Person to Person Lending Challenge

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A quick Google search reveals that person to person (p2p) lending and borrowing is all the rage. From the Wall Street Journal to the Huffington Post, the media dissects the p2p industry.

The two giants in the field are LendingClub and Prosper, as this chart from the above WSJ article aptly demonstrates:

Borrow or Lend Online

I’ve invested in both Prosper and LendingClub notes for years. At times my returns have exceeded 15%, at times they’ve been less than 3%. My investments have included notes that the p2p giants have picked for me, they have included notes I’ve hand picked, and they have included notes I’ve bought from other investors on the secondary market.

With a number of readers asking me about investing with LendingClub and Prosper, I thought the best approach would be to show you my investments. So I increased my accounts at both Prosper and LendingClub to $1,000 each. Throughout the year I’ll report back on how these investments have performed.

Today, I want to show you just how easy it is to invest in LendingClub or Prosper notes. To that end, here is a short video I pulled together:

For those that prefer to read, here are the steps needed to get started:

  1. Open an account: If you haven’t already, open an account at LendingClub, Prosper, or both. If you only what one account, I think LendingClub is the best choice. It’s a bit easier to use, and as the graph above shows, it has more borrowers who need investors.
  2. Fund the account: Funding either a Prosper or LendingClub account requires nothing more than linking a checking account. They’ll make two small test deposits to make sure the accounts are linked properly. Once linked, you can quickly and easily either add or withdraw funds from either p2p company.
  3. Invest in notes: As the above video shows, it literally takes a couple of minutes to select the notes you want to invest in. I tend to pick notes from borrowers within the top to credit score ranges, with a smaller portion going to more riskier loans. You can see below the notes that LendingClub picked for me using a moderate risk portfolio.

My Notes Lending Club

And that’s all it takes to get started. I’ll be publishing updates throughout the year with the performance for both LendingClub and Prosper.

Are you investing in p2p loans? If so, what returns have you experienced?

Published or Updated: April 3, 2014
About Rob Berger

Rob founded the Dough Roller in 2007. A litigation attorney in the securities industry, he lives in Northern Virginia with his wife, their two teenagers, and the family mascot, a shih tzu named Sophie.

Comments

  1. bipin says:

    Rob,

    I read this article and wanted to give p2p a shot, and headed to lending club website, but when I tried opening an account and put in MA as my resident state, I got this banner below:

    “Due to state regulatory restrictions, residents of your state are not permitted to purchase Notes on the Lending Club platform at this time. You may be able to purchase Notes from current Note holders through a secondary market operated by our partner FolioFN. To gain access to the FolioFN platform you will need to complete your Lending Club registration and then, separately complete the FolioFN application process. ”

    I aborted my plan to open my account at this time. Are you aware of this ? any suggestions.

    • Rob Berger says:

      Yes, unfortunately, there are a few states where Lending Club can’t operate.

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