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How to Invest With Lending Club

by Christopher Hundley
  • Overview

    Inspired by the recent popularity of the concept of micro-finance, an industry of online peer-to-peer lending firms arose in the mid-2000s. In the U.S., Lending Club is one of the most prominent players in this emerging market. When you invest at Lending Club, you are actually investing in unsecured notes that correspond to the portion of a consumer's loan. Funds can be transferred into your Lending Club account through either your bank or PayPal account.
  • Open an Account

 
  • Step 1

    Access the Lending Club home page, and check the "Join Now" link at the top right of the screen.
  • Step 2

    Fill out the accompanying pages, which require your name, address, email address and phone number, as well as an indication that you will abide by their terms of service.
  • Step 3

    Select "Prospectus," and read it thoroughly before funding your account. Before committing any funds to an investment, you should be aware of all the risks involved.
  • Fund Your Account

    • Step 1

      If you have a PayPal account with which you would like to fund your Lending Club account, choose "Fund Your Account."
    • Step 2

      Select "PayPal," and enter your PayPal address and password where prompted. Enter the amount you would like to transfer from your PayPal account to your Lending Club account. The transfer will take 15 minutes.
    • Step 3

      If you plan to fund your Lending Club account with money from your bank checking or savings account, choose "My Bank Account."
    • Step 4

      Enter your bank account information where prompted. Lending Club will send a small amount of money to your account within a couple of days to verify your account. Once you have received the funds, log in to your Lending Club account, and choose "My Bank Account."
    • Step 5

      Enter the amount Lending Club deposited into your account. You will now be able to electronically transfer funds to and from your Lending Club account from your checking or savings account.
  • Invest in Notes

    • Step 1

      Choose the "Invest" tab at the top of the screen.
    • Step 2

      Select "Browse Notes." This screen will take you to a listing of all the requested loans available to investors. You can filter loans by particular criteria by using the "Search" pane on the right-hand side of the screen.
    • Step 3

      Read more about each loan by selecting the title of the one(s) in which you are interested.
    • Step 4

      Choose your loan(s), check the box before the title of the loan, then click "Invest." You will be prompted to enter how much of the loan you wish to fund.
    • Step 5

      After indicating how much of the loan you wish to fund, click "View Order" and then "Submit Order" to purchase the corresponding note(s).
    • 2
    • Bank account information PayPal account information
    • Bank account information
    • PayPal account information
    • Make sure to diversify your notes between high-risk and low-risk loans. Lending Club allows lenders to ask borrowers questions about their loans. Take advantage of the opportunity before committing funds to ask questions to increase your confidence that a particular borrower will be able to repay the loan.
    • Make sure to diversify your notes between high-risk and low-risk loans.
    • Lending Club allows lenders to ask borrowers questions about their loans. Take advantage of the opportunity before committing funds to ask questions to increase your confidence that a particular borrower will be able to repay the loan.

    References & Resources