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Are you looking for high return investments other than traditional investments like stocks, mutual funds, money market accounts, CDs, high yield savings, etc? You should consider LendingClub.com. Lending Club is a website that connects borrowers and lenders.
Lending Club allows you to lend money to people looking for unsecured loans ranging from $1000 to $25,000. You can build a diversified loan portfolio, where you spread out your money across many loans. You earn by collecting money from the borrowers — their loan payments plus any late payment fees.
Now how much can you earn? Much more than a savings account or money market account these days, that's for sure. Lending Club claims you can earn more than 9%. Although as an investor, you can earn as much as 12.4% from a personal loan on LendingClub.com, most often you earn around 9% if you take into consideration the service charges, defaults, etc.
What about liquidity? Well, real estate which is an investment option for many is illiquid; while stocks, another favorite investment option for many is fairly liquid. Now how does Lending Club compare? LendingClub.com has a feature called Foliofn. Using this feature, you can buy and sell notes before the 3-year notes have reached maturity. All you need to do is set a price and the note is added to a list of notes for sale. You can change the price of unsold notes. Foliofn charges a 1% fee on note sales. You can use Foliofn to sell your non-performing loans.
Lending Club has a feature that lets you automatically reinvest your monthly returns. You can set the reinvestment criteria. This feature helps in maximizing your returns.
LendingClub.com offers you the choice of choosing the borrower. You can pick one note at a time or invest in bulk using the LendingMatch feature. The LendingMatch feature divides your investments into $25 chunks and invests it across different loans to get you the returns you specify. This is also an easier way of diversifying your investments and reducing the risks.
Now to the main issue – defaults. Every investment has risks associated with it. Lendingclub.com too has risks but it has taken steps to reduce the risk of default. LendingClub.com only approves borrowers with a FICO score of at least 660. Lendingclub.com borrower’s average FICO score is above 700. As an investor, you can mitigate the risk of default by diversification of your investments across loans.
Here what you need to know about charges on LendingClub.com:
- Service charge – 1% of all amounts paid by the borrowers to Lending Club
- Collection charges – 30% if the loan is less than 60 days past due and no more than 90 days from the date of origination; 35% in all other cases, except litigation and 30% or hourly attorneys' fees in the event of litigation, plus costs. Collection charges are payable only upon successful collection.
If you are looking for higher returns for your investments, you should seriously consider LendingClub.com. It offers everything an investor would want – higher earnings, choice, liquidity, lower risk of default. Just visit LendingClub.com and watch your money grow. If you'd rather stick with the main stream here are charts listing the highest money market accounts, savings account rates, and CD rates in the nation.
