I previously blogged about how to open a Lending Club account with a $25 sign-up bonus. Working on a product launch, blogging, drafting my fantasy baseball teams and dominating some rock band, I just never got around to investing my $25 sign-up bonus at Lending Club. I had a pretty mild weekend for the first time in weeks, which allowed me to catch up on some personal finance tasks. I finally invested my $25 sign-up bonus and will detail the investing process below.
There are two methods for purchasing brand new notes. Both methods start the same way. Either sign-up for a Lending Club account (with a $25 bonus) or sign-in if you have already signed up for one. Next, select the invest tab.
Click the “Get Started” button.
The page that comes up will show you how much available money you have in your account. In the box labeled investment amount, input the total amount that you want to invest and select the “Run LendingMatch” button.
Under investment distribution use the slide bar to select your desired average interest rate. The desired average interest rate will be acquired by mixing the number of loans funded with the riskiness of the loans. After you have selected the desired rate, click on the “Next” button.
At this point, all you have to do is either click on “Buy Notes”, “Add Notes” or “Start Over”. You are also able to click on the title to get more information about the loan. Finally, you can take a look at the connections in case you would feel more comfortable lending to someone in a particular line of work, or who resides in a certain area of the country.
Browse Notes (Do-It-Yourself) Method
To use the browse notes method, select the “browse notes” link under the invest tab.
The browse notes method is very intuitive and a great option if you want total control of who you loan your money to. Once you arrive at the browse notes page, the first step is to select or de-select the categories for your search criteria.
I used the following search categories. I only selected the “A” category for average rate. The interest rates look nice for the other categories, but I’d much rather not lose my investment and 8.40% is good enough for me.
I wanted the credit score to be 714+, since someone with a higher credit score is less likely to become delinquent on repayments.
For DTI (debt-to-income) ratio, I wanted to keep it below 20%. It is important to note that the DTI ratio is prior to borrowing this money.
After average rate, delinquencies in the last 2 years was the most important category for me. I don’t want to lend my money to anybody who has already been delinquent in the past two years.
Finally, I selected 75% and higher for funding status, because I wanted my loan to start earning me interest as soon as possible.
After inputting all of these search criteria, I was left with 5 notes. I made my ultimate decision based on the background information. Two of the borrowers sounded unintelligent. One borrower’s farm was foreclosing. A profession of farming was just too risky for me.
In the end, I settled on a borrower who had an income of $6,000/month and was only taking out a $7,000 loan. Seems pretty safe to me. This note will net me an interest of 9.32%, not too shabby.
To finalize the loan, I clicked on the box next to the desired borrower and clicked on “invest”. Click on “View Order”. On the next screen click on “Buy Notes”. Finally, click on “Submit Order”.
Restrictions for Certain States
Notes are only available if you live in the following states:
If you’re looking for a quick, easy, get a target average rate, I recommend using the Lending Match method. If you want to personalize and remove risk according to a variety of criteria, I recommend the browse notes method. I used the browse notes method and would recommend that method over the Lending Match method. Either method is extremely easy. I have been very pleased with my Lending Club experience so far. I will keep you informed with regards to payments, delinquencies or future note purchases.
Has anybody else invested with Lending Club? What are your thoughts and experiences?
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