Lending Club — Review for Investors in Peer-to-Peer Lending, 2019


Hi friends, I’m Rebecca, welcome to Squintillions! Today I’m going to be talking about Lending Club. Lending Club is an
online platform that connects borrowers and investors. It works by investors
depositing money in a Lending Club account and purchasing notes that make
up a fraction of a loan. Borrowers get loans to pay for such things as home
improvements, small businesses, major purchases, and debt consolidation. Lending Club provides the platform for the transactions to take place. When
borrowers pay back the loans, the lenders receive the principal and the interest.
Lending Club takes a 1% management fee. I put $1,000 into Lending Club as part of
the 2019 Grow Your Dough challenge which lasts for one year; however, as the loan
lengths are 36 months and 60 months, I plan to keep my money in my Lending Club
account long enough for the investments to be repaid. Let’s take a look at
Lending Club. I’ve just logged into my Lending Club account and this is the
summary page that is the first thing that you see once you log into your
account. And if you like this content please click the like button and
remember to subscribe for more similar content. So you can see they just give
you the basic summary of what’s happening in your account, where your
current value is, it shows how much interest you’ve received, and so I put
$1,000 into this account — interest is a bit more here than here, because they’ve
taken out a small percentage for their fees. And you can see this is the money
I’ve already been paid back it’s not quite enough to invest in another loan
yet. I’ve got $23.20 here and I need to
have at least $25 to invest in a note to make up a part of a loan. And we’re going
to go to the holdings area and look at the details page. We’re on the details
page here and it shows you a summary of what’s going on with your account.
I’ve had all of my notes issued I’ve only just started we’re not in the point
where someone’s gonna be in a grace period or paying late so that’s all zero
right now. The next thing I’m going to show you are the notes. This is still
under the holdings area just click on notes here, and this gives you the full
details of all of the notes in your account. I have $100 in most of my notes
here because when I open my account I thought I would just put $100 in ten
notes, and that will be simple, but I got a phone call from a representative at
Lending Club and he suggested that to spread out the risk more I change my
investment levels to $25 in each note. That’s why there’s four here for $25
because the last $100 for the last note I was going to buy hadn’t
processed yet so I was able to change it before that last one processed so that I
could have four notes at $25 instead of one note at $100. So
here we have the interest rates for each of the notes next to the level that they’re
on and I set up these levels earlier when I open my account and I’ll show you
the percentages of those on another screen, but here you can see the B level
is less risky so they have a lower interest rate. So if I click on current
on the end I can see details about this particular note. So here on the loan
performance you get the summary, my note amount was $100 — this person’s loan
amount is $40,000, so I’m just paying 1/40th part of their loan and you can see
I get a small fraction of a payment in here
and this is how many payments are left, and this is what I should expect to get
back from this loan. And the payment history is here, I don’t have much
because I just started. And we’re gonna go to another selection on the top menu,
I’m not going to go on to activity because that just shows all of your
recent transactions. I’m going to go in to invest because I want to show you my
note allocation this is what I was talking about earlier — the percentages
that I set up for each category. My current allocations are the solid colors
the target allocation is this diagonal stripe and for A notes I’m at 9.66%, B notes I’m at 21.95%, C notes — 46.53% I didn’t get any D notes, and
then E notes are 19.55%. And I have a little
bit of money in cash that’s that money that hasn’t been reinvested yet, because
it’s not quite enough. So I probably will be reinvesting that automatically as
soon as I get another payment because my note level is for $25
and I’ve got my automatic reinvestment set to on. Now you can also do manual
investing and I will show that here. If you want to choose each loan that you
want to invest your money in, you can come to the manual investing page and
select from the choices here. This person’s paying off a credit card. You
can click on this and they show you all the details. I’m going to go out of this
one and show you another one, that was a B rating and their interest rate is 10.72%, I want to show an E rating this one’s a loan
refinancing and consolidation now you can see their credit score range is a
bit lower than the other one. The interest rate range is higher. So
these are interesting if you’re really particular about what you’re investing
in or maybe you’re looking at a certain factor that you want to keep under your
control, you can do manual investing. I was just a little bit afraid that if I
did a manual investing, if I’m not looking at my account enough that I’m
gonna have cash left in here and not working for me, because I haven’t come in
here frequently enough to get it moved over. So I’m letting it auto invest — I might change it in the future, I might leave it that way the whole time
the Grow Your Dough challenge is running. I’m just gonna keep an eye on it and
keep in mind that I can do this manual investing if I want to. Transfer — I’m
not going to go into it — this is where you go if you want to bring money into
your Lending Club account from your linked bank account. And then one last
thing as the invite friends link — you can invite your friends by sending them an
email or you can share the link that they give you. And I will be sharing my
link here in the description of this video. And if you follow the link and
decide to set up a Lending Club account you will get a $25 bonus when you get
started investing. It shows that terms and conditions apply so please read
those very carefully they have very specific conditions — there’s a certain
amount that you have to put into the account and you have to follow their
terms in order to get your bonus. And then one last thing I’m going to mention
here under Invest is the trading account — you can trade notes with other investors —
or you can sell notes — so that’s just another tab I do not plan on doing that
at all. So I just want to let you know that that’s something that’s available
if you’re interested in going into a bit more depth on the money lending. And
that’s the basics of Lending Club I hope you enjoyed this video, if
you did please hit the Like button and Subscribe for more content on financial
growth and very soon I’m going to be launching my personal growth information
on Squintillions. 🙂

3 comments on “Lending Club — Review for Investors in Peer-to-Peer Lending, 2019”

  1. Passive Income Tom says:

    I've used lending club before as a lender – it works just like a bank.

  2. Game Poop says:

    Ugg… LendingClub is such a scam for investors. Since they are all unsecured loans, the site is overwhelmed with borrowers who have no intention of paying back their loans. My 2018 return was -19%, meanwhile the stock market returned -4.38%. LC needs to either collateralize their loans or they need to reduce the principles they lend. $40K is way too much money to take someone's word that they'll pay it back.

    This reddit thread from January 2019 hits the nail on the head when it comes to P2P Lending. (https://www.reddit.com/r/investing/comments/acvngv/p2p_lending_is_a_scam_change_my_mind/).

    The reality is that the risk is far too high for investors to bother. Even if you invest only in A-Grade loans, and manage to get really lucky and have no defaults, you are looking at Bond level returns, except you've got the risk profile of a basket of individual stocks.

  3. Quest to FIRE says:

    I think Mr. Money Mustache used lending club as well.🔥🔥🔥

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