Comments on: Lending Club: How To Participate in P2P Lending

By: Kim @ Money and Risk

Kim @ Money and Risk — Mon, 24 May 2010 17:13:18 +0000

Oh thank you. That’s one less for the must address list based on risks for people that I’ve seen on the internet. I didn’t think about credit cards. The only credit card balances that I advocate are in the 2-5% fixed range.

Since the only thing I’ve read on the internet before researching for this blog are govt sites, company sites, business research or Yahoo entertainment, it’s been eye opening to see what’s out there. Very frightening.

By: Craig

Craig — Mon, 24 May 2010 09:36:12 +0000

@Kim
Thanks for the comment.
As far as the interest rates I think most people would gladly exchange a 18+% credit card balance for a 10% Lending Club loan. If someone can get a better rate then by all means they should. One thing I could have mentioned is that the borrower sets the rate. They say – I’m looking for a loan for X dollars at Y interest rate. Lenders can chose to loan to that individual or not. I guess my point is that no one is getting taken advantage of via Lending Club.

As for Kiva, I have no personal interaction with the company, but you are exactly right – before you do anything with money always do you homework and research.

By: Kim @ Money and Risk

Kim @ Money and Risk — Mon, 24 May 2010 05:55:08 +0000

Hi Craig,

I’m surfing the personal finance blogosphere and saw this article on lending club.

I’m not familiar with lending clubs, but if that’s the returns that you’re getting then the rates are close to usurious. If someone has minimum 680 FICO and D/I of 25% or less, they more than qualify for decent rates via banks and credit unions. Some would get even lower interest rates through the finance companies.

In regarding to Kiva. If you are looking to support, then I would suggest doing some research first. I have some serious doubt about Kiva despite the organization being endorsed by many high profile celebrities. The finance world is littered with celebrities being scammed financially that normal people don’t hear about because it’s too embarassing.

http://www.nytimes.com/2009/11/09/business/global/09kiva.html
http://blogs.cgdev.org/open_book/2009/10/kiva-is-not-quite-what-it-seems.php

Here are two articles that go into a little more details about the issues with Kiva. California’s First Lady, Maria Shriver, just recently endorsed and created a program with Kiva but upon researching the details, it didn’t make sense at all to me. For example, over the last year, the newly created org with Kiva lent an average of 164 loans /per borrower to 150 business owners. These are red flags to me.

By: Darren

Darren — Wed, 19 May 2010 21:53:44 +0000

Yep, I opened up a Lending Club account last year when they offered a bonus. I had my note paid off early, so I reinvested it this year.

Though it’s only been a short time, I’ve had a positive experience thus far. My stated return is a bit over 6%, which is more than savings accounts and CDs are offering at the moment.

If they can keep defaults low and keep monitoring the creditworthiness of borrowers, over time I think we may see this as real legitimate alternative to banks.

By: Lara

Lara — Tue, 18 May 2010 14:26:00 +0000

Been investing for almost 2 years now, love it. I’ve had a few defaults (about 6 out of 200+ notes), so it’s not without some heartbreaks, but even after those, I have still made right above 8%, which is not bad at all. Trick is diversification (never lend more than $25 per loan), and reinvest quickly when you get payments.

By: Scott F

Scott F — Tue, 18 May 2010 13:24:26 +0000

Never thought about it from an investment point of view. I did try and get a car loan in February from them but the rate they offered was about 80% higher than the rate I got at my credit union. And my scores are above 800 so I know it wasn’t from that. But that may be a great way to invest. I’ll have to think about that one…..