loan, visit Lending Club’s website at LendingClub.com or Prosper Marketplace’s website at Prosper.com. It’s important to remember that peer-to-peer loans are only available in certain states because lending laws vary from state-to-state. Both Prosper Marketplace and Lending Club will tell you if your state is eligible when you begin the application process.

Here’s how to sign-up with Lending Club:

(1)    Visit this link to sign-up as a borrower or as a lender

(2)    To apply for a loan, click on the “Get a Loan” link on Lending Club’s website. Fill out the simple form indicating how much money you want to borrow, what you want to borrow it for and how good your credit score is, then click the “Next” button.

(3)    Next, fill out the relevant information in the fields required such as your name, address, phone number, social security number, your employment status and your email address. The website will also ask for information about your income and permission to pull a copy of your credit report.

(4)    After filling out Lending Club’s three-minute form, you will be given a loan offer with the details of the loan. If the offer is to your liking, then you will need to enter in a checking account number and routing number so that Lending Club can deposit the money into your account.

(5)    The loan money will be deposited into your account on a specific date. You will have to wait until the loan is completely funded by lenders on the website before receiving the deposit. After the loan is funded, the money will be automatically put into your checking account. An origination fee will be charged when putting into your account based on your credit score and the loan amount. This fee typically ranges between 1.25% and 3.75%.

(6)    After receiving your money, Lending Club will deduct payments from your checking account for 36 months. There’s no penalty if you want to make extra payments or pay off your loan early. There are also no hidden fees to speak of.

Final Thoughts

Borrowers on Prosper Marketplace and Lending Club end up borrowing money for a variety of purposes, including purchasing a car, consolidating debt, getting additional money for college and even to pay for medical bills. Peer-to-peer lending companies provide a valuable service to both investors and borrowers by providing lenders above average interest rates and for giving borrowers better rates than they would be able to get from a bank.

If you haven’t tried peer-to-peer lending on either the borrowers or investors side, it might be worth a shot. You can make a decent rate of return that is less volatile than a stock market investment as a lender or get a great deal on an unsecured loan as a borrower.

How to Apply for a Loan at Lending Club or Prosper Marketplace was created by and is property of American Consumer News.

In the newsletter, Monetto urged that lenders update their loan contracts and change the name account number of the bank account they use to collect repayments. Monetto said that it will no longer serve as an intermediary for processing loan repayments and that borrowers should repay their funds to lenders’ accounts directly.

Monetto was an early entrant into Poland’s social lending industry. The company was backed by the IIF venture capital fund.

From the company’s beginning, Monetto’s lending market was tainted by unscrupulous borrowers that had misrepresented their credit risk, due in part to verification procedures that could be labeled insufficient at best.

The company’s CEO, Lukasz Banach, was interviewed in September 2009 by Finnovation.pl. In his interview, he commented that higher loan amounts that Monetto offered compared to other Polish social lending sites might attract more fraudulent activity than what other sites had faced.

Banach commented to Finnovation.pl that, “In USA, UK (also Germany) there are central, accessible and trustworthy databases of credit history. As long as there is no such thing in Poland, I don’t believe that social lending will be successful here. When this barrier is removed, the percentage of bad debts on P2P markets will fall down significantly. ”

The company’s downward slope began at the end of 2008 when its venture capital firm decided to pull out of the project. Since January 2009, Monetto stopped accepting new loan listings. There were several issues with transferring payments to lenders and the company’s customer service quality declined dramatically.

Although not officially report, many believe the company’s investors attempted to sell the service, however no buyer was found.

(Sources: WiseClerk.com, Finnovation.pl)

Polish Social-Lending Website Monetto Shutting Down was created by and is property of American Consumer News.

The industry that enables savings account holders to cut the bank out of the lending process is called “peer-to-peer lending.” Instead of indirectly loaning money to borrowers through the bank, there are now a number of peer-to-peer lending marketplaces that allows savers to take the money they would have placed in savings accounts and loan it directly to borrowers. Although there is some risk involved if the borrower does not repay, many savers that have moved their money to peer-to-peer lending services are making between 8% and 12% back on their money.

It’s not a fair comparison to say that the interest rates that you get by making loans directly to other people through peer-to-peer lending marketplaces is the same as loaning money to the bank. When you put money into a bank, your money is FDIC insured and there’s no risk that you will lose money on the investment. When you “become a bank” and lend money to borrowers via a peer-to-peer lending marketplace, you are taking on all the risk of default that a bank would when they make a loan.

Some of the early investors in Prosper Marketplace, the largest peer-to-peer lending marketplace, did end up losing money because the company as accepting very high-risk borrowers at the time. These lax standards combined with an increasing unemployment made “becoming a bank” a less profitable venture for some than they had originally expected. Fortunately, more recent investors in Prosper Marketplace and its primary competitor, Lending Club, have fared much better as the two companies tightened their lending standards to reduce default rates.

If you are interested in “becoming a bank” your first step is to visit one of the websites for two major peer-to-peer lending marketplaces. If you are located outside the U.S., there may be a peer-to-peer lending marketplace specifically to your country. In the United States, Prosper Marketplace and Lending Club are the two companies that serve as an exchange for savers that want to “become a bank” and borrowers that would like to take out a loan.

After creating an account on Prosper or Lending Club’s services, you can then transfer funds in just as you would with any brokerage account. After you have money in your account, you can then start looking at loan listings and choosing which borrowers you would like to loan money to. In this part of the process, you are literally acting as a “loan officer” for the bank that you have just become. You need to look at each borrower’s listing and decide if you would like to fund a portion of their loan.

Common strategies that investors use to determine how risky a borrower is include looking at the person’s employment history, their credit rating, their amount of late payments, and the reason for their loan. Some choose to look at riskier loans in hopes of making higher rates of return and others play it safe and only invest in “A” quality loans.

No one is sure whether or not these peer-to-peer lending marketplaces will survive and thrive long enough to become a major part of the lending industry, but for now they are an interesting way for savers to take on a bit more risk and earn a much better rate of return than one would get on a savings account.

How to Become a Bank: Thoughts on Investing in Peer-to-Peer Loans was created by and is property of American Consumer News.

Typically when an individual investor makes a loan to a business or corporation, it happens in the form of a corporate bond. This is a common investment that investors typically purchase as part of mutual funds. An individual investor or a mutual fund manager will purchase a bond from a corporation and then the company will agree to make payments for a set period of time with interest.

In a move that melds investing in corporate bonds and social lending, BigCarrots is hoping to connect individual lenders with corporate borrowers on its new website, BigCarrots.com. Typically with a peer-to-peer lending website, individual investors will make loans to individual borrowers. With BigCarrots.com, individual investors will fund loans to small businesses and companies that want to take out loans.

Investors can lend as little as 25 GBP to companies and companies can apply for unsecured loans of up to 25,000 GBP for 3 to 36 month terms. Lenders can also sell their investments early by reselling their ownership in the loan on a reseller platform. Currently the website only has 34 loans listed to corporations. The company’s FAQ page is rather sparse and doesn’t provide any information about how BigCarrots assesses borrowers for risk.

U.K Based BigCarrots.com Mixes Peer-to-Peer Lending and Corporate Bonds was created by and is property of American Consumer News.

On the company’s blog, Zopa said that, “In January, we disbursed £3.81 million to our borrowers, making it our biggest month ever. We’re pretty chuffed with this, so thanks to all our members for making it possible. And with our table-topping A* rates, we hope to have an even better February!”

Zopa is a relatively large peer-to-peer lending company compared to some of its non-United States counterparts. To put things in perspective, Zopa is originating about twice as much in loans per month as Prosper and about 66% of what Lending Club is originating.

Zopa is a peer-to-peer lending company based in England. The company has operations in the United Kingdom, Italy and Japan. Zopa had been planning to launch a U.S. version, but has since scrapped those plans in October 2008 citing the United States’ deteriorating economic conditions. Zopa has received an estimated $33.9 million in venture capital.

Zopa Announces Record Month, Originates £3.81 Million in New Loans During January 2010 was created by and is property of American Consumer News.

Bankers without Borders, an organization run by the Grameen Foundation, will use the funds to help support its microfinance partners in more than 30 countries. According to Shannon Maynard, the organization’s directory, the grant will nearly triple Bankers without Borders’ annual budget.

The organization currently has about 3,000 volunteers, most of whom come from companies such as Accenture, Best Buy and JP Morgan Chase, have contributed more than $2.3 million in the form of in-kind services in nine countries, including China, Haiti, and India.

Alex Counts, CEO of the Grameen Foundation, said in a statement that “Bankers without Borders’ volunteers are helping to give poor people greater access to financial services and information technology by helping microfinance organizations and technology-for-development initiatives improve their operations, develop new products, and reach more clients.”

Recently, the organization’s volunteers have analyzed currency risks for a microfinance lender in Indonesia, helped pilot a point-of-sale device in Ghana that allows customer to repay loans and make deposits remotely, and evaluated potential investments for Grameen.

Bankers without Borders Secures $3 Million JP Morgan Chase (NYSE: JPM) Grant for Microfinance Initiatives was created by and is property of American Consumer News.

Here’s the interview:

LENDING SOCIALLY: CommunityLend launched this month in Ontario and Quebec. How are the company’s efforts to do business in other provinces coming?

CL Colin:  CommunityLend is committed to providing the service to all Canadians. The securities jurisdictions in Canada are unique to each province and each requires its own application process with all the commensurate application process, discussion and of course legal costs.  Nonetheless we feel the hardest parts have been achieved with our initial work in Ontario, and we hope to make good and rapid progress towards our objective within 2010.

LENDING SOCIALLY: Tell me about some of the unique regulatory challenges that CommunityLend has faced. Has Canada’s regulatory environment made it difficult for CommunityLend to launch?

CL Colin:  The real challenge for peer-to-peer lending broadly, is that it was not contemplated by the founding fathers in US nor Canada when they drew up the regulations that apply to banking and securities.  Internet and automation were not around in those days.  The framework for regulation was based on face to face human oriented activity and paper based processes.  Today we have a dramatic shift in capability allowing asymmetric activities across automated platforms.  People can not just access and interact online, they can have the flexibility to operate on their own schedule, yet still be at the convenience of others.  Online platforms can manage the time gaps and keep everyone connected.  The unique challenge for us and for the regulators is to apply the regulatory principles including protection of Canadians, without too much compromise in our system.  Long answer to explain that Canada’s regulatory system has no particular challenge that others do not have.  The real challenge is brought about by change by internet and the new business models that are now possible.

LENDING SOCIALLY: There was recently a well-publicized article on Slate called “You are unlikely to prosper” that criticized the peer-to-peer lending industry for being too risky for investors. What are your thoughts about the high default rates that some US peer-to-peer lending companies have seen? What is CommunityLend doing to ensure that only loans to credit-worthy borrowers are made?

CL Colin:  My response which I wrote earlier was this.   The peer-to-peer lending model to date has two definitive characteristics that with the passage of time are essential to understand that peer-to-peer lending is not what social lending looked like in 2005.  So 2005 events and circumstances should be viewed as learnings to be applied to 2010 circumstances.

At CommunityLend our job is to provide a robust platform that takes that learning and applies it in a way which offers smooth, simple and comfortable environment for borrowers and lenders.

LENDING SOCIALLY: Tell me about CommunityLend’s “Communities” feature. Have borrowers that are part of CommunityLend communities gotten better interest rates than those that are not part of communities? What other benefits do members get from joining communities?

CL Colin:  We think of Communities as our beta feature.  It will take time to prove out the beta with sufficient data and experience.  Our premise is that Communities will provide borrowers the capability to demonstrate that their collective loan repayment success is better than the average of all borrowers with similar credit scores.  Time will tell, and we are excited to build this beta out.

LENDING SOCIALLY: CommunityLend has been active for just under a month. Has CommunityLend’s initial launch demonstrated a demand for peer-to-peer loans in Canada? Any numbers you would like to share in terms of dollar amounts, lenders, borrowers would be very welcome.

CL Colin:  Our first month has been deliberately kept under the radar.  We used it to speak with early users and flush out parts of the site that are not optimal.  We have used this feedback to redesign our site, and the first part of the build goes live later this week.  We are under no illusions that building borrower activity in particular will take time and we have multiple activities underway to make that happen, including partnerships and awareness activities.

LENDING SOCIALLY: Tell me about CommunityLend’s future. What are CommunityLend’s major goals now that the service has launched?

CL Colin:  Our primary goal is to change the rules of lending.  We want to provide a better experience for borrowers, which offers them more empowerment and control that combines in a better experience.  We want to offer sources of capital including personal investors and institutional investors the access to borrowers on a scale and return that offers them another alternative.

LENDING SOCIALLY: Is there anything else that you would like to share about CommunityLend?

CL Colin:  We have high hopes and we are a small startup.  Our early goals are modest but our vision is larger.  Our team is small and that will change over time too.  We just appreciate the attention from folks such as yourselves and this all helps us to get our name out there and recognised by folks.  The world has come out of the recent economic crisis more pragmatic, less trusting of institutions.  Through transparency and openness, built on a robust secure platform, our intention is to make a difference and rebuild some of that trust for people.

Interview With Colin Henderson of CommunityLend was created by and is property of American Consumer News.

The first company to make such a partnership was Prosper Marketplace with Zero Motorcycles. Through a partnership between the two companies, Zero Motorcycles is allowing their customers to pay for their purchases by taking out a peer-to-peer loan via Prosper’s peer-to-peer lending marketplace.

Prosper Marketplace CEO Chris Larsen said in a statement to Lending Socially that “The Zero Motorcycles relationship is unique given that it’s the first example of peer-to-peer lending being integrated with a retailer, which is part of our long-term vision.”

People Capital, a company hoping to bring peer-to-peer loans to the student lending world, has also made a referral partnership with Prosper Marketplace. People Capital will refer customers looking for non-student loans to Prosper Marketplace and Prosper will refer borrowers looking for student loans to People Capital.

Larsen commented on Prosper’s ongoing relationships with the two companies, “Our partnerships with Zero Motorcycles and People Capital are synergistic from the perspective that there continues to be a dearth of traditional financing options available to consumers.”

“To date we haven’t been aggressive in our volume forecasts for these partnerships; we’re still learning from them and have work to do to ensure they’re successful.  However, we think overtime these relationships, combined with future ones, will result in incremental volume, especially as peer-to-peer lending continues on a path toward the mainstream,” said Larsen.

Prosper Marketplace and People Capital have been the only two peer-to-peer lending companies to seek out such partnerships so far. Prosper Marketplace’s primary competitor, Lending Club, is still seeing significant growth from their online ad campaigns, affiliate program and other direct to consumer advertising. Most of the peer-to-peer lending companies internationally are still very much a fledgling industry and have not made any significant partnerships with retailers.

Peer to Peer Lending Companies Begin Integrating with Online Retailers was created by and is property of American Consumer News.

The industry that enables savings account holders to cut the bank out of the lending process is called “peer-to-peer lending.” Instead of indirectly loaning money to borrowers through the bank, there are now a number of peer-to-peer lending marketplaces that allows savers to take the money they would have placed in savings accounts and loan it directly to borrowers. Although there is some risk involved if the borrower does not repay, many savers that have moved their money to peer-to-peer lending services are making between 8% and 12% back on their money.

It’s not a fair comparison to say that the interest rates that you get by making loans directly to other people through peer-to-peer lending marketplaces is the same as loaning money to the bank. When you put money into a bank, your money is FDIC insured and there’s no risk that you will lose money on the investment. When you “become a bank” and lend money to borrowers via a peer-to-peer lending marketplace, you are taking on all the risk of default that a bank would when they make a loan.

Some of the early investors in Prosper Marketplace, the largest peer-to-peer lending marketplace, did end up losing money because the company as accepting very high-risk borrowers at the time. These lax standards combined with an increasing unemployment made “becoming a bank” a less profitable venture for some than they had originally expected. Fortunately, more recent investors in Prosper Marketplace and its primary competitor, Lending Club, have fared much better as the two companies tightened their lending standards to reduce default rates.

If you are interested in “becoming a bank” your first step is to visit one of the websites for two major peer-to-peer lending marketplaces. If you are located outside the U.S., there may be a peer-to-peer lending marketplace specifically to your country. In the United States, Prosper Marketplace and Lending Club are the two companies that serve as an exchange for savers that want to “become a bank” and borrowers that would like to take out a loan.

After creating an account on Prosper or Lending Club’s services, you can then transfer funds in just as you would with any brokerage account. After you have money in your account, you can then start looking at loan listings and choosing which borrowers you would like to loan money to. In this part of the process, you are literally acting as a “loan officer” for the bank that you have just become. You need to look at each borrower’s listing and decide if you would like to fund a portion of their loan.

Common strategies that investors use to determine how risky a borrower is include looking at the person’s employment history, their credit rating, their amount of late payments, and the reason for their loan. Some choose to look at riskier loans in hopes of making higher rates of return and others play it safe and only invest in “A” quality loans.

No one is sure whether or not these peer-to-peer lending marketplaces will survive and thrive long enough to become a major part of the lending industry, but for now they are an interesting way for savers to take on a bit more risk and earn a much better rate of return than one would get on a savings account.

How to Become a Bank: Thoughts on Investing in Peer-to-Peer Loans was created by and is property of American Consumer News.

With banks facing new financial regulation and pressure from regulators to increase their capital levels, the amount of available consumer credit, especially for student loans, is drying up. Student borrowers often represent a higher-risk to banks because they often do not have an established credit history. As a result, student lending is generally one of the first types of loans that become more difficult to acquire when banks restrict their lending activities.

Almost all families will be able to get some amount of federally guaranteed student loans via the Federal Stafford Loan Program and the Federal PLUS Loan Program. Some will also qualify for Pell grants, scholarships and other forms of financial aid, but often the amount of financial aid that a student receives isn’t nearly enough to cover the cost of tuition, room and board, and other fees that universities charge students.

Fortunately, students have now have several options to borrow money directly from other people through a number of peer-to-peer lending marketplaces that offer peer-to-peer student loans. The two largest peer-to-peer lending companies, Lending Club and Prosper Marketplace, both allow borrowers to take out personal loans to pay for college expenses. Prosper and Lending Club loans generally aren’t marketed specifically to students, but students can get education loans if they meet the companies’ 660 credit score requirement.

Unsecured loans that are offered by Lending Club and Prosper Marketplace will come with an interest rate between 7 and 20% depending upon the borrower’s credit score. Unlike federal student loans, the payments are not deferred until after college and amortize over 36 equal payments.

There are two other peer-to-peer lending companies that target student borrowers specifically—People Capital and Fynanz.

People Capital has not officially launched their service as of the publish date of this article (2/20/2010), but have recently announced a “beta launch” of their service, but are allowing students to apply for loans. People Capital is waiving the application fee for borrowers during their beta period. People Capital rates borrowers based on a number of different factors, including the student’s GPA, major and the university they are attending rather than the student’s credit score.

Fynanz also allows students to borrow money via their “EdAccess Private Student Loan” product. The peer-to-peer student loans being offered by Fynanz are marketed through its “CuStudentLoan” subsidiary. To qualify for Fynanz’s student loans, borrowers must also be a member of one of the company’s participating credit unions.

Although the peer-to-peer lending industry’s foray into the student lending business is in its infancy, there are many opportunities for students to borrow that may have been otherwise been turned down by their local bank. Getting a peer-to-peer student loan to help pay for college expenses may not be the best option for all students, but are certainly worth looking into for students that do not have their tuition expenses fully covered.

How to Qualify for a Peer to Peer Student Loan was created by and is property of American Consumer News.

According to a blog post on Lending Clubs website, the company says that it believes the new logo will “better express our values (trustworthy, transparent, professional yet friendly and accessible) as well as Lending Club’s commitment to innovative financial services.”

When discussing the company’s new website design, Lending Club said that “Our concept is smart and simple, and our new site will reflect that.  Our goal is to make it easier and more engaging for our members to get lower rates and earn better returns.  The new site works harder to help investors better understand our concept, and the most creditworthy borrowers feel more confident in getting a loan at better terms than they would get from a traditional bank.”

The new logo and website design likely won’t result in any noticeable changes to borrowers or lenders other than a few user interface elements being located in different places on Lending Club’s website.

Here’s a screenshot of Lending Club’s new website:

Lending Club Announces New Logo and Brand Identity was created by and is property of American Consumer News.

Lending Socially recently interviewed Prosper Marketplace CEO Chris Larsen on the topic of risks associated with peer-to-peer lending. Larsen said that when the company had launched in 2006 that it did not place any limitations on borrowers, lenders, and interest rate bidding.

“It was available to borrowers across the credit spectrum (including subprime), and lenders were free to bid as low as they wished whether it be for financial or, more commonly in the early days, social reasons,” said Larsen.

As a result of Prosper Marketplace’s early policies to allow anyone to borrow money or loan money at rates that they wanted, inexperienced investors bid on loans at interest rates that were too low to net a positive rate of return for its investors. As a result, many investors ended up losing money by making loans through the service.

When Prosper Marketplace re-launched in July of 2009, the company put on a number of safeguards to prevent the high default rates and low rates of return its earliest investors had seen.

“Since re-launching last year, Prosper’s marketplace is now more analogous to paternal capitalism and representative democracy, which is part of larger trend I think we’re seeing more broadly among companies,” said Larsen.

Larsen also outlined a number of safeguards that the company has put into place to minimize investor losses, including introducing, in Larsen’s words, “a minimum credit score requirement of 640, a new risk rating and underwriting system driven by the thickest, most seasoned set of peer-to-peer lending performance data; and, a bid floor that prevents people from listing / bidding at a rate below the combination of the estimated default rate for a particular loan and current three-year CD rate.”

Larsen argued that the interest rates its investors are receiving are now much higher than they were before its re-launch, commenting “estimated returns are tracking at approximately 10% after fees and defaults.”

“This 10% return estimate is grounded on the actual performance of thousands of seasoned Prosper loans and the introduction of new safeguards previously outlined.  So the new Prosper is markedly different and more attractive to lenders.  As I’ve said before, there’s truly never been a better time to be a banker on Prosper,” said Larsen.

Some critics of the peer-to-peer lending industry would argue that the average rate of return investors are making are much lower than Larsen’s stated 10% rate of return.

Prosper Marketplace Taking Steps to Reduce Risk for Peer-to-Peer Lending Investors was created by and is property of American Consumer News.

Larsen commentated that he would favor a regulator other than the Securities and Exchange Commission because it only represents investors and does not have any regulatory authority to protect borrowers.

“We also believe the enormous legal cost involved in registering with the SEC is an extraordinarily high barrier to entry.  Sure Prosper benefits from this barrier given that we survived the experience of registration, but many companies didn’t; and we believe more players would further validate and help grow the industry,” said Larsen.

Larsen commented that the California Department of Corporations is “a great example of a holistic regulator.” Larsen and other executives in the peer-to-peer lending industry recently met with the California state legislature to discuss the fledgling peer-to-peer lending industry.

When commenting about Prosper Marketplace’s activity in different states, Larsen commented, “When we re-launched in July 2009, we had only 14 active lender states.  Now we’re up to 27.  So we’ve made a lot of progress, but it’s certainly frustrating for Prosper and lenders in non-approved states that are eager to participate in the market.”

“In some states, the lender side of the industry doesn’t necessarily fit neatly into existing state regulatory regimes despite the fact that it is regulated at the federal level by the SEC,” said Larsen.

Prosper’s CEO said that the company is “hopeful that the House passage of peer-to-peer lending reforms late last year, and ultimately a banking / small dollar loan regulatory regime passed by Senate and signed into law, will move the needle on the state front for lenders.”

Prosper Marketplace Favors Holistic Regulator for Peer-to-Peer Lending was created by and is property of American Consumer News.

When you borrow money from or loan money to someone close to you, sometimes the process will work out fine. In the situation that the borrower can’t repay his or her bill, which is often the case, your relationship with the person on the other side of the transaction is almost always soured. If you’re loaning money to a family member or borrowing money from a family member, it’s likely because you may not have been able to get a loan from the bank due to your credit or because of the tight credit situation in the financial markets.

Borrowing money from a friend or family member changes the relationship dynamic from father/daughter or brother/sister to borrower or lender. Radio host Dave Ramsey frequently says that when you borrow money from a friend or family member, they become your master and you become their servant, referencing the passage of Christian scripture which says “The borrower is servant to the lender.”

There’s so much that can go wrong when making these types of financial transactions with friends or family. The lender might start placing a closer eye on the borrower’s spending patterns. You might start avoiding your family members if the deal goes sour or you could find yourself upset at someone that owes you money. Eventually the relationship will suffer and loaning money from or borrowing money to family members should just be avoided.

Fortunately, there’s another option for borrowers to take out loans that isn’t via a credit card or getting a loan from a family member. Instead, get a personal loan from your bank or a peer to peer lending site such as Lending Club or Prosper.com. You’ll be able to get a better interest rate than you would from a bank and your relationship with your family won’t be in danger.

Avoid Borrowing and Lending Money to Family with Peer to Peer Loans was created by and is property of American Consumer News.

During a recent interview session that Lending Socially had with Chris Larsen, CEO of Prosper Marketplace, Larsen commented that, “Over time we anticipate building a tailored business serving students, but already Prosper is well suited for some specific education financing markets; namely parents and working grad students.  These are segments within the student market that are well served by our current product offerings.”

Both Fynanz and People Capital are beginning to develop peer-to-peer lending offerings for student borrowers, but neither of them have originated any significant of loans. People Capital is currently in a “beta” phase of their service and Fynanz only makes loans to students through partner credit unions.

The peer-to-peer lending industry as a whole is still a relatively new phenomena. Although Prosper Marketplace and Lending Club have both generated significant loan demand, neither has attained profitability to date. It will likely be more difficult to build a successful student loan product based on the idea of peer-to-peer lending because of the long repayment terms and difficulty in judging the credit-worthiness of student borrowers.

When commenting on the intricacies of getting into the student loan business, Larsen said that ”Student financing is a specialty given that many students do not have a credit history or a steady income stream, meaning they typically require long, flexible terms and/or deferments.”

“We’re thrilled to see more peer-to-peer lending companies launching, especially in the student finance space.  More peer-to-peer lenders entering the market validates the industry and serves what we believe is the collective goal of bringing peer-to-peer lending to the masses in all financing categories”, said Larsen.

Prosper Marketplace Hints at Building Peer-to-Peer Lending Product for Student Loans was created by and is property of American Consumer News.

Prosper has originated more than $190 million in peer-to-peer loans since the company was founded in 2006. A recent press release from the company indicated that about 45% of all loans over time have been for debt consolidation purposes, but that percentage has increased significantly in the last few months. Loan origination data from the month of January indicates that 59% of all borrowers that took out loans on Prosper’s peer-to-peer lending marketplace did so to consolidate debt.

Many believe that credit card companies raising their customers’ interest rates before the latest provisions of the Credit Card Act went into effect was a primary motivating factor for the increased demand in peer-to-peer debt consolidation loans. Provisions from the Credit Card Act now prevent credit card companies from arbitrarily raising interest rates on existing debt. As a result, banks increased their rates on credit cards because they would not have the flexibility to do so after the provisions went into effect.

Borrowers with decent credit can generally get much better interest rates than they are currently paying on their credit cards. With recent fee and interest rate increases from credit card companies, many are taking the opportunity to pay off their credit card debt and are using peer-to-peer loans to save on interest in the process.

Traditionally when taking out a debt consolidation loan, banks will push borrowers toward home-equity loans and other forms of second mortgages. Most consumer advocates advise against taking out loans that have your home as collateral because then banks can foreclose on your home if you do not pay your second-mortgage.

Borrowers that takeout loans on Prosper Marketplace or Lending Club can generally get unsecured loans with interest rates between 7% and 20%. Lending Club’s available data indicates that the average rate that borrowers are paying is around 9%.

Debt Consolidation Loans Becoming Increasing Popular on Peer-to-Peer Lending Marketplaces was created by and is property of American Consumer News.

The service that Lending Circle plans on offering will allow individuals to lend small amounts of money to a wide range of creditworthy businesses. Businesses will benefit from taking out loans through Funding Circle because the interest rates will likely be lower than what the company can get from a bank. Funding Circle says that lenders will also be able to loan specifically to businesses in their community or businesses that meet certain criteria, such as being environmentally friendly.

When Funding Circle launches its service, small businesses will be able to apply for loans between 5,000 and 50,000 GBP. Businesses will be checked for any sign of fraud and will have to meet a number of credit requirements to qualify for a loan. The company has a team of underwriters hat will analyze the risk of each loan and screen businesses before allowing them onto Funding Circle’s platform.

“Small businesses are essential to the economy, employing 59% of the private sector workforce and accounting for 50% of UK turnover. Funding Circle is a new way for individual people to connect with and support businesses in the UK, at the grassroots, whilst also generating an attractive return,” said Funding Circle Non-Executive Director Andrew Learoyd.

The A-round of funding that was recently announced was taken from a group of private investors, including current and former heads of private equity firms, insurers, banks, IT companies and leading professional services firms.

Funding Circle Raises $1.1 Million to Build Social Lending Platform for Small Business Loans was created by and is property of American Consumer News.

Here’s the full text:

1)  Tell us about your two recent affiliate partnerships with Zero Motorcycles and People Capital. How were these two partnerships made? What sort of lending volume does Prosper Marketplace expect to garner from these two partnerships?

Our partnerships with Zero Motorcycles and People Capital are synergistic from the perspective that there continues to be a dearth of traditional financing options available to consumers.  The Zero Motorcycles relationship is unique given that it’s the first example of peer-to-peer lending being integrated with a retailer, which is part of our long-term vision.

To date we haven’t been aggressive in our volume forecasts for these partnerships; we’re still learning from them and have work to do to ensure they’re successful.  However, we think overtime these relationships, combined with future ones, will result in incremental volume, especially as peer-to-peer lending continues on a path toward the mainstream.

2)  Prosper Marketplace recently launched a mobile version of its website. From a technology standpoint, will Prosper members see any additional website revamps, new features, or technology upgrades in the near future?

We’re constantly developing and innovating.  Most of what we’re working on right now revolves around improving and simplifying the experience for lenders and borrowers.  Many of these improvements may not be headline worthy or obvious by visiting our website, but the active user experience is where our focus is right now.  In fact, the mobile site has been significantly enhanced for lenders since we first unveiled it in December; but there’s still more mobile functionality needed for borrowers.  This isn’t to say that there won’t be noteworthy new features and revamps coming down the pike, we’re working very hard on that front too.

3) Companies such as People Capital and Fynanz developing are student loan peer-to-peer lending marketplaces. Does Prosper Marketplace have any plans to compete directly in this market?We’re thrilled to see more peer-to-peer lending companies launching, especially in the student finance space.  More peer-to-peer lenders entering the market validates the industry and serves what we believe is the collective goal of bringing peer-to-peer lending to the masses in all financing categories.

Student financing is a specialty given that many students do not have a credit history or a steady income stream, meaning they typically require long, flexible terms and/or deferments.  Over time we anticipate building a tailored business serving students, but already Prosper is well suited for some specific education financing markets; namely parents and working grad students.  These are segments within the student market that are well served by our current product offerings.

4)  A recent Gartner study indicated that there will be significant growth in peer-to-peer lending industry in the next few years. What is Prosper Marketplace doing to maximize its share of that growth?

Maximizing growth and market share for any company requires focusing on two key things: 1) Constantly working to improve the customer experience; and, 2) Building consumer awareness.  The combination of these two things drives loyalty and consumer adoption.

Our priority right now is on the customer experience.  We are pulling and evaluating marketing levers we’ve used in the past and continue to test new ones as well, but they must be cost-efficient.  We also take the view that steady, responsible growth is more important than rapid growth.

5)  Prosper makes use of a reverse Dutch auction to determine interest rates that borrowers are paying. Could you explain why Prosper opted for this route rather than setting fixed rates bates on the borrower’s credit worthiness? Are there any plans to change how interest rates are set?

In terms of the user experience, we strive to capture the best of eBay and Amazon.  The Amazon component is really about simplicity.  For example, continuing to make it easier for lenders to put money to work in custom or template portfolio plans and providing starting rate guidance to borrowers based on current marketplace dynamics.  The best of eBay naturally encompasses the power of an auction for fair price discovery, which we’re firmly committed to.  At the same time, we are considering an eBay-like “Buy It Now” experience to complement our auction model and ensure we have appealing offerings for all borrower and investor segments.

6) Prosper recently became open to Lenders in Mississippi. How are Prosper Marketplace’s efforts coming to meet the regulatory requirements of states that the company does not currently operate in? Are there any states that Prosper expects to meet regulatory approval in soon?When we re-launched in July 2009, we had only 14 active lender states.  Now we’re up to 27.  So we’ve made a lot of progress, but it’s certainly frustrating for Prosper and lenders in non-approved states that are eager to participate in the market.  In some states, the lender side of the industry doesn’t necessarily fit neatly into existing state regulatory regimes despite the fact that it is regulated at the federal level by the SEC.  However, we are hopeful that the House passage of peer-to-peer lending reforms late last year, and ultimately a banking / small dollar loan regulatory regime passed by Senate and signed into law, will move the needle on the state front for lenders.

7) Recently Prosper Marketplace has come under fire by various writers online claiming that Prosper’s default rate makes the investment too-risky for the average investor. What has Prosper Marketplace done since its re-launch to improve its underwriting criterion to reduce default rates?This is a great question, and one that is best addressed by looking at the evolution of Prosper evolution as well as actual lender returns.

When Prosper first launched in early 2006, it was very much a Web 2.0 company in that the marketplace was completely open.  For instance, it was available to borrowers across the credit spectrum (including subprime), and lenders were free to bid as low as they wished whether it be for financial or, more commonly in the early days, social reasons.

So during Prosper’s first few years, Prosper was somewhat like Wikipedia in that it was extremely open.  However, since re-launching last year, Prosper’s marketplace is now more analogous to paternal capitalism and representative democracy, which is part of larger trend I think we’re seeing more broadly among companies.

For example, when we launched last July, we introduced a number of new safeguards and completely revamped our underwriting system and criteria.  We introduced 1) a minimum credit score requirement of 640; 2) a new risk rating and underwriting system driven by the thickest, most seasoned set of peer-to-peer lending performance data; and, 3) a bid floor that prevents people from listing / bidding at a rate below the combination of the estimated default rate for a particular loan and current three-year CD rate.

So how does all of the above translate in terms of lender performance?  To date, the median return across all Prosper lenders who bid from the time we launched in February 2006 to the time we entered our SEC registration quiet period in October 2008 was negative 3.2%.  For lenders who have been bidding since our re-launch estimated returns are tracking at approximately 10% after fees and defaults.  This 10% return estimate is grounded on the actual performance of thousands of seasoned Prosper loans and the introduction of new safeguards previously outlined.  So the new Prosper is markedly different and more attractive to lenders.  As I’ve said before, there’s truly never been a better time to be a banker on Prosper.

8 - Felix Salmon of Reuters has recently criticized the peer-to-peer lending industry because of “adverse selection”, in which un-creditworthy borrowers will go to the most work to get a loan. Both Lending Club and Zopa’s CEOs have responded publically to this article. What are your thoughts about the problem of “adverse selection” in the peer-to-peer lending industry? What is Prosper doing to mitigate this issue?It is true that at times new and unfamiliar channels can induce adverse selection, but it is not a given.  For example, early in the history of the Internet marketing industry, it was a neutral or positively selecting channel.  Only after desperation-oriented key word searches became the norm for some companies (e.g. the keyword search “need cash now”) did it become a natural outlet for risky people in search of lowest common denominator.  However, there are plenty of online and consumer direct companies that are highly positively selected such as GEICO and USAA.

The key to fending off adverse selection rests upon how the marketing and branding are handled, and whether there is a strong value proposition.  Prosper has a strong value proposition for highly credit worthy borrowers.  Among other things, our interest rates are low compared to personal loan benchmarks from banks and specialist consumer finance companies.  High quality borrowers have access to great rates on Prosper as well as the ability to tap into the unique social benefits of the marketplace.  For example, on Prosper people who have friends participate in funding their loan are significantly less likely to default and therefore typically fund at lower interest rates. We are building our marketing and branding activities around these benefits to be sure we are appealing in the highest-quality segments.

The improvements in underwriting and risk performance on Prosper show that adverse selection is being mitigated and in fact that Prosper is well suited to originate good returns on low-risk assets.

9 - Congress is currently working on a regulatory overhaul of the financial industry. Some pending legislation could place peer-to-peer lending companies under a new regulator. You have commented previously that you would welcome this change. Why would the proposed consumer financial protection agency be a better regulator for the peer-to-peer lending industry? What changes do you anticipate that this legislation will bring to Prosper Marketplace?

We’ve always believed that peer-to-peer lending is best served by a holistic regulator who has the best interests of both borrowers and lenders in mind.  The California Department of Corporations is a great example of a holistic regulator.  We also believe the enormous legal cost involved in registering with the SEC is an extraordinarily high barrier to entry.  Sure Prosper benefits from this barrier given that we survived the experience of registration, but many companies didn’t; and we believe more players would further validate and help grow the industry.

Full Q&A With Prosper Marketplace CEO Chris Larsen was created by and is property of American Consumer News.

In the company’s 10-K disclosure, Prosper said that “Our Notes involve a high degree of risk” and that “You should be aware that the Notes offered through our platform are risky and speculative investments. The Notes are special, limited obligations of Prosper and depend entirely on payments to Prosper of obligations of borrower members under the corresponding borrower loans.  Notes are suitable only for lender members of adequate financial means.  If you cannot afford to lose the entire amount of your investment in the Notes you purchase, you should not invest in the Notes. ”

Prosper also disclosed delinquency rates for the loans on its peer-to-peer lending marketplace.

“Since our inception in November 2005 through July 12, 2009, we facilitated 29,013 borrower loans with an average original principal amount of $6,174 and an aggregate original principal amount of $179,137,624 on our platform…As of December 31, 2009, of the 29,013 borrower loans, 35.8% were current, 31.2% were paid in full, 0.6% were 16 to 30 days late, and 2.8% were more than 30 days late.  In addition, of these 29,013 loans”:

• 11,569 loans, or 39.9%, have been more than 15 days past due on at least one occasion;
• 10,342 loans, or 35.6% have been more than 30 days past due on at least one occasion;
• 9,424 loans, or 32.5% have been more than 60 days past due on at least one occasion;
• 8,514 loans or 29.3% had defaulted (a borrower loan is considered to have defaulted when it is more than 120 days past due or has been discharged in bankruptcy).

Prosper also noted data for the loans that have been originated since it reset its borrower criteria when re-launching its service in July of 2009.

“From July 13, 2009 to December 31, 2009, we facilitated 2,034 borrower loans with an average original principal amount of $4,369 and an aggregate original principal amount of $8,886,296 on our platform.  There have been no repurchases by Prosper due to identity theft or operational issues.  As of December 31, 2009, of the 2,034 borrower loans, 96.5% were current, 2.9% were paid in full, 0.3% were 16 to 30 days late, and 0.3% were more than 30 days late.  As of December 31, 2009 of the 2,034 borrower loans, no borrower loans had defaulted.”

• 19 loans, or 0.9%, have been more than 15 days past due on at least one occasion;
• 9 loans, or 0.4% have been more than 30 days past due on at least one occasion;
• 3 loans, or 0.2% have been more than 60 days past due on at least one occasion;

The new notes that Prosper seems to be facilitating appear to be performing much better, however the loans have not had time to age and the delinquency rates will likely rise over time.

Prosper Marketplace Regulatory Filing Admits its Loans are High-Risk was created by and is property of American Consumer News.

About Lending Club

Lending Club is a peer-to-peer lending company that operates in the United States. The company facilitates lending activities between borrowers and lenders on its website. Lending Club, like other peer-to-peer lending companies, hopes to eliminate banks from the lending process by allowing lenders to make loans to borrowers directly without involving a bank. Lending Club’ serves as a marketplace for loan listings as well as a facilitator of payments between lenders and borrowers.

On its website, Lending Club says that it was founded to “create an alternative to banks that offers both borrowers and investors a great rate.”

The company was founded in 2006 and began initially as a Facebook application. After its launch, Lending Club soon moved off of Facebook and built a lending platform on its own website, LendingClub.com. The company’s current CEO is Renauld Laplanche and its COO is John Donovan.

By The Numbers

To Date (1/31/2010), Lending Club has had requests for more than $850 million and loans and has funded more than $83 million in loans. (Only a small percentage of loan requests are approved because of Lending Club’s credit history requirements for its borrowers.)  The company has paid more than $5.7 million in interest to its borrowers.

Default Rates

The average interest rate that borrowers are paying on the site is 12.86%. Lending Club states that its average default rate is 2.63% per year. Since Lending Club loans amortize over a period of three years, this means that Lending Club predicts that 7.9% of all loans will go into default.

Some would argue that the methodology that Lending Club uses to calculate default rates are suspect, arguing that only loans that have had the opportunity to fully amortize should be considered valid data to use to determine a default rate. By using these metrics, Lending Club’s default rate would be much higher.

Lending Club has had only a small amount of loans that have completed their three year loan repayment terms. It will take another year or two before enough data is available to accurately determine a default rate using only loans that have completed their full three year term.

For Borrowers: Types of Loans Available

If you are looking to get a personal loan or an unsecured loan, Lending Club is a great alternative to getting an unsecured loan from a bank. Many have also used Lending Club loans as consolidation loans to get a better interest rate on their debt than what they would be paying otherwise on their credit cards. If you are paying 25-30% on a credit card, you could potentially save a large amount in interest if you were to transfer that debt to a Lending Club loan with an interest rate between 10% and 15%.

All Lending Club loans amortize fully over a period of three years. This means that when repaying the loan, you will be making 36 equal payments to Lending Club and at the end of that three year term; your loan would be fully repaid.

Lending Club loans are unsecured, meaning that you do not have to put up any collateral such as a car or your home to get a loan. If you are unable to repay your loan, Lending Club cannot come after any property that you might have had to put up as collateral if you were getting a loan from a bank.

The interest rate that you will pay will vary depending upon your credit history. Generally, rates range between 7.5% and 20% depending upon your credit score. The average interest rate that borrowers are paying is currently 12.86%

From a borrowers perspective, getting a loan from Lending Club is just the same as getting a loan through a bank, except that you might get a better interest rate from lenders on Lending Club than you would be able to get form a bank.

For Borrowers: Who Can Get a Loan

Lending Club has some requirements for borrowers, but they are not necessarily as strict as what you might see when applying from a loan from a bank. Currently Lending Club requires that borrowers have a credit score of at least 660 to get a loan and a debt-to-income ratio of less than 25%.

Lending Club also lists the following requirements on their website: “at least 3 years of credit history, showing no current delinquencies, recent bankruptcies (7 years), open tax liens, charge-offs or non-medical collections account in the past 12 months, no more than 10 inquiries on your credit report in the last 6 months, a revolving credit utilization of less than 100%, and more than 3 accounts in your credit report, of which more than 2 are currently open.”

Borrowers from the following states cannot currently get a loan on Lending Club: Iowa, Idaho, Indiana, Kansas, Maine, Mississippi, North Carolina, North Dakota, Nebraska, and Tennessee. Borrowers from the other 40 states can get a loan from Lending Club. Lending Club does not accept loans from borrowers outside the United States.

For Borrowers: How to Get a Loan

If you are interested in getting a loan from Lending Club, you can visit their website and fill out the application process. You will be asked for some basic contact information and your social security number. Lending Club will then offer you a loan at a specific interest rate based on your credit history. At this point, you can accept the loan and it will go into a funding period or you can turn down Lending Club’s loan offer.

After getting to the funding stage, Lending Club investors will then have the opportunity to fund part of your loan. Lending Club investors may have questions for you to determine if they want to fund your loan. Don’t hesitate to answer their questions. After your loan has been fully funded, the money will be transferred to your checking account on a specified date.

For Investors: Risks and Rewards of Investing with Lending Club

If you are interested in becoming a lender with Lending Club, you have the potential to earn between 8% and 12% back on the money that you invest if you follow sound strategies when choosing loans to fund.

Investing in Lending Club loans is very much an alternative investment to stocks, bonds and real estate. They are essentially an entirely new asset class. The performance of Lending Clubs generally aren’t tied to the performance of the stock market, bond market or real estate markets, so investing in peer-to-peer loans could be a good way to diversify your investment portfolio.

When investing in Lending Club loans, make sure to fund small amounts in each loan listing to prevent yourself from taking a major hit if a borrower doesn’t make his or her payments. Also look for loan listings from borrowers that have few delinquencies and have a long and stable job history.

For Investors: Who can become a Lender

Lending Club investors from the following states can invest in Lending Club loans: California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Kentucky, Louisiana, Maine, Minnesota, Missouri, Mississippi, Montana, New Hampshire, Nevada, New York, Rhode Island, South Carolina, South Dakota, Utah, Virginia, Washington, Wisconsin, West Virginia, and Wyoming.

According to Lending Club’s website, “Individual lenders who are residents of states other than California or Kentucky must have (a) an annual gross income of at least $70,000 and a net worth (exclusive of home, home furnishings and automobile) of at least $70,000; or (b) have a net worth of at least $250,000 (determined with the same exclusions);”

Lending Club does not appear to explicitly enforce the income requirements of its lenders, so if you make slightly less than $70,000 per year, you would likely be able to get away with investing through the service.

For Investors: How to Begin Investing

If you are interested in investing in peer-to-peer loans through Lending Club, visit Lending Club’s website (there’s a link on the banner to the right) and register for an account. After transferring money in from your checking account or via PayPal, you will be able to begin investing.

Final Thoughts

The peer-to-peer lending industry itself is just over three years old in the United States. It will take many years to determine whether or not Lending Club and its competitor, Prosper Marketplace, will become an integral part of the financial system in the United States. For now, Lending Club is a great alternative to getting a loan from a bank and an interesting investment opportunity that may provide a way to diversify your investment portfolio outside of stocks, bonds and real estate.

Lending Club Review: Our Review of Lending Club’s Peer-to-Peer Lending Service was created by and is property of American Consumer News.

How Microfinance Works

Microfinance is a broad term, but in most cases generally refers to providing financial services to entrepreneurs in third world countries that would otherwise be unable to get capital for their small business. Many believe that providing financial services to small business owners in impoverished area is an extremely important tool in fighting poverty and encouraging economic growth.

An example of microfinance in action would be a farmer that needs a piece of equipment to better operate his business, such as a trailer to bring his produce to market. The farmer might not have enough capital to buy the trailer himself, but if he had the trailer, he would be able to pay for it rather easily with the revenue from being able to sell crops in the local market.

In a developed country, the farmer would likely get a loan from a bank or a credit union, but in many third world countries, basic financial services are unavailable. To fill in the gap, a non-profit microfinance organization that has international partners might provide the farmer a loan to buy the trailer. The farmer would then have additional income to pay off the loan and then would have more revenue to help raise his/her family out of poverty. In addition, his/her local community would benefit by being able to purchase the farmer’s crops that would have otherwise been wasted.

Kiva and Microfinance

Local Microfinance organizations in third world countries usually don’t have significant amounts of capital to lend out to entrepreneurs—that’s where Kiva comes in. Kiva connects people in the United State and other developed countries that are interested in helping alleviate poverty with local microfinance institutions in third world countries.

Kiva’s unique proposition is that it connects philanthropic lenders with entrepreneurs in third world countries on a one-on-one basis. Instead of someone in the developed world donating to a general fund that’s used to provide funding to on-the-ground microfinance institutions, Kiva connects people with entrepreneurs in third-world countries on a one-on-one basis. You can visit Kiva’s website and see profiles of entrepreneurs from around the world and opt to meet some or entrepreneur’s total financing need.

Organizations such as Compassion International and World Vision have had success by connecting child sponsors with children on a one-on-one basis and providing a personal connection. Kiva has taken this same concept and applied it to microfinance.

Lending with Kiva

Providing capital to an entrepreneur in the third world is a noble endeavor, but it’s important to recognize that it’s not an investment like Lending Club or Prosper Marketplace since you don’t earn any interest and it’s not a traditional donation because you receive your money back after the entrepreneur repays the loan.

It’s not a guarantee that you will receive your money back though. Kiva notes that there are risks that the borrower may not repay the loan for whatever reason and there are also risks related to Kiva’s partner institutions. Finally, Kiva emphasizes that political instability in the participating country may also result in non-payment. Kiva has entrepreneurs that it funds in Iraq for example.

The process is relatively simple and straightforward. To fund a loan, you must first create an account on Kiva’s website. After creating an account, you can add funds to your account using PayPal or via electronic transfer. You can then search the listings and fund entrepreneurs listed by partner organizations as you choose.  As the entrepreneur repays the loan, you have the option of withdrawing the money or re-investing it into another entrepreneur’s venture.

Conclusion

Some would debate the validity of microfinance as a way to alleviate poverty, but if you are convinced on the idea that helping entrepreneurs expand their businesses in third world countries is an effective way to alleviate poverty, Kiva could be a great way for you to participate in microfinance initiatives.

Kiva: A Microfinance Story for the Digital Age (Our Kiva Review) was created by and is property of American Consumer News.

Prosper Chief Executive Chris Larsen earned a 2009 salary of $125,673, down from his $150,000 salary for 2008, representing a 16% pay-cut.

Former General Counsel Edward A. Giedgowd was set to receive a 2009 salary of $198,712, down from his 2008 salary of $227,500. Giedgowd resigned his position from Prosper Marketplace in August of 2009 but remained with the company through the end of October 2009.

Chris Denerd, former CTO of Prosper was set to earn a $148,243 salary, down from $154,404. Denerd resigned his position on March 19th, 2010. Denerd was also given 50,000 stock options awarded with an exercise price of $0.56.

Kirk Inglis, COO and CFO of Prosper, was the only top executive listed to receive a bump in pay during 2009. Inglis received a 2009 salary of 190,000 versus his 2008 salary level of 180,000. Inglis was given 100,000 stock options at $0.56 per share.

Prosper Inc Executives Take Pay Cut was created by and is property of American Consumer News.

The basic concept of peer to peer lending, which is a subset of social lending, is that when you need to borrower money, for just about any reason, other individuals will put their money together and lend them to you.

The two major companies in the peer to peer lending space in the United States, Prosper.com and Lending Club, also allow users to participate as lenders and help fulfill loans that are requested in a website.

To Use Prosper Marketplace as a borrower, you create a new loan request with the amount that you borrow, which can be between $1,000 and $25,00. Next, you set the maximum rate that you are willing to pay, then create a description or “story” for your loan to tell investors how you plan on suing the money. After you create your loan listing, Prosper lenders will begin a 7-day auction period in which they can bid down your interest rate. After that 7 day period, the loan amount is deposited into your account.

Lending Club works similar to Prosper, but there are a few notable differences. Lending Club offers 3 and 5 year terms, whereas Prosper only offers three year terms. The interest rates that borrowers pay on the loans are based on the credit rating of the borrower rather than a bidding processors.

Borrowing money from strangers online rather than a bank is probably a relatively new idea for most of us, but as banks continue to cut back their lending practices, companies like Prosper and Lending Club will continue to grow.

How to Borrow Money from Prosper.com or Lending Club was created by and is property of American Consumer News.

Both companies have similar business models, but use slightly different models for their lending process. Lending Club determines interest rates for its borrowers based on their credit score, whereas Prosper makes use of a reverse Dutch auction to help provide its borrowers potentially lower rates.

Lending Club began funding loans in June of 2007 and has funded more than 10,000 loans since it’s launch. The company has had more than $1 billion worth of requests for loans but has only funded $95 million in loans because of its stringent credit requirements.

Prosper.com has been offering loans to borrowers since 2006 and has funded more than 32,000 loans to borrowers. Prosper also boasts that $194 million in loans have been funded. Of those, 56% of loans were used for debt consolidation, 11% for business use and 10% for home improvement.

Although Prosper has a significant head start in originating loans than Lending Club, Lending Club is now originating a much greater loan amount on a monthly basis than Prosper. Prosper has been originating about $2 million in loans per month for the last several months and Lending Club has been originating between $6 million and $8 million monthly during the same period.

Peer to Peer Lending: Lending Club and Prosper by the Numbers was created by and is property of American Consumer News.

Small finance companies have been setting up operations in every major city, often in lower income areas, and have made a lot of money by offering  short term financial products that come with high interest rates, such as payday loans, cash advance loans, and loans on car titles. Be very careful in dealing with these companies, more often than not the terms are stacked against you and you would likely be able to get a better rate somewhere else.

This can also be true for companies that provide loans online. Some companies that offer loans online are simply another arm of a respected bank or credit union, but there are also a number of finance companies online that you should stay far away from. Make sure to read reviews of what a bank of finance company’s customers say about them before taking out a loan with a company. Your best bet is to find a few companies that you already know and respect and see if they offer online options if you want to get a loan online.

Another option that is becoming increasingly popular is peer to peer lending. Prosper Marketplace and Lending Club allow borrowers to place loan listings online, then individual investors can choose to partially fund those loans and take the interest that you pay on your loan as their rate of return. Peer to peer lending companies essentially take the bank and the profits that banks take out of the picture, resulting in a better rate for borrowers and sometimes a better rate for investors.

If you’re looking to get a loan, make sure that you can easily handle the payments and make sure to consider the total cost of the loan rather than the monthly payments. Also make sure you are signing up with a reputable company online and make sure that you’re getting the best rate and terms.

Evaluating Options for Borrowing Money Online was created by and is property of American Consumer News.

Prosper Marketplace, Lending Club’s competitor, has had trouble getting the amount of loans that it sets up between borrowers and lenders each month above $2 million on a monthly basis. Prosper had previously been issuing more than $7 million  in new loans each month before getting slapped on the wrist by the Securities and Exchange commission for Securities Act violations. After Prosper emerged from a “going dark” period, it has had trouble returning to its previous levels of loan demand.

Lending Club survived the SEC’s coming down on the peer to peer lending industry much better than Prosper Marketplace did and has taken over the vast majority of the peer to peer lending market in terms of the loan origination amounts on a monthly basis.

Lending Club said that it originated $8,664,750 in loans during the month of March, whereas Prosper Marketplace originated $2,262,096 across 495 loans during the month of March, according to data from the two company’s websites.

Prosper Marketplace recently announced that it would soon be closing on a “Series D” funding round of approximately $15 million, giving it a new shot in the arm after being considered by many near bankruptcy. Prosper will need to make good use of its new round of venture capital to return to its previous monthly loan origination highs.

Lending Club Originating Loans at 4 Times Rate of Prosper Marketplace was created by and is property of American Consumer News.

The California-based peer-to-peer lending company recently issued their 10,000^th loan and has now originated more than $95 million in loans as of the middle of March.

Lending Club is one of a few companies taking advantage of depressed loan activity on the part of traditional banks. Large financial institutions in the United States are being pressured by regulators to increase their capital levels. They are cutting back on their lending activities with unsecured loans such as personal loans and student loans often being the first type of loan to get cut.

As a result, Lending Club, its competitor Prosper Marketplace, and a new class of fledgling student loan-focused peer-to-peer lending companies are enabling borrowers to take out loans with other individuals serving as the creditor. Investors looking for an alternative investment can opt to partially fund loan listings from borrowers and then receive payments with interest from the borrower overtime.

Prosper Marketplace, the company that popularized peer-to-peer lending in the United States, has learned many lessons for the peer-to-peer lending industry the hard way and is now in desperate need of another major round of funding to continue operations. Prosper recently took out a $2 million bridge loan to pay for its operations, but the loan is due on April 1^st if the company does not receive another round of funding by the date according to an SEC filing made by Prosper.

Lending Club appears to have avoided many of the problems that Prosper faced by making more stringent requirements from borrowers from the get-go. This is why Lending Club has seen $1 billion in loan demand but has originated only $95 million in loans—most borrowers on the site get rejected because of insufficient credit.

Lending Club also reported on a blog post on their website that the average interest rate that their borrowers are now paying is 11.95%. 60% of Lending Club borrowers use their loans as a balance transfer for their credit card debt or to consolidate other debts.

Peer-to-Peer Lending Company, Lending Club, Passes $1 Billion in Loan Demand was created by and is property of American Consumer News.

The $2 million bridge funding round that Prosper Marketplace received is a $2 million “warrant and note purchase” agreement (a loan) from its existing investors, including Accel Partners, Benchmark Capital, DAG Ventures, Meritech Capital, Omidyar Network, and Volition (formerly Fidelity Ventures). Prosper Marketplace is paying a 15% interest rate on the money that it is borrowing.

According to Prosper Marketplace’s SEC filing, the company must repay the loan and interest on April 1^st, 2010. If Prosper Marketplace completes a “Series D” round of funding by April 1^st, the note purchasers will have an option to have their notes paid in full with interest or have their funds converted into shares of preferred stock at going share purchase price of the new round of financing.

Many believe that Prosper Inc is running low on operating capital and that the company may face bankruptcy if it does not receive a “Series D” round of funding. On September 30^th, 2009, Prosper Marketplace reported to the SEC that they had just over $2 million in operating capital. The company received a $1 million bridge loan in November 2009 before the new bridge loan that was announced earlier this week.

The amount of operating capital that Prosper Marketplace has on hand does not bode well given its current burn rate. Using Prosper Marketplace’s June 30^th 2009 and September 30^th 2009 SEC filings, the company is spending approximately $27,600 per day in cash. At this burn rate, Prosper would still only have enough capital to last through April 2^nd 2010.

The latest SEC filing that Prosper Marketplace has made indicating that it only has 2 months to earn a “Series D” round of funding or it must repay its $2 million loan in full lead many to believe that the company will run out of cash if it does not receive a “Series D” round of funding by April 1st.

Here is an excerpt from Prosper Marketplace’s latest SEC filing:

On February 1, 2010, Prosper Marketplace, Inc. (“Prosper”) entered into a Note and Warrant Purchase Agreement (the “Purchase Agreement”) with certain of its existing investors, pursuant to which, Prosper issued and sold to such investors a series of Convertible Promissory Notes (each, a “Note” and, collectively, the “Notes”), dated as of February 1, 2010, in the aggregate principal amount of $2,000,000.  The Note purchasers (each, a “Note Purchaser” and, collectively, the “Note Purchasers”) are as follows: Accel IX L.P. and certain of its affiliates (collectively, the “Accel Investors”); Benchmark Capital Partners V, L.P.; Agilus Ventures IV, Limited Partnership, and certain of its affiliates (collectively, the “Agilus Investors”); Meritech Capital Partners III, L.P., and certain of its affiliates; DAG Ventures I-N, LLC and certain of its affiliates; and Omidyar Network Fund LLC. Interest on the Notes accrues at a per annum rate of 15.0%.  All principal and accrued interest under the Notes are due in a single payment on April 1, 2010 (the “Maturity Date”).  If, prior to the Maturity Date, Prosper consummates a preferred stock financing for an aggregate purchase price of $5,000,000 or more, each Note Purchaser will have an option to have its Note paid in full or converted into shares of the preferred stock sold pursuant to such financing at the per share purchase price for such financing.  Prosper’s obligations under the Notes are unsecured.

Prosper Inc Must Repay $2 Million Bridge Loan by April 1st if “Series D” Round Isn’t Complete was created by and is property of American Consumer News.

The new interim round of funding comes from Prosper Marketplace’s existing investors, including Accel Partners, Benchmark Capital, DAG Ventures, Meritech Capital, Omidyar Network, and Volition (formerly Fidelity Ventures). Prosper Marketplace says that it is in the process of raising another round of capital and according to their blog, the process is “going well and we have strong interest from a number of world class investors.” Prosper Marketplace said that they are looking “forward to announcing our Series D round soon.”

In the company’s blog post, the company painted a rosy picture about the peer-to-peer lending industry’s future prospects, saying “we’re pleased that estimated lender returns are tracking very well. In addition, continuing to attract high quality borrowers – the cornerstone of great lender returns – is our top priority as evidenced by the recent additions to our leadership team. With the persistent disruption of the traditional banking system, there is a world of opportunity to drive great loan assets to our lenders.”

However, not everyone is as optimistic about the peer-to-peer lending industry’s and Prosper Marketplace’s future success. A recent slate article entitled, “You Are Unlikely to Prosper” questioned the riskiness of peer-to-peer loans as an investment. The article pointed out that 39% of loans on Prosper Marketplace that have reached the end of their three year term have gone into default. Prosper was unsurprisingly unhappy about the article and demanded that the article be retracted.

Others that cover the peer-to-peer lending industry question whether or not Prosper Marketplace is nearing bankruptcy. These detractors note Prosper Marketplace’s relatively poor cash position during its last SEC filing and the company’s high burn rate. On September 30^th of 2009, the company reported having $2.07 million in operating capital. Prosper Marketplace has received $3 million across two rounds of capital since then, but at the company’s high-burn rate, that money will not last the company more than a few months.

Using data from Prosper Marketplace’s June 30^th and September 30^th SEC filings, their cash position dropped from $4,617,594 down to $2,079,624 during a 3 month period, leading to a burn-rate of $27,591 per day. Based on that burn rate, Prosper Marketplace’s 9/30/2009 cash position and its new funding, Prosper Marketplace would only have 184 days worth of capital to last through April 2^nd, 2010 based on the calculated burn rate. The company likely has made some amount of money from the loans that it has originated and has likely slimmed down on its operating expenses, so the “out of capital” date will likely be a month or two after the calculated date. However, until the details of Prosper’s next SEC filing are released, it will be difficult to determine the company’s current financial state.

Prosper Inc. Receives $2 Million Bridge Loan as Bankruptcy Fears Loom was created by and is property of American Consumer News.