If you looking for an online marketplace where you can invest your money, then Lending Club is a fine choice.
Lending club connects both the borrowers and investors together in one of the largest online marketplaces available today. They operate at lower costs than the traditional lending programs by banks. Savings are then transferred to borrowers in form of lower rates and investors get their savings in the form of solid returns.
So, how does Lending Club work exactly?
- Loan applications are submitted by potential borrowers and Lending Club screens these applications to see which are good enough for approval
- Approved loans are than grouped and assigned grades between A and G. These grades are based on credit quality and underlying risks. Similar to grading in high-school, A is much better then F. 🙂
- Investors are then given the opportunity to select and invest in the form of notes. Each note corresponds to fractions of loans. You, as an investor, can then diversify your portfolio by investing smaller amounts of money in many different notes to reduce risk.
- Funds are deposited into your account as borrowers repay their loans and can be withdrawn or reinvested. So far I’ve just been reinvesting mine. Saving up for a rainy day I suppose. 🙂
Interested in trying it out? Setting up an account is free!
Step 1: Visit Lending Club, a page where you can jump right in and register will be displayed (see image below)
Click “Open an Account”
Step 2: Set Up Your Account
You will be able to choose your account type right here, choose which state you are from, enter your email and create a password. The most important part of this page is to select your account plan. My account is for investment. When you are done, click “NEXT”
Step 3: Personal Information Page
Fill in your personal details, your Address, Name, City, Zip Code etc. Click “NEXT” to continue
FUNDING YOUR ACCOUNT
Step 4: Add a funding source
Lending Club gives you the opportunity to fund your account with three different choices,
- Bank Transfer
- Wire Transfer
- Credit Card
At least one of these options will be available to you. Choose one and click “NEXT” In these guide, I used the banks transfer, so I’ll use it for illustration purposes. What is important is to fund your account by whatever means you choose.
Fill in your bank details and click “NEXT”
Your homepage will be displayed next, remember, I choose bank transfer which takes up to 4 days for any transfer to occur. My first transfer took a little over a week, but all other transfers were much quicker.
Check your account and you will find a very small deposit or withdrawal from Lending Club.
What you need to do is to verify your account. Log in to your Lending account and click on “Verify Your Account”
Enter the deposit or withdrawal amount sent to your bank account and click “Submit”
That’s it, your bank account is verified! You can then proceed to fund your Account
HOW TO ORDER YOUR FIRST NOTE
Log in to your account and find the “Browse Notes” button.
Look through the list of notes and select the ones you like. Notice the areas circled in the image below, they are search option. Choose your options and proceed.
Now, it’s time to place your orders. Order summary will be displayed
Note: you can edit the order if you are not satisfied with what you are seeing. Click “Place Order” to continue.
Confirmation details will be displayed next. You can view your order details here and assign your notes to an existing portfolio or create a new one
So, that is it, you have successfully set up an account and ordered your first notes! Happy Investing!! Check Out My Most Recent Cash Flow Summary to see details of my investments.