Lending Club Review

Photo Credit

The Short review

The lending Club is a new unique concept that brings the borrower and the lender on one single platform. Here the lender, normally an individual, goes through the possible options for investing money and spends time to select one good borrower to loan money. The risks are more. But the rewards are also excellent. All that it takes is the extent of risk that one is ready to take.

Today, The Lending Club, is a big name in peer to peer lending space, by being able to fund almost $1.7 billion in loans, a big money by all counts. They have the experience, available funding and also the capabilities, much better than the competition.

From a borrower’s point of view, The Lending Club gives a good opportunity for hard loans, the fees are competitive, and money is easily available. From an investor's point of view, the returns are quite decent, varying from 5% to 13 % depending on the risk that one is ready to take. There is only one disadvantage and that it takes a good amount of time to rummage though all the loan requests on the site and then select the right opportunity to fund. So, one has to evaluate of the time spend in finding the right opportunity is worth in terms of money or not.

The Long Review

Whenever, there is a funding opportunity, the first question that comes in mind of an investor is the credit profile of the borrower. One good thing is that the average borrower on The Lending Club has a credit rating of more that 700, which is quite safe.

Another important factor that is important before opting for peer-to-peer lending is the ability of the borrower to service the loan, and that is reflected properly by the debt to income ratio of the borrower. The average borrower on The Lending Club that debt to income ration of 15.8%, something that is not very comfortable, especially if one is approaching a bank for a loan. In other words, these are the people who will actually turn to peer to peer lending as they face difficulty in getting the loan from a bank.

The next important thing that is important in peer to peer lending is how to decide the starting point and how to invest it. It is preferred that one starts will money not less that $500 and invest it such that not more than 10% corpus is invested in one loan. It is better to fund as many options as possible so that the risk of default is diversified. It is also a good strategy to choose some low return and some high return options so that the risk is suitably diversified as some time or the other someone will definitely default. So do not put all your eggs in one basket.

From a borrower's point of view, especially when you are facing difficulty in getting loans from regular channels, The Lending Club gives a very convenient borrowing option. The rates are also competitive with respect to banks. If you have good credit history and your debt to income ratio are low, you will have to pay much less interest than otherwise.

The Lending Club- Conclusion

The Lending Club is a great platform, with excellent experience and also transparent business process for investors, borrowers as well as stockholders. The interest rates are quite reasonable and data available authentic and well researched. In all, it is a great way to make and take peer to peer lending.