Better Rates. Together.

Posted on : Wed, 16 Sep App: Lending Club

If you’re looking for better investment returns or on the hunt for a better rate on a personal loan then the Lending Club might just have the answers. If the costs and complexities of the banking system are also adding to your woes then the Lending Club can bypass that issue too.

It’s a win-win situation for investors and borrowers alike. Investors enjoy the benefit of better returns as their money is lent directly to creditworthy borrowers who in turn benefit from the sheer lack of banking costs which is reflected in the rates they get.

Lending Club is one of a growing number of Peer to Peer lending platforms that allow people with money to invest to lend it to people who want to borrow it. Whether you’re a lender or a borrower, initiating an application or setting up an investment account is simple.

Borrowers can apply for loans of up to $35,000 stating what it’s for and preferred term. Lending Club then carry out credit checks and if the individual is approved the loan is listed on the website for two weeks where interested investors can contribute portions of the amount requested. After two weeks the borrower gets a loan of the full amount or a partial amount if it hasn’t been fully funded. There is also the option to re-list at this stage and try for the full amount.

The Lending Club charge an origination fee of 2% - 5% depending on term and loan grade.

Investors will enjoy being able to spread their funds in the way that best suits their strategy. What they are doing in essence is buying loan notes from Lending Club and these notes can cover a range of borrowers, amounts, rates and risk categories.

The “Browse Notes” section of the website has a very clear table showing loans waiting for full funding. This table contains all the relevant information required to decide whether to invest or not like amount, interest rate, term and purpose. The last two columns show the level the loan has already been funded to in percentage terms and the exact amount still required and time left on the clock.

The loans are all unsecured and for terms of 3 or 5 years and investors are repaid monthly out of the relevant loan repayments. Investors also have an option to sell notes at any time giving a level liquidity to their portfolio.

The lending club charge a service fee to investors of 1% of all payments paid by borrowers.

The Lending club is well supported financially and has recently raised a further $25 million of funding to expand the management team, products and infrastructure. They currently have 50,000 individual investors and 32,000 borrowers with an average loan size of $10,000.

ConclusionA smart way to bypass the banks and their associated costs and get a good rate on a personal loan. For investors, the chance to see some great returns and have control over the spread and risk profile of your portfolio.

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