Hi friends, Good morning and a warm welcome back. For the article for today, I would like to look into the details of completely different breed of investment programs, that is based on the growing popular phenomenon of Peer to Peer lending, abbreviated as P2P Lending.
With credit card holders getting higher interest notes and lower credit lines and many investors pulling out their money from downhill stock markets, there was always a desire among investors to invest in Investment programs, that offer better interest rates. The internet being filled with shady money making programs, there was always a space for something completely legal yet offering higher returns than the CD accounts offering 2% annual returns.
A new industry, namely the peer to peer lending programs evolved back in 2007 to 2008 to satisfy both the groups of disappointed borrowers and lenders.
One of the most popular among the P2P lending sites is the Lendingclub.com . Lendingclub.com was launched way back on 2007 by the successful entrepreneur Renaud Laplanche. Since then, Lending club has received several accolades, one of them being listed as one of the top 20 breakthrough ideas by the Harvard Business review. One of it’s recognitions has been included within America’s Most Promising Companies 2011 [Top 20 Companies] – Source – Forbes.com
According to the current statistics published at Lendingclub.com, it has already paid $71,347,182 as interest to the investors and funded loans amount to a total of $827,328,800 [Source - Lendingclub.com ]
Investing At Lendingclub.com
* First thing that is needed to be learnt is ‘ What are Prime Consumer Notes ? ‘
As explained at Lendingclub.com the Primary Consumer Notes are fixed income investments that generate monthly return, that can be withdrawn or re-invested. The Primary Consumer Notes are graded from A1 to G5, offering progressively increasing monthly returns, proportionate to the the risk associated.
As reported at Lendingclub.com, an average borrower at qualified for
- 715 FICO score
- 14.25% debt-to-income ratio (excluding mortgage)
- 15 years of credit history
- $69,274 personal income (top 10% of US population) 2
- Average Loan Size: $11,750
Source – Lendingclub.com
Monthly Cash Flow
Investors receive a monthly payment of their investments as well as the interests, which one can withdraw or re-invest.
Searching And Selecting Loans :
Once inside your Lendingclub.com dashboard, on the right side – you get to see a range of parameters to select the borrowers, according to your preference. One can select the loan applicants by average rate of return, Credit Score, DTI Ratio, delinquencies in the last two years.
Automated Loan Selection – Using the LendingMatch :
There is also an option for automated loan selection, if investors do not wish to make the selection manually. For automated selection, one has to place the desired investment amount and the desired interest rate and run the LendingMatch, which will fetch the loan applicants according to your selection.
Funding And Withdrawal Options :
* ACH (directly from your bank account)
* Wire Transfer
Minimum Investment required to Create a Lendingclub.com Investor’s Account :
Minimizing the risk at Lendingclub.com : Best Practise
Obviously Diversification is very important. It’s always prudent to diversify and remember never to put all the eggs in the same basket, in this case the borrowers.
A Note to Remember : While selecting the Loan applicants, it must be kept in mind that if one opts for very high returns, it may lead to lower quality borrowers.
The Legal Stuff :
Lendingclub.com is fully registered at U.S. Securities and Exchange Commission (SEC) .
Eligibility for Investing at Lendingclub.com
Investors residing at the states of California, Colorado, Connecticut, Delaware, Georgia, Hawaii, Idaho, Illinois, Kentucky, Louisiana, Maine, Minnesota, Missouri, Mississippi, Montana, New Hampshire, Nevada, New York, Rhode Island, South Carolina, South Dakota, Utah, Virginia, Washington, Wisconsin, West Virginia, and Wyoming are only eligible for investing at Lendingclub.com . [Lendingclub.com is a peer to peer lending program available for U.S citizens only]
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