I’ve been a long time investor in Lending Club and have been getting great returns on my investment in that time. Some of you may be wary of about investing in social lending, but I’ve had great success with this method. So I thought I’d talk a little bit about Lending Club and how it works.
Lending Club is a service that connects borrowers with potential lenders. Someone can sign up for a free account with Lending Club and begin investing in borrowers or if you are in need of money, you can apply to borrow money at a fair interest rate based on your credit history.
The way that investors earn a return on their investments is that they receive the interest payments from the borrowers as they repay the loans. Investors earn a rate of return that is better than most other forms of investment. Just as an example, I’ve been earning a net annualized return over 15% on my investments:
That’s just a phenomenal rate that I’d be hard pressed to get on any other investment. Not only that, but it’s an incredibly stable and steady rate:
Just so that you’re aware, my rate of return is higher than average, however I’ve been investing for several years with Lending Club and have a very stable rate above 15% year over year. You can read about my specific methods for picking investments in my article about using the social in social lending to learn my specific methodology for getting such a great return.
That’s a much more in depth look at investing strategy with Lending Club. For now, I just want to take a basic look at Lending Club and how it works.
As an investor, Lending Club doesn’t have a minimum deposit requirement, so you can deposit a small amount to start. You can invest in increments of $25 at a time in a borrower, so it’s very feasible to diversify.
You simply open a free account and deposit your desired amount. You then have access to browse through the investment notes and research potential borrowers. You have access to their borrower information, such as credit history, delinquencies, income, as well as the ability to pose specific questions to any of your concerns.
Once you chose a borrower that you like, you can then invest in their loan in increments of $25.
You are repaid each month in payments that include principal plus interest over the course of the loan repayment period.
It’s a simple concept and over the last few years, I’ve found that my investments are getting great returns.
So, this is my brief look into Lending Club and how it works. You can take a look at some of my related articles below to get more in depth information about the specifics of how Lending Club works.