How Peer Lending Works
How does
peer lending
work?
Lending Club is transforming the banking system to make it more efficient, transparent, and customer-friendly. Lending Club uses technology to operate a credit marketplace at a lower cost than traditional bank loan programs, passing the savings on to borrowers in the form of lower rates and to investors in the form of solid returns. By providing borrowers with average savings of 29% on their interest rates and investors with steady, strong returns, Lending Club has earned among the highest satisfaction ratings in the financial services industry.1
Innovation transforms lending
Lending Club is the world's largest online peer to peer lender, where investors back creditworthy borrowers in exchange for interest income. 3
Here's how it works:
- Customers interested in a loan complete a simple application at LendingClub.com
- Lending Club evaluates the information (with no impact to the applicant's credit score), determines an interest rate and instantly presents a variety of offers to qualified borrowers
- Investors ranging from individuals to institutions select loans in which to invest and can earn monthly returns
The entire process is online, using technology to lower the cost of credit and pass the savings back in the form of lower rates for borrowers and solid returns for investors.
Better for Borrowers
We cut the cost and complexities of traditional bank loans and pass the savings on to borrowers.
- Easy online application
- Low fixed rates
- Fixed monthly payments
- Flexible terms
- No prepayment penalties
- No hidden fees
- Friendly service
How it works:
- Check your rate - it's fast and free
- Choose your offer, if given
- Watch as people invest in your loan
- Fast funding directly to your bank account
- Convenient, automated fixed monthly payments
- Prepay anytime with no fees
Better for Investors
At Lending Club you can build a diversified portfolio of Notes and earn solid returns.
- Solid returns with historical returns by
Grade A-C of 4.77% to 8.24%4 - Monthly cash flow
- Simple and straightforward
- Easy to diversify across many Notes
- 401(k) rollover and retirement accounts available
How it works:
- Open an account and transfer funds
- Quickly and easily build a portfolio by investing in a range of Notes in increments as little as $25
- Receive monthly payments of principal and interest as borrowers repay their loans
- Reinvest payments or withdraw
Your privacy is protected.
Lending Club strongly protects your personal and financial information. Investors and borrowers never know each other's identities; we will never sell, rent or otherwise distribute your information; and we only share what's necessary to complete your requested transactions. See our Privacy Policy for full details.
We're committed to transparency.
We are proud to share information about our company and give you straight answers to all your questions. Whether you want more information about Lending Club and its management team, the borrowing and investing process, news and updates, or help with specific issues, we'll get you the information you need.
Common Questions
1 All loans made by WebBank, a Utah-chartered Industrial Bank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage & history. Source for savings % and satisfaction scores: Lending Club borrower surveys, 2013-2014.
2 This depiction is a summary of the processes for obtaining a loan or making an investment. Loans are issued by WebBank, an FDIC insured Utah-chartered industrial bank located in Salt Lake City, Utah, Equal Housing Lender. Investors do not invest directly in loans. Investors purchase Member Dependent Notes from Lending Club. Loans are not issued to borrowers in IA, ID, ME, ND, or NE. Individual borrowers must be a US citizen or permanent resident and at least 18 years old. Valid bank account and social security number/FEIN are required. All loans are subject to credit review and approval. Your actual rate depends upon credit score, loan amount, loan term, credit usage and history. LendingClub notes are issued pursuant to a prospectus on file with the SEC. You should review the risks and uncertainties described in the prospectus related to your possible investment in the notes. Currently only residents of the following states may invest in Lending Club notes: CA, CO, CT, DE, FL, GA, HI, ID, IL, KY, LA, ME, MN, MO, MS, MT, NH, NV, NY, RI, SD, UT, VA, WA, WI, WV, or WY. Our mailing address is: Lending Club, 71 Stevenson, Suite 300, San Francisco, CA 94105.
3 http://www.economist.com/blogs/schumpeter/2013/01/lending-club
4 Historical Returns for Grades A-C adjusted NAR, aged 12 months. Data current as of April 1, 2014. Historical Returns represent the adjusted net annualized returns (Adjusted NAR) of Notes with Grades A through C that were originated 12 months or more before the calculation date. Adjusted NAR is calculated using the formula described here. Adjusted NAR is based on monthly borrower payments actually received net of Lending Clubâs service fees, actual charge offs, recoveries, and adjustment for estimated future losses. To estimate future losses, we apply a loss rate estimate to the outstanding principal of any loans that are past-due but not charged off. The loss rate estimate is based on historical charge off rates by loan grade and loan status over a 9-month period. Historical returns are not a promise of future results. Lending Club Notes are not insured or guaranteed and investors may have negative returns. Individual portfolio results may be impacted by, among other things, the diversity of the portfolio, exposure to any single Note or group of Notes, as well as macroeconomic conditions. Notes are offered by prospectus filed with the SEC and you should review the risks and uncertainties described in the prospectus prior to investing in the Notes.
