P2P lending has had a weird go of it in the United States. While peer to peer lending and borrowing has a great ring to it, it rarely functions that way anymore in the US, at least when you read the fine print. Many P2P lenders have sold out to the very financial institutions they were created to exclude. Today, many banks and funds invest as “peers” through these services. Lending Club is no exception, but where they do stand above the rest is the way in which they have not abandoned their service, nor the truly “peer” aspect of their lending and investing, at least in part. I like Lending Club, and think they’re the best large P2P company still operating in America, even as Wall Street sops up some of the goodness that made P2P great.
Lending Clubs rates are somewhat lower than you’ll see with competitor Prosper. Though the specifics of how rates are matched with individual borrowers, APR runs from 6.81% to 29.99%. The average APR issued in 2014 was 12.48%. Even though Prosper nominally offers lower rates (by .6%), you’ll rarely see those actually offered to anyone but the highest of highly qualified candidates. Prosper rates can exceed 35% for those with lower credit scores. Individual borrowers can get up to $35,000, with clear terms and fees. Businesses can be loaned up to $300,000, with terms of 1 to 5 years.
In general, customers are enthusiastic about their Lending Club experience, something that cannot be said for the majority of significant American P2P lenders. When it comes to loans like this, good customer service and clear terms are priceless. No one comes to P2P for the most affordable rates. They choose this financing because it is faster and easier to get than loans from traditional financial institutions. In these latter two regards, Lending Club is the best in the US, setting up real people with loans they can afford, with terms they can comprehend. What more can you ask for?
For Investors, this is also a great option. Lending Club published a 2.48% default rate in 2014, which is better than Prosper and comparable to reputable P2P lenders in the UK, where the industry is somewhat healthier than the US. When calculating the average default rate of the past several years, it runs about 5%. ROI (for 36 month loans) was a hearty 9.61%, a great return for almost any investor and, again, better than Prosper investors report.
Lending Club gets my vote for go-to American P2P lender. This goes for investors as well as borrowers. Those familiar with the P2P format will find all the usual bells and whistles here, with good terms for all, usually better than the competition. I have high hopes that, with customer testimonials nearly universally positive, the trend will continue and Lending Club will continue its tradition of excellence for many years to come. The United States needs reputative, efficient Peer to peer finance. Though some have declared the format dead, Lending Club is proof that it lives on in a significant form. We can only hope that it will continue. To take advantage of what makes P2P great, sign up as a Lending Club investor, or go to them with your next loan proposal.