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From Financial Integrity

Lending Club

A leader in peer-to-peer lending - a grass-roots financial innovation - Lending Club is a website that connects prospective borrowers with individual lenders. Potential borrowers have to meet certain criteria such as minimum credit scores and are screened by the site, which then sets an interest rate based on risk. Individual investors then choose loans - or portions of loans, minimum $25 - to fund. The site manages the loans, handles collections of defaulted loans, and provides helps such as screening tools to help investors choose loans. Investors can buy and sell loans as well.

Is it safe? P2P lending is still in its early phases, so its track record as an investment vehicle (as of early 2012) is still under construction. Interest rates are fixed, unlike many investments, so there's less chance of fluctuating returns. Diversification by investing small amounts into many loans helps spread the risk.

To some reviewers, the biggest winners at this stage are borrowers: Lending Club offers qualified borrowers a solid alternative to big banks without usurious rates like those on credit cards, and a way to opt out of the financial system dominated by giant banks. Interest paid goes to individual investors rather than huge multinationals or bloated bonuses. The loans can be especially useful as bridges to get out of higher priced loans - such as car loans - on assets that have lost value, or high-interest credit card balances, as the interest rate is fixed. As an investment it also offers a way to be directly involved with how your money/life energy is used, as you can choose which borrowers you wish to fund. Read several reviews below, and if this option interests you, search on "lending club reviews" for a broader view of the risks and benefits.

WealthPilgrim.com
GoodFinancialCents.com
Caseyresearch.com


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