LendingClub is no longer offering investments.
LendingClub unlocks the potential for higher fixed-income returns with a peer-to-peer lending platform where investors purchase fractions of personal loans. But you can only invest if you have an annual income of at least $70,000 or a net worth above $250,000.
|Option trade fee||$0|
|Account types||Brokerage, Retirement|
|Average return||3.89% to 8.04%|
Peter Carleton is a writer that covers banking and investing, breaking down what you need to know about where you put your money. When Peter's not thinking about cutting-edge banking apps and robo-advisors, he runs a creative agency and spends his spare time cooking or reading.
The LendingClub Notes platform to shut down
LendingClub announced in October 2020 that it’s shutting down its Notes platform at the end of the year. It’s also closed down its loan trading platform. The move is part of LendingClub’s shift to become a fintech bank.
Current investors received an email from LendingClub detailing the plan and how it affects their investments. If you were considering investing, you’ll need to compare other options.
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How does LendingClub work?
LendingClub is a peer-to-peer investment platform that connects personal loan borrowers with investors. Through LendingClub, investors can gain access to consumer credit investment opportunities by purchasing slices of personal loans.
LendingClub splits loans up into notes, which are sold to investors under three- or five-year terms. Each note is given a risk grade from A-C and notes can be purchased for as little as $25.
Investors receive monthly returns that include both interest and principal payments. LendingClub takes a 1% cut of monthly returns as a fee.
Who is LendingClub best for?
Better suited for more experienced investors, LendingClub has steep eligibility requirements. In exchange, however, it could provide higher returns than traditional fixed-income investments:
- Passive investors. Unlike stocks and other securities, LendingClub doesn’t require active involvement. Once you invest, you’ll receive monthly payments that include both interest and principal.
- Long-term investors. LendingClub allows investors to open individual, joint, retirement and many other types of accounts.
- Corporations and businesses. Businesses and corporations may be more capable of meeting the eligibility requirements, allowing them to turn unused capital into residual income.
What are the benefits of LendingClub?
LendingClub offers a handful of perks that make it stand out:
- Diversification. Instead of investing in a single personal loan, diversify your money by investing in fractions of multiple loans.
- Versatility. Handpick your investments when you open an individual, joint, retirement, trust or other type of account
- Low fees. Lenders are charged a 1% fee on each monthly payout, and nothing else.
- Passive income. You’ll get monthly payments that include principal plus interest as borrowers repay their loans.
- Potential for high returns. LendingClub advertises that you can earn between 3% and 8% on your investment.
- Automated investing. If you don’t have the time to build your own portfolio, LendingClub can automatically invest your money.
What to watch out for
Despite being a platform with low fees, here’s what to watch out for if you choose to invest with LendingClub:
- Minimum deposit requirements. You’ll need to deposit at least $1,000 to invest with a regular account or $5,500 for a retirement account. After that, each note costs $25.
- Risk. As with any other loan, there’s always a risk of the borrower defaulting and the lender not getting paid. And LendingClub is not covered by FDIC or SIPC insurance.
- No guaranteed returns. Peer-to-peer lending isn’t a traditional type of investment. While LendingClub investments have historical returns between 3% and 8%, there’s no guarantee that your investment will perform the same.
- Steep requirements. To become a lender, you’re required to make at least $70,000 per year and can’t lend more than 10% of your net worth.
- Long term investment. Your money is tied up in loans for 36 or 60 months.
- Gains taxed as ordinary income. Unlike interest and capital gains, your earnings from LendingClub are taxed as ordinary income.
LendingClub reviews and complaints
LendingClub holds an official accreditation on the BBB website along with an A rating and a 3.4- out of 5-star customer review score, as of October 2020. However, there are many complaints about billing issues, denied loans and a lack of communication.
Keep in mind that people with negative experiences are more likely to leave reviews than those with positive ones.
How do I get started?
Signing up for LendingClub can be done online and only takes a few minutes:
- Visit the LendingClub website, hover over Invest, click Individuals.
- Click Start Investing.
- Choose your account type, enter your email, create a password, then click Next.
- Enter your personal information to verify your identity, then click Next.
- Fund your account via ACH transfer, wire transfer or mail a check.
- Choose an investment strategy to complete your account setup.
To open a joint, trust, corporate, custodial or any other type of account, contact Investor Services by phone or email.
To invest with LendingClub, you’ll need to meet a few eligibility requirements:
- At least 18 years old
- Have an annual gross income and net worth of at least $70,000 or a net worth of at least $250,000
- Residents of California must have an income and net worth of $85,000 or a net worth of at least $200,000
- Reside in any state other than New Mexico, North Carolina and Pennsylvania
- Have a valid Social Security number
- Make an initial deposit of at least $1,000
During your application, you’ll be asked for the following information:
- First and last name
- Date of birth
- Address, phone number and email
- Social Security number
- Funding information
Based on current regulations, Alaska, New Mexico, North Carolina, Pennsylvania, and Ohio limit investment activity in LendingClub Notes for their residents.
Alaska, New Mexico, North Carolina, Pennsylvania: Residents are unable to purchase LendingClub Notes on the primary market. However, they are permitted to buy and sell LendingClub Notes on the Folio Investing Note Trading Platform.
Ohio: LendingClub Notes are currently unavailable for residents to purchase or trade.
LendingClub is currently working to expand LendingClub primary market investment access to residents of Alaska, New Mexico, North Carolina, Pennsylvania, and Ohio.
How do I contact LendingClub customer service?
Contact a customer service representative by:
- Phone: 888-596-3157 Monday to Friday 5 a.m. to 5 p.m. PT, and Saturday 8 a.m. to 5 p.m. PT
- Email: Visit the Contact Us page to fill out the contact form
I’ve made my first investment with LendingClub. Now what?
Once you’ve opened and funded your account, take advantage of everything LendingClub has to offer, by:
- Setting up your portfolio. Choose loan grades and ranks that correspond to your investment strategy. Better interest rates come with low-grade loans, but there’s a higher risk of the borrower defaulting.
- Maintaining your investments. To get the best returns, stay on top of your investments. This means configuring your portfolio or potentially buying and selling notes on the secondary market through Folio.
- Considering an IRA. Since standard investment earnings are taxed as regular income, consider opening an IRA account to make tax-deductible contributions.
- Understanding tax implications. Read up on your state’s tax guidelines and visit an accountant or financial advisor.
- Downloading the mobile app. Make it easier to keep up with your investments.
LendingClub is an alternative way to invest. And with returns that fall between 3% and 8%, you could earn more than you’d make from traditional fixed income investments like bonds or CDs.
However, it has steep income and net worth requirements and you’ll need to invest at least $1,000 to get started. Compare your options if you want to explore other investment strategies.
Frequently asked questions
You can transfer money into your account via ACH transfer, wire transfer or by mailing a check.
LendingClub makes an effort to contact the borrower to collect the payment and sends the loan to collections if necessary. Delinquencies are an expected risk of lending money, which is why diversification can help lower your exposure and reduce the volatility of your portfolio’s returns.(Video) Top 5 Best High Interest Savings Accounts - High Yield Savings Account Reviews Pros & Cons | 2022
Yes. To do this, fill out an IRA transfer form and submit it to LendingClub.
Any available cash can be withdrawn by navigating to the Transfer page of your account, then clicking Withdraw funds. You can also request a check by contacting Investor Services, but a $15 fee is deducted from your total withdrawal amount.
Contact member support or investor services and ask to cancel your account.
LendingClub is not currently available on Finder
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LendingClub Corporation - Sell
Valuation metrics show that LendingClub Corporation may be undervalued. Its Value Score of B indicates it would be a good pick for value investors. The financial health and growth prospects of LC, demonstrate its potential to outperform the market. It currently has a Growth Score of D.
LendingClub is a legitimate online lender. It offers personal loans with annual percentage rates that don't exceed 36%, which is a rate cap that most consumer advocates recommend.What are the risks of LendingClub? ›
The main risk with LendingClub is the potential to default on the loan, which can severely damage your credit score. Other risks of borrowing from LendingClub include being subject to a high interest rate, suffering credit score damage from the hard inquiry and possibly having to pay a late payment fee.Is there a lawsuit against LendingClub? ›
The FTC sued LendingClub in 2018 over the allegations that the company falsely promised loan applicants that they'd get a specific amount without hidden fees. The company, the FTC charged, had deducted hundreds or even thousands of dollars in hidden up-front fees from the loans.What bank is behind LendingClub? ›
All loans are made by LendingClub Bank, N.A., which operates under federal banking law. LendingClub Bank is FDIC-insured and is subject to consumer lending regulations, including the Truth in Lending Act, the Equal Credit Opportunity Act, and the Fair Credit Reporting Act.Why is LendingClub shutting down? ›
According to LendingClub's website, "Unfortunately, under a prospective banking framework, it is not economically practical for LendingClub to continue to offer Notes.Are lending stocks risky? ›
Stock lending is risky for short-sellers, but it's risky for lenders, too. There's no guarantee Robinhood customers who lend stocks will be repaid if a massive short-squeeze proves too large for the company to handle.Can you make money from lending stock? ›
Stocks on loan can still earn dividends—the resulting amounts are just paid out and taxed differently. If your stocks are on loan, you'll still receive cash equal to any dividends earned—it'll just be passed to you from the borrower through Robinhood, not the issuer of the stock.Is upstart better than LendingClub? ›
While Upstart is suitable for lenders with a fair or no credit score, LendingClub is ideal for those who have a fairly good credit score. Borrowers will be able to take personal loans of up to $40,000 at LendingClub compared to $50,000 at Upstart. Both have a good market reputation when it comes to serving customers.Does LendingClub check your bank account? ›
To verify your bank account, Lending Club will initiate a debit and a credit for the same amount (under a dollar) against your bank account.
No, checking your rate and applying for a loan with LendingClub Bank won't affect your credit score. It generates a soft credit inquiry to provide insight into your creditworthiness. You'll see that soft inquiry on your credit report, but others who access your report won't see it.Does LendingClub have hidden fees? ›
While LendingClub does not charge an application fee on any of its loans, we do charge an origination fee which ranges from 3-6% of your total loan amount (depending on your credit).Is LendingClub still peer to peer? ›
Lending Club, which pioneered the market in 2007, is out of the peer-to-peer lending business, pivoting toward more traditional financial services after it acquired Radius Bank (opens in new tab) last year.How do I get my money out of LendingClub? ›
You can withdraw funds from the account in two ways. Make an external transfer (ACH) to another financial institution for no fee. You can add an external account by selecting “Manage External Accounts” from the Transfer page within Online Banking or the LendingClub Mobile app.What happens if I dont pay LendingClub? ›
If you do not pay it, then your debt will be sent or sold to collections. You may even be contacted by debt collectors looking to collect your debt. Lending Club itself will make efforts to contact delinquent borrowers and collect these payments.Is LendingClub FDIC insured? ›
Your deposits are FDIC-insured up to the highest possible amount allowed – $250,000 per depositor for each ownership category.Is LendingClub owned by Wells Fargo? ›
That's because Lending Club's biggest shareholder, with a 19.5 percent stake as of December 2012, is Norwest Venture Partners, a wholly owned subsidiary of Wells Fargo. Lending Club also does its corporate banking with Wells Fargo.How much do LendingClub investors make? ›
Bottom line. LendingClub is an alternative way to invest. And with returns that fall between 3% and 8%, you could earn more than you'd make from traditional fixed income investments like bonds or CDs. However, it has steep income and net worth requirements and you'll need to invest at least $1,000 to get started.Does LendingClub still have investors? ›
LendingClub is America's largest online credit marketplace, and the first marketplace bank connecting borrowers and investors.Is P2P investing worth it? ›
' P2P lending can be an excellent choice if you want to diversify your portfolio. Not only is P2P lending an attractive alternative asset, but it can also still yield impressive returns for investors in a low-interest-rate environment.
Your income from lending your stocks is calculated using this equation: Daily Interest Earned= Number of Shares on Loan *Stock Price* Annualized Interest Rate/360*15%.What are the disadvantages of lending? ›
Loans are not very flexible - you could be paying interest on funds you're not using. You could have trouble making monthly repayments if your customers don't pay you promptly, causing cashflow problems. In some cases, loans are secured against the assets of the business or your personal possessions, eg your home.Why shouldnt you invest with borrowed money? ›
Investing with borrowed money (buying on margin) is easy if you have a taxable brokerage account. But it's far riskier than investing with cash. Buying on margin amplifies your gains and your losses. If your account value drops, your broker might sell your stocks at a loss to pay down some of your margin debt.Is lending money profitable? ›
Excellent cash flow.
Besides passing the test of time with flying colors, banks and other institutions that operate as lenders are some of the most profitable businesses in the world. Unfortunately, many people are borrowers, not lenders! So if you've got money to lend, congratulations, you can put it to good use.
While you do not receive dividend payments directly on the stocks that are on loan, you will receive Payment in Lieu equal to the value of dividends paid on loaned shares. These payments will be taxed at your marginal tax rate rather than the prevailing dividend tax rate.Does TD Ameritrade have stock lending? ›
TD Ameritrade's Fully Paid Lending Income Program provides clients the opportunity to earn extra income from the securities they already own by loaning shares to TD Ameritrade while clients maintain full economic ownership.Is LendingClub easy to get approved? ›
2022 LendingClub Review
LendingClub loans are reportedly easier to get than the average unsecured personal loan, however, with a credit score requirement somewhere between 600 and 640. Many personal loan providers ask for 660+. LendingClub personal loans are peer-to-peer transactions.
- Insurance, Health, & Wellness. Dental Insurance. Gym Discount. Paternity Leave. ...
- Home. Remote Work.
- Financial & Retirement. 401k $8,550. 100% match on the first 4% of base salary up to $5000. ...
- Perks & Discounts. Employee Discount.
- Transportation. Transport allowance.
- Other. Donation Match. Volunteer Time Off.
Our process is fast—most members are approved for their loans within a couple of hours. The exact turnaround time you'll see for your application will depend on your unique details. Once you submit your application, we start confirming the information you entered about your identity, employment, and income.Does LendingClub let you pay off early? ›
At LendingClub, you can pay off your personal loan early or pay more than your contractual monthly amount at any time with no prepayment penalty or fee. Any payments you make on top of your regular monthly payment are applied toward reducing the principal balance of your loan.
It usually takes about two business days for us to review your documents.What credit score is needed for LendingClub? ›
Most lenders prefer extending credit to borrowers with good or excellent credit scores—670 and up. Below that range, loans can often still be approved, but interest rates may be higher.
LendingClub's gradual P2P lending wind down
In August, LendingClub closed down its loan trading platform. This was because Folio Investments, its affiliate which offered the secondary market, agreed to be acquired by Goldman Sachs in May.
“LendUp was backed by some of the biggest names in venture capital,” said CFPB Director Rohit Chopra. “We are shuttering the lending operations of this fintech for repeatedly lying and illegally cheating its customers.”What is LendingClub now? ›
LendingClub is America's largest lending marketplace, connecting borrowers with investors since 2007.Does loan shark still exist? ›
Loan sharks are illegal lenders, often part of organized crime, who threaten and use violence to get their money back from borrowers. Though loan sharks are less prevalent with a decline in organized crime, vulnerable people still fall victim to predatory loans.Is Buddy loans still lending? ›
Appointment of Administrators
Shane Crooks, Antony Nygate and Kiri Holland were appointed as Joint Administrators (the 'Administrators') of Advancis Limited t/a Buddy Loans (the 'Company' or 'Buddy Loans') on 7 September 2021. Buddy Loans will continue to operate, although we will no longer be making any new loans.
On 8 September 2021, Advancis Limited (best known by its trading name, Buddy Loans) went into administration. Due to the nature of the company, no protection is offered to consumers under the Financial Services Compensation Scheme.How do LendingClub investors make money? ›
Lending Club makes its money by collecting fees from both borrowers and investors. Specifically, investors pay a 1% service fee on each payment received.What happens when you stop paying LendingClub? ›
Debt settlement companies typically encourage you to stop making your credit card or LendingClub payments. If you stop paying your bills, you may incur late fees, penalty interest, and other charges, and creditors will likely step up their collection efforts against you.
But remember that LendingClub charges origination and late-payment fees. And if you need funding quickly, know that this lender takes at least two days to fund a loan after your application is approved.