But be quick. Within minutes many of the loans have been fully invested and have therefore disappeared from the platform. While Lending Club provides some analysis of investor portfolios they also provide their entire loan history for download. Luckily, an entire data analysis eco-system has been created around Lending Club that provides a great deal of information to investors. Since the entire loan history is available for public download some enterprising investors have created a way to query this data and back test various investment strategies.
For a complete look at all of the p2p automation and analytics sites, view our comprehensive two part series on the topic. This can be found in Automated Investing tab after you login to your account. Users of this service can select investment criteria, which are then executed up to four times per day as loans are listed on the platform. Lending Club is the largest and most successful p2p lender in the world. They have a long track record now of providing excellent returns to investors.
If you want to take the plunge and open an account then just click the link in the box below. Lending Club Review for New Investors. To invest at Lending Club you need to meet a number of requirements: Must be at least 18 years of age and have a valid social security number. Residents of California and Kentucky have slightly different net worth requirements. With the recent Lending Club IPO, there is a possibility for these payment-dependent notes to become available to investors in all 50 states.
You can read more about this topic here. What are the Risks? Investing with p2p lending has a number of risks: Borrower defaults — the loans are unsecured so an investor has little recourse if the borrower decides not to pay.
Lending Club bankruptcy — This is a much smaller risk today than it was several years ago because Lending Club is making money and has had an influx of cash with the recent IPO. But the risk will always be there. In the unlikely event of a bankruptcy, there is a backup loan servicer who will take over servicing the loans but there would likely be some disruption and investors could lose some principal. Interest rate risk — the loan terms are three or five years so during this time interest rates could increase substantially.
Poor loan diversification — many new investors get caught in this trap. If you only have 20 loans one default could wipe out most of your gains.
You can learn more on basic portfolio diversification and then read a statistical analysis of p2p lending diversification.
Liquidity risk — There is a secondary market on Lending Club where loans can be sold but if you need to liquidate your entire investment you will likely lose some principal in the process. Market-wide event or recession — While p2p lending has been around since the latest recession in , the asset class still remains untested when platforms were originating significant volumes.
In a recession, defaults will increase and thus will result in a decrease in investor returns. How it Works Peer to peer lending at Lending Club is a very simple process. Explanation of loan grades Lending Club categorizes borrowers into seven different loan grades: A through G. Starting to Invest Some investors like to consider every loan individually while others want to put their money to work quickly. Automated Loan Picking If the thought of choosing selection criteria or wading through hundreds of loans is overwhelming Lending Club makes it very easy to put your money to work quickly.
Selecting Loans Manually When you click the Browse Loans link from the Lending Club Accounts screen you are presented with all available loans as you can see in the screenshot above. The loan details — there is information about the loan itself such as the loan grade, loan purpose, interest rate, monthly payments, loan length and funding information.
Borrower details — while personally identifying details such as name, address and social security number are withheld from investors, information such as job title, gross income and location first 3 digits of zip code and state are included.
Credit information — Lending Club pulls a complete credit report during the application process and shares much of this information, such as credit score range, delinquencies and credit line details, with investors. Loan Filtering Reading the details of hundreds of available loans could easily become a full-time job. Third Party Tools While Lending Club provides some analysis of investor portfolios they also provide their entire loan history for download.
There is a back testing and filter feature that provides a front end to the entire loan history of Lending Club broken down by loan grade. Investors can test various filtering strategies to determine the best historical returns. Investors can also upload their own Lending Club portfolio for analysis. NSR can also be used for order management and automation. Besides filter based investing, they also offer a fully automated selection, which will invest in loans for you based on whether you seek a conservative or aggressive investment approach.
They also provide data on order history, sell history and provide a cash-flow forecast. It provides an alternative to the Browse Notes section of Lending Club allowing investors to run more sophisticated filters. Then in just one click investors are taken to the Lending Club site to complete an investment on the loan. Through BlueVestment, users can create their own filter criteria using 22 attributes and also create advanced filters using the node builder.
Can I still invest in LendingClub Notes? Unfortunately, Notes are no longer available for investment. Check back soon on new products LendingClub will offer to individual investors.
What happens now with my current investment account? Your existing Notes are not impacted, and servicing of your investment account will continue per usual, until all Notes in your account fully mature. Can I sell the Notes I own? The company does a hard credit pull once a loan is issued. The Member Center shows customers information like their debt-to-income ratio, credit utilization and credit score. Compare LendingClub with other loan companies. SoFi vs. LendingClub vs. Limited term lengths: Borrowers can choose a three- or five-year loan repayment term, which is somewhat common for online lenders.
Many online lenders offer some kind of refinancing option. If you qualify for a lower rate, refinancing can help you pay off the loan faster or lower your loan payments. In response, LendingClub removed the "No Hidden Fees" statement from marketing materials and updated its loan options page to include origination fees and the total loan amount the consumer receives. The averages for the two borrower types differ. LendingClub prime borrower averages:.
Interest rate range: 8. Common uses: Credit card refinancing, large purchases and debt consolidation. LendingClub near-prime borrower averages:. Interest rate range: Common uses: Credit card refinancing and debt consolidation.
Rates, terms and features vary among lenders, so NerdWallet recommends pre-qualifying with multiple lenders to compare loan offers. Pre-qualifying allows you to receive personalized rates from lenders that partner with NerdWallet.
Pre-qualifying won't have an impact your credit score. We collect over 45 data points from each lender, interview company representatives and compare the lender with others that seek the same customer or offer a similar personal loan product.
NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary. Our star ratings award points to lenders that offer consumer-friendly features, including: soft credit checks to pre-qualify, competitive interest rates and no fees, transparency of rates and terms, flexible payment options, fast funding times, accessible customer service, reporting of payments to credit bureaus and financial education.
We also consider regulatory actions filed by agencies like the Consumer Financial Protection Bureau. NerdWallet does not receive compensation for our star ratings.
Read our editorial guidelines. The minimum credit score needed for a LendingClub loan is , the company says. The company also uses information like credit history and income to evaluate a borrower's ability to repay, which many payday and other predatory lenders don't.
LendingClub is transparent about its fees and answers questions about its loans on a frequently asked questions page. LendingClub says personal loans are approved in 24 hours and funded within two days, on average.
Our Take 4. The scoring formula takes into account factors we consider to be consumer-friendly, including impact to credit score, rates and fees, customer experience and responsible lending practices.
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