$25 Free To Invest With Lending Club

Last year, I opened an account with the social lending site Lending Club when they were offering $50 for free to invest with. Since there was no financial obligation on my part and I didn’t have anything to lose, I decided to give it a shot. Each note that you invest in is for a term of three years. However, my loan was paid off early, so I got all $50 of my money back with a bit of interest.

Since I had a pleasant experience investing with them, I recently reinvested the money into two separate notes at $25 each.

How Does Lending Club Work?

In the current traditional banking system, investors will go to the bank to invest in safe products such as CD’s, which offer a relatively low return. Borrowers also go to the bank to get loans for purchases such as a home, car, or small business at high rates of interest. With this model, the bank would make a huge profit through the spread, or the difference between the low interest paid to investors, and the high rate of interest received from borrowers.

Lending Club has created a new business model in which both parties now invest and borrow directly from each other, eliminating the bank as the middleman. Without the bank in the way to take their big piece of the pie, investors can now receive higher returns, and borrowers can receive lower interest rates.

What Kind Of Returns Can You Expect?

According to the site, investors earn an average net annualized return of about 9%. Since I started investing last year in a less risky note, I’m earning a 6.77% return, which I’m still happy with.

Lending Club Promotion

At the moment, Lending Club is offering $25 for free to invest in a note. All you need to do is sign up for an account by clicking on the button below, which is also free to do. There’s no obligation to put in any of your own money, so you don’t have anything to lose. However, if you’re happy with your experience, you can always invest more money later.

Tips On How To Get Started Investing

If you’re new to Lending Club, I would suggest that you get a sense of their reputableness by investing in the safest type of note possible. This can be done simply through a feature they have for filtering through all their notes. Here are my recommendations to find a low-risk note:

● Funding Progress – I look for notes that are at least 70% funded. My reasoning is that if other people are also investing in the note, then they have found that the note meets certain investing criteria that they’ve set.

● Max Loan Amount – Screen for notes with a maximum amount of $10,000. I believe that the lower the total amount of the note, the higher the chance that it’ll get paid back in full.

● Max Debt-To-Income Ratio – Find notes in which the borrower’s debt-to-income ratio is no more than 15%. The lower this ratio is, the more money they will have to repay the note.

● Credit Score - Invest in loans where the borrower’s credit score is in the highest two ranges, between 750-779, and 780 and above. People with higher scores tend to be more responsible in making their payments on time.

● Delinquencies In The Last 2 Years – I look for zero delinquencies. This is also a sign of responsible use of money.

Of course, these are just suggestions. If you want to take on a little bit more risk, you’ll have the chance to earn higher returns.

A Few Things To Note

● There are a few requirements that you must meet to open an account. Some of the important ones include being at least 18 years of age, having a valid social security number, and residing in one of the eligible states. More information can be found here.

● They do not pull your credit file, look at your payment history, or credit score. However, they do use some information from your credit file to verify your identity. More details can be found on the FAQs section of their site.

● As for taxes, you’ll only receive a 1099-OID if the interest received on any note is $10 or more.

● It’s important to know that the notes are not FDIC insured. There is a possibility that borrowers will not repay their notes. That’s why I recommend investing in the safest possible notes using the methods described above.

Last Thoughts

Again, I’ve had a good experience investing with Lending Club. If you’re interested in opening an account, now is a great time to try it with no obligation. If you sign up as an investor, you’ll receive $25 to invest for free. To receive this offer, open your account by clicking on this button below.

(Please note that these are affiliate links, and I’ll also receive $25 if you sign up.)

Related Websites

• Income Tax Refunds and Your Retirement Plan
• NetBanker: Person-to-Person Lending 2.0
• Taking Advantage of Lending Club's 5% Cash Bonus Offer
• When that interest-free loan gets paid back ...
• A Faster Way to Review Lending Club Notes

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