I would still say a 7.5 out of 10 seems reasonable. Oh, by the way, I live in one of those states where I can only buy on the secondary market. Long Loan Terms: You can stretch the loan to repayment terms of three years and five years. Grading Risk. Once set up, Lending Club requires you to invest at least $25 per note. Going forward to open a new account at Lending Club you must deposit $1,000. Lending Club: Fees. Lending Club does offer IRA investment accounts. But compare to my MUNI EFT, it was just so so it seems. See here: http://www.lendingclub.com/kb/index.php?View=entry&EntryID=113. 2) why do you ignore A notes paying less than 7.5%? Again, unless you live in PA! It should be noted that Lending Club investments are not considered passive investments by the U.S. government. Click here to open an investor account on Lending Club. Okay so sadly even that I read these reviews I didn’t come to the correct conclusion so let me help other people here. There are a few requirements that you have to meet when you open an account. Analyzing borrowing trends is something I recommend. So I guess I consider myself lucky since I didn’t lose any more money with LC. @retirebyforty, Soon enough, it doesn’t sound like anyone is against social lending, seems more like there are some legal issues that need to be solved. Has not been a good investment for me. If your state doesn’t allow it, would you if you could? I felt my test of this service was a success. Wish I had put that money into the stock market or even bonds, would have made 10x as much. I started auto investing then switched to hand picking loans that were not for stupid purchases like vacations and limited to 36 mon and income verified. Note that Lending Club requires a minimum of $1,000 to start investing in a taxable account and a minimum of $5,500 to open an IRA. Here are a few upsides and downsides that may help explain the focal pros and cons: Advantages; Long term loan – You can extend the credit to reimbursement terms of three years and five years. I am a private lender, I grant loans to companies and individuals to low and affordable interest of 2%. Daniel, Good article and thanks for the link. There goes another 450.00!! I have a current balance of 1608.87. 1) why don’t you consider Debt/Income ratio and/or Credit Utilization in your loan qualifying? Lending club says they verify income (filter I always used) but I find it hard to believe that many people would fall on hard times making $10k/month with a low debt/income ratio right off the bat. What Are Lending Club’s Requirements? Lending Club stinks. In any event, I would have done almost as well depositing my money in a money market account and would not even have had the risk of losing my money. I diversified a large amount of money over all loan categories A-F. The reason is more control of note selection. No other conditions exist, and I am completely free to say what I want about Lending Club — positive or negative. I got curious to what requirements there were to borrow money (in my mind, it’s pretty hard not to allow people to seek out the lowest interest rates they could get, but sure enough, some states have done it), and while there are specific requirements such as minimum credit scores (660 for Lending Club), and a certain credit history, only 8 states don’t allow P2P borrowing yet, and they are Iowa, Idaho, Indiana, Maine, Mississippi, North Dakota, Nebraska, and Tennessee. Lending Club offers loans from $1,000 to $35,000 for individuals and from $15,000 to $300,000 for businesses. Lending Club uses complex algorithms to determine borrower eligibility and behavior. If I’d put that money in the regular stock market five years ago…. When a lot of my loans has charge off I Google what lendingClub is doing to get our money back and found that all he do is to call there number that’s ALL. I’m actually wondering why everyone doesn’t take a loan out and then not pay. Most clients I have referred are trying to improve their FICO scores or consolidate to one payment. 4.5. Residents of Iowa and U.S. territories are not eligible. I agree with you Robert. Here are the five main changes: Maximum number of credit inquiries is now 6 for all borrowers (before it was maximum of 3 inquiries for FICO scores of less than 740 and up to 8 inquiries for scores of 740 or more). Also like credit cards, any defaults are reported to the three credit rating agencies (Equifax, TransUnion and Experian). It has great deal flow, decent fees, and investors get a lot of information to do proper due diligence. Applicants apply for a Lending Club loan online. Just put the numbers in perspective, out of 200 notes, 20 notes defaulted in less than 3 months after stopping investment. I tried $5K with them and have a 2.2% interest rate. I have been in Lending Club for a long time….since it’s inception but now Florida is not allowed to do ANYTHING therefore I cannot reinvest even if I wanted to!! I started with LC about 3 or 4 years ago, initially it was ok. I have been an investor for several years and had a total of 142 investments.. 29 were paid off. The company was one of the first peer to peer lending sites on the scene, founded in 2005. Signing up as an investor is simple and takes a few minutes to complete. You can fund your account either via an electronic transfer from your bank or by mailing a check. Right away I experienced high default rates. there’s so few of those already! Also, traditional banks are now lending again. According to verified Lending Club reviews, it does take into account your credit history and other information to predict if you would make your payments on time. Unsecured lending is all about the servicer and declining a high percentage of the loans. I’ve been with them for about 10 years . The good notes tend to get snapped up quickly, so you are best to either log in at these times or use some of the third-party tools to get your best notes. I had hundred’s of loans on this platform from May 13 to May of 16. What is Lending Club? Investor Junkie does attempt to take a reasonable and good faith approach to maintaining objectivity towards providing referrals that are in the best interest of readers. No one has stated to me that they want to default–trust me, as their lawyer, many have flat up asked me about defaulting on credit cards after they run them up (of course there is a waiting period and purchases made in that time can’t and should not be discharged). Since this is a blog about investing, let’s discuss how to get started (Here's our guide on how to get started investing). For example, I need to know (historically) how much money I would earn after all the financial gymnastics are all settled. It would be bad if someone lost their life savings by putting everything into say one or two loans paying 20% that end up defaulting. I was able to liquidate ~75% of my investment in 3 days on the secondary market. That means the loans by LC and Prosper might be of less quality than before. I was in loans to A and B creditors, and the default rate is incredibly high. Investor Returns Have Fallen Almost 2% in Two Years. You will incur a 1% service fee on each payment you receive, for instance. Lending Club has built a solid reputation since becoming one of the first peer-to-peer lending sites — they’ve granted more than $20 billion in loans since 2007, and they continue to have a loyal base of investors. 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