I recently asked How is your Lending Club Account Doing? after seeing my net annualized return on investment at 8.44%.

I enjoyed reading readers’ responses about their portfolios at Lending Club and wanted to share them. It’s fun to see how everyone stacks up and what their portfolios look like.

What I find particularly interesting is that many readers are taking the time to look at what the borrower wants to do with the money, rather than just looking at the interest rates.

Readers’ Lending Club Returns

  • 14.46%. All current. One loan is an A, but the others are D or E. I let Lending Club pick the loans for me. – Dough Roller
  • 12.15%. 11 loans, all current, one grade D paid off early. Portfolio is A (36%), B (8%), C (28%), D (20%), and E (8%). I’m still relatively early into the terms so the fact that they are all current isn’t a huge surprise, but I expect one of the 12 notes I took out will eventually default. Selection based on how much they were asking to borrow and for what purpose. – Jeremy
  • 11.47%. 20 loans, all current, 3 months in. Generally, if I invest in a D, E, or F I read the reason they need the money, and usually only go in on small sums less than $5,000. I keep a pretty balanced portfolio across all the percentages with enough A’s to balance out my higher risk investments. I’m trying to get my portfolio to a point where I’m getting paid at least $25 per month so I can reinvest in other loans. – Jenny
  • 11%. 2 loans, both current. I’ve only dabbled in social lending. To spread my risk out a bit, I balanced investments in Lending Club borrowers between a medium-risk borrower with a low-risk borrower. – Frugal Dad
  • 10.57%. All current. Mostly A loans that I selected myself, but a couple low quality “gambles” too. – Rocket
  • 10.18%. 4 loans, all current, 1 borrower is paying extra every month. I know that means I don’t get to earn interest off him or her, but I’m happy to see their progress in paying it off early. Makes me think I invested in a really good person who has their stuff together. This is why peer to peer lending is better than banks. I really, really care about investing in good people who have their acts together. Not just people who can do math. (i.e. I don’t want to finance your Sea-doo because you’re overfinanced on your truck). – Jessica Ward
  • 9.64%. 2 loans, B grade, both current. I picked the loans myself and asked a question of one of the borrowers. – No Debt Plan
  • 9.4%. All current. My notes are pretty old (nearly halfway through the 3 year repayment process). – Debt Kid
  • 8.83%. 4 notes, all current. I just barely started. Grade A loans. I look at the reason for borrowing. I like to help people who are getting loans for business needs. – Miranda
  • 8.75%. A few loans, all current, loans are about a year old. This is a small sample size though, because residents of my state are not currently able to fund new loans via Lending Club. – Patrick
  • 7.34%. Over 200 loans. Investing for 1.5 years. I had a few defaults (about 10 of my loans). But gosh! What a great return after defaults and fees. I’m now investing again after they reopened and I’m never going back to Prosper. The quality of borrowers is better, and there is no drama with Lending Club (no quiet periods, no out-of-control defaults, and only good credit borrowers, etc). – LooneyMooney
  • 0.74%. The return is low because I have been hit by 3 defaults from D loans that I made at the very beginning. I guess I am paying for my desire to get the highest interest rates possible. I’ve now learned my lesson. Currently, I am cautiously optimistic about peer to peer lending and continue to invest on new notes when I have a chance. – Pinyo

More information on Lending Club can be found in the Lending Club Step-By-Step Guide and my Lending Club Review.

I logged into my Lending Club account this week to see how my loans are doing. So far my net annualized return on investment is 8.44%!

My Lending Club Account

My loans are all current, which is much better than the loan I had at Prosper, which was charged-off last week because the person filed bankruptcy.

Although, in all fairness, that loan was at 15.5% because the it was a credit grade D. I was pretty greedy when I first started out in peer to peer lending.

I learned my lesson, and at Lending Club I’ve carefully selected loans with a grade A. The interest rate is lower (7.68% – 9.63%) but there’s a much greater probability that they will pay! And so far they all have!

Open a Lending Club Account

If you’re interested in opening a Lending Club account, here is a Lending Club Step-By-Step Guide to get you started. Minimum investments, interest rates, and requirements are detailed in my Lending Club Review.

Net Annualized Return on Investment

Lending Club uses the net annualized return method to show the performance only on the money you have received payments on to date, accounting for the service charge and defaulted loans. It doesn’t compare neatly to stock market returns, but it does give you a good indicator of the return you are getting on your money.

Here’s the formula for the math junkies out there:


Your Lending Club Account

How is your Lending Club account doing? Log in and check your net annualized return on investment (which should show on the first page when you log in). I’d love to hear how readers are doing!

  • What is your net annualized return on investment?
  • Are all your loans current?
  • What investment grade loans did you select?
  • Did you select the loans yourself or use the portfolio builder?

Lending Club is busy expanding their service right now, so Free Money offers just keep popping up.

Lending Club now has a multi-level referral program for you to earn bonus money.

How to Get Your Referral Money

  1. Sign into your Lending Club account (or open a Lending Club account if you don’t have one yet).
  2. Invite your friends to sign up as borrowers.
  3. You’ll get a $25 referral bonus for each borrower you refer.

Sweeten the Deal

But wait, it gets even better… there are multi-level bonuses. If your friend refers someone, you’ll get another $15, and if that friend refers someone, you’ll get $10. This is one of those deals that you’ll want to be the first one of your friends to get in on!

You could even lend your friend part of the money they need after they sign up.

Lending Club

As a lender at Lending Club, here are the details you need to know at a glance:

  • $25 minimum investment.
  • 1% service charge.
  • Interest rates currently range from 6.69% to 19.37%.

For more lender details and information about Lending Club, check out my full Lending Club Review or the Lending Club Step-By-Step Guide.

My Lending Club portfolio is finally starting to take shape. If you haven’t signed up for a Lending Club account yet, here’s a step-by-step guide to becoming a lender and a sneak peak into what you’ll see once you fund some loans.

For all the details on minimum investments, interest rates, and requirements, see my full Lending Club Review.

Become a Member

The enrollment process is easy, just sign up for an account at Lending Club. First you’ll enter your sign-in information. Lending Club will then send you an email to verify your email address. You can then enter your personal information. The process was easy and quick!

Lending Club Sign Up

Account Summary

Your account summary is essentially the dashboard where you can monitor everything going on in your account. You’ll be able to see at a glance how much cash you have available to invest, the status of your loans, and a breakdown of the loans. (Click on any of the pictures to make them larger.)

Lending Club Account Summary

Investing in Loans

Once you’ve signed up, there are two ways to shop for loans. You can browse for individual notes or use a targeted portfolio.

To shop for individual notes, narrow down your criteria with the search options on the right. I selected the interest rates (A&B), credit scores, debt-to-income ratios, and delinquencies that I wanted to look for loans that will have a better success rate (although lower interest rate).

When you see a loan that interests you, click on it to read details about the borrowers employment, what they plan to use the money for, and more details. You can also ask the borrower questions about their intended loan.

Lending Club Browse Notes

Place Order

Once you’ve selected your notes, you’ll see the order summary screen to place your order. Buy the note, and you’ll see it move to the “in funding” status in your account summary.

Lending Club Order

Portfolio Lending

The other option to search for loans is to use Lending Match, to select a bunch of notes at once. Use the slider to select your interest rate and click run.

Lending Club Lending Match

Your order screen will populate with a mix of loans that together will meet your intended interest rate. However, you do not need to purchase all the loans on the order screen; you can review each loan just as you did before and choose whether or not to include that loan.

Lending Club Lending Match Results


Once you’ve selected loans, you’ll receive interest each month from your borrowers. To avoid having to go in and purchase more loans from time to time, you can use the reinvest option to purchase loans for you. Select the amount, interest rate, and time frame and the rest will be done for you!

Lending Club Reinvest

Portfolio Contents

After you’ve invested in notes, you can use the portfolio contents to see the portfolio summary, similar to the account summary, and a list of loans that you are invested in. It’s a good way to see which loans are current and the details for each.

Lending Club Portfolio

Lending Club

I’m having fun with Lending Club, and I’ll continue to monitor how my portfolio does. Eventually, I might try a loan with a higher interest rate, but for now, I’m going to stick to the borrowers with less risk.

Good news! For those of you that were interested in the Lending Club Review yesterday… now there is Free Money to go along with it.

Lending Club is offering a $25 $50+ sign up bonus for new lenders! It’s a great way to try it out without any risk.

How to Get Your Sign up Bonus

  1. Sign up as a lender using this special link: Lending Club Sign Up Bonus.
  2. Make an initial investment of $5,000 within 45 days of signing up.
  3. Get your $50+ bonus within 15 days deposited to your account.
Sign Up for Lending Club

For more details about this bonus please see my Lending Club $50+ Bonus post.

For more lender details and information about Lending Club, check out my full Lending Club Review.

If only Lending Club had existed back when we loaned money to my brother-in-law for a car. He had a new job and needed a car to get to work. After a lengthy discussion we loaned him the money. In general, I don’t like to loan family or friends money, but I do like to help people out on a smaller scale. I’m guessing that situation isn’t unique.

Lending Club

Lending Club is one of the players in peer-to-peer lending. The idea behind P2P is to connect borrowers and lenders and cut out the middle man (the banks) to offer lower loan rates and higher returns for investors. Next time a friend or family member asks, I have somewhere to send them: Lending Club!

I originally opened an account last year, but they went into a quiet period for SEC filings. Now that Lending Club is open again, it’s time to check them out and make some loans!

Lender Details

Minimum Investment. $25. You can link your account to your bank account to transfer money back and forth using ACH.

Interest Rates. The interest rates on the notes currently range from 6.69% to 19.37%.

Fees for Lenders. There is a 1.00% service charge.

Personal Touch. Borrowers can share details and a personal touch and lenders can ask questions. This would have been helpful in my brother-in-law’s situation. He could explain his situation on a more personal basis and explain the new job.

Spread the Risk. The loans are funded by multiple borrowers. We could have loaned my brother-in-law $25 along with 99 or so other people to spread out the risk. I would be happy to loan him $25 for the car, but $2,500 is a lot of risk to take on for any one loan.

States. The loans are available to lenders in California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Louisiana, Minnesota, Mississippi, Montana, New Hampshire, Nevada, New York, Rhode Island, South Carolina, South Dakota, Utah, Virginia, Washington, Wisconsin, West Virginia, and Wyoming.

Lender Requirements. Lending Club states you must have an annual gross income of at least $70,000 and a net worth of at least $70,000; or have a net worth of at least $250,000. (California lenders have different rules.)

Liquidity. Lending Club offers a nice new feature. If you want to sell your loans, you can trade your notes on the Note Trading Platform using an account at FOLIOfn. There is a 1% trading fee.

Borrower Details

The borrowers must meet the following criteria:

  • FICO score minimum: 660.
  • Debt-to-income ratio (excluding mortgage): Below 25%.
  • A credit report without any current delinquencies, recent bankruptcy, collections or open tax liens.
  • Credit history with limits on utilization, inquiries, minimum number of accounts, and minimum credit length.

Each loan is assessed a grade, A through G, and the interest rates correspond to the grade.

Borrower Fees. The borrowers pay a processing fee from 0.75%- 3.5% based on credit grade. In addition, they will have to pay fees if their payment bounces or if they pay late.

Lending Club Taxes

Once you are a Lending Club investor, see our guide on how to handle Lending Club Taxes for more information.


Stats. I looked at the statistics for loans issued in 2008; 2.82% were late and 2.20% were in default.

Collections. If a loan goes into default, Lending Club will work to collect it from their own internal collections department first. If that fails, they will send it on to external collections.

Collection Fees. Here is the schedule for collection fees:

  • 30% if the member loan is less than 60 days past due and no more than 90 days from the date of origination.
  • 35% in all other cases, except litigation.
  • 30% or hourly attorneys’ fees in the event of litigation, plus costs.

Searching For My Loans

I funded my Lending Club account and began searching for loans.

Connections. In addition to asking the borrower questions about their profile and credit history, you can check out their connections to see where they went to school, where they work, and where they live. I had fun searching for loans of local people or people that went to school where I did. I just searched on the keyword for my home state.

Financial Status. You can also limit your search by credit grade, credit score, debt-to-income ratio, delinquencies, or funding status. At this point I’m planning to limit my loans to A or B grades to get started.

Intriguing Stories. It’s pretty addicting to browse through the loans to read about what people are doing with their lives. Whether it’s a car, debt consolidation, a new business, a kitchen remodel, or a new baby it’s fun reading!

Final Thoughts

It’s all about risk versus return. Sure, you can take on some of the riskier loans for a higher interest rate, but the chance for default goes up. For now, I’ll just be funding the loans with some fun money and sticking to relatively higher grades.

This isn’t your traditional investment, but it does add an element of diversification. I looked for some correlation studies, but haven’t seen any done yet, so it must still be too new.

In addition, I thought it would be fun to share my portfolio of loans with you in the future. I talked to Lending Club and they haven’t added that feature yet; they hope to add it later this year.

Have you checked out Lending Club?

Sign Up for Lending Club