Lending Club Review – Shopping For Loans at Lending Club

by Ryan Guina

Lending Club is the “Amazon of Person to Person Lending” sites. Why is that? Well, partially because last week I referred to Prosper as the Ebay of Lending. The other reason I refer to Lending Club as the Amazon of P2P Loans is because of their lending process. Making loans through Lending Club is set up like an on-line store – you find a loan and you “buy it.”

To fund a loan, you first select the loan you wish to fund. Then click the loan button and it updates your portfolio (just like your shopping cart). When you review your portfolio, you have the option to Start Over (empty cart), Add More Loans (continue shopping), or Check Out (check out). OK, I bet you didn’t need that last one! As long as you are familiar with on-line shopping, you can use Lending Club to make loans. Now let’s look at the details.

There are two methods for making loans with Lending Club:

  1. Individual loans selected by the lender.
  2. Lendingmatch™, Lending Club’s target portfolio composition.

1. Individual loans selected by the lender. I chose to make loans with Lending Club using this method because there is more long term flexibility in selecting my own loan and the minimum loan is only $25. It is very easy to fund a loan at $25, in fact, if you use this link to sign up, Lending Club will give you your first $25 that you can use to fund a loan.

2. Lendingmatch™, Lending Club’s target portfolio composition. This method preselects the loan allocation for the lender based upon their selected risk level. There are 9 risk levels lenders can choose, each with an interest rate corresponding to the level of risk. This method is good because it allows lenders to select a target and forget it. However, there is a $500 minimum to lend with this method. I chose not to lend using this method because my current Lending Club portfolio is $100. I hope to grow that over time, but as for now, I chose individual loans.

Making a Loan with Lending Club

I made three loans with Lending Club, each at $25. The blended return rate for those loans is 9.70%, which certainly isn’t the highest possible rate, but is still a nice return on investment if everything goes to plan. The loans I funded had a high rating and have a good chance of being paid in full.

As mentioned above, making a loan with Lending Club is much like making an on-line purchase. The first thing you do is select an individual loan or portfolio plan, then click the “Loan” button. It will take you to a screen that displays the loan in your portfolio. My first impression was that there was no confirmation page, but in fact, there are two more steps to go before the loan is official. The first is to click the “Check Out” button, then you need to confirm the loan once you check out. Much like shopping with Amazon, you can’t “accidentally” fund a loan. You must consciously select the loan to make it happen.

My Impression of Lending Club

I think Lending Club is providing a good service to lenders and borrowers alike. Borrowers have the opportunity to get a better interest rate on loans, and lenders have the opportunity to “be the bank,” and earn more interest on their money than it would earn in a regular bank account or CD.

The lending process is easy to understand, secure, and offers a good reward for the risk you take. I currently have $100 in my account and plan on growing that as time and moey allow.

Try it out at virtually no risk!

If P2P lending intrigues you, now is a great time to try it out with little to no risk on your end.

$25 New Lender Referral Bonus from Lending Club. Lending Club is currently offering new lenders a $25 bonus for signing up. All you need to do is register your account and make your first deposit and you will receive the $25 bonus. You must use this special link to receive the bonus money: $25 Lending Club new lender bonus.

Prosper is also giving new lenders $25 to sign up, but you have to fund a loan before you get the bonus, and the minimum loan is $50. So, it will only cost $25 to try the lending process. Prosper also has a referral program, so you can again refer people and make money. Keep in mind the bonus is not paid unless the person you refer either makes a loan or borrows money.

Published or updated March 7, 2009.
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{ 4 comments… read them below or add one }

1 Amanda

I’ve got a loan ‘in funding’ with lending club right now. Now that my credit score has improved a bit I can get a better rate with them plus they charge a smaller closing fee. As a die hard Prosper fan I was pretty surprised at that…


2 Ryan


I read about your experience on your site. I’m happy that it has worked well for you! I really think P2P lending is fantastic for borrowers! There is no risk on their end and they can get much better deals than they could from a bank. Thanks for sharing!


3 Ryan

There are a few key differences between LC and Prosper, and until you try out each service, you won’t know which one you prefer. I think there are currently more lending options w/ Prosper, but Lending Club had higher rated loans. There are a few other differences, but those are the key ones right now.

IMO, both are viable options, and it doesn’t hurt to try out either one.


4 Mark @ TheLocoMono

What I find interesting about the rise of P2P programs is this question, why lend in more than 1 P2P program?

I can understand the goal of learning but in the end, it is still an income generator so there is financial incentive as a lender. I have been using Prosper for about a year now and reading all these Lending Club articles so it is interesting to read the different views.

Right now, I am basically entering Round 2 with a few loans being funded last year now arriving in their 2nd year and a few loans funded this year in Round 1 so I am learning something for sure. Exactly what, I am still learning. 😉


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