Pros of Lending Club Investing
People before would have to go to the bank to apply for a loan. If you have plans on investing, you would have to stick on with the traditional money market accounts, bonds or stocks.
But this had now changed today. Lending club in fact now allow consumers to acquire loans directly from regular individuals who have the necessary cash to invest. A platform like this is offered through a peer-to-peer lending.
How this Works
Lending club is a type of peer-to-peer lending platform. In such case, the borrower will be able to acquire loans directly on site with an interest rate that’s lower than the bank. The investor also could invest on their peers and be able to earn returns after the loan has been paid back.
This all happens online and there is no need for face-to-face meetings. Borrowers may upload their documents to lending club and investors may transfer funds from linked checking account. To simplify this, lending club is actually putting a new spin on lending to where both borrowers and investors are in control.
A benefit that you could get is that you have a hedge with the volatility of the stock market. A bad market simply could affect people’s willingness to borrow or lend. But, the performance of lending club loans does not have any direct connection with the stock market. When you will diversify the investment to a p2p lending investing, you will get a form of protection against the problems of the stock market.
Investing Returns are Automatic
Lending club actually reinvest your returns directly when you will consider the auto-invest option. It is also possible to reinvest to others and you may then continue in building your portfolio.
Risks are Diversified
As long as you are going to invest in a minimum of $25 for every note, you have the opportunity to invest more. You may even allocate the investment towards notes that vary in grades so you are able to get an ideal balance on the risks and lending club returns.
When you wish to borrow money and you also have a good credit and has a low debt ratio, you can actually bypass the bank and then get money from individual investors.
If you also have a decent net worth and you are in search for something other than stocks and bonds, you could make decent returns on your investments with lending club investing.
Like other investments or loans, it is very important to make sure that you first read and understand the risks and have a lending club strategy. The peer to peer lending investing comes with a solid platform, but it is really important to consider weighing in your situation and follow some investing tips so you can make a wise choice.
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