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LendingClub is the United State's largest marketplace lending platform. Since it was launched in 2007, investors have invested over $26 billion. LendingClub offers attractive returns (5% to 7%) and an easy way to diversify your portfolio.
How Does LendingClub Work?
Borrowers apply for loans from LendingClub. LendingClub selects the applications that are most likely to be repaid using a proprietary risk assessment model. Investors then buy notes, which represent fractions of these loans. LendingClub investors can quickly diversify their investment by creating a portfolio comprised of notes for hundreds or even thousands of loans.
As borrowers repay their loans, investors receive a stream of income, typically 2% to 5% of the amount invested every month.
What is the average return on investment?
LendingClub notes have historical annual returns between 5% and 7% per year. Here's a typical scenario. Let's say you have a portfolio of loans that generates an average return of 13% per year. Even if you only invest in borrowers with good credit, some may still default. Let's say you lose 5% to defaults. That leaves you with a 7% annual return.
Interest rates vary depending on the type of loans you invest in. LendingClub assigns borrowers a grade that ranges from A to G based on their credit score and other credit relevant factors. This score will determine what interest rate they qualify for. Investing in borrowers with a lower score will increase your potential earnings, but it also increases the risk of default on your loans.
What is the minimum investment in LendingClub?
The minimum investment in LendingClub is $1,000
What types of investment accounts are there?
LendingClub offers regular investment accounts and several types of tax-advantaged IRAs, such as traditional IRAs, Roth IRAs, and 401(k) rollovers.
How Is It Better Than Other Lenders?
LendingClub gives the average investor access to consumer credit loans, which historically has only been available to banks and large financial institutions.
It's easy to diversify your portfolio in amounts as small as $25 per loan. You could spread an investment of $2,500 over 100 loans.
LendingClub makes it easy to automate your investment on a preselected strategy.
The minimum investment amount is only $1,000.
71 Stevenson St
San Francisco, CA 94105 USA
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Other Services by LendingClub
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