April 21st, 2009

Lending Club Review

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Lending Club is a social lending network that brings together lenders and borrowers to provide additional services not offered by your typical bank. Similar to its competitors, Prosper and Loanio, Lending Club enables people looking to borrow money an alternative method to bank lending. By matching up borrowers and lenders online, Lending Club allows lenders to earn better returns than available in a traditional bank savings account while providing credit to someone who would rather not deal with the bank.

Look and Feel

The site itself is well designed, with plenty with information about Lending Club, social lending, some nice press write-ups including a video; in short, all the nice things to have when you are in a fledgling industry and are introducing a new concept to the public. Also, there are a few website certifications are also displayed on the bottom of the page to assure that all standards are being maintained. Overall, the site is simple and straightforward, with a orange and black color scheme that is a little bit Halloween, but compensates by having the majority of the page a neutral white.

Lending Club Homepage

How it Works

Its pretty straightforward, you sign up, get the confirm email, click back to the site, and then decide to be an investor or get a loan.

Lending Club Signup Process

Regardless if you are looking to borrow or lend, there are a few more pages of signup info, including your Social Security number. Remember those privacy and security certifications at the bottom? Good thing Lending Club has them.

Once you are signed up, you can request a loan, or search for a loan to invest in. Searching for a loan is easy; you can filter how much interest rate you’d like, the borrower’s credit score, and DTI (debt to income) ratio.

Lending Club Search Page

Looking through the loans available, there are plenty of loans to invest in that have some high interest rates. In fact, Lending Club states that their investors have earned an average annual return of 9.05%. That’s a solid return, considering high yield savings accounts are paying 1%-2% and a bank CD is not much higher.

Sounds great doesn’t it? Lending Club is very selective with their borrowers, as they state less than 1 in 6 is approved to borrow on the site. Borrowers must have a 660+ credit score to borrow on Lending Club, so you can be assured that you are not lending to the low end of the credit spectrum, but these loans are still unsecured debts and you may lose your investment if the borrower defaults. If you are looking for a loan, its important to know that not everyone is going to be eligible to have their loan approved; Lending Club will verify your income, employment, and credit score to provide more peace of mind for those investing in your loan.

Overall Conclusions

Lending Club is a viable and potentially more lucrative option to keeping your money in high yield savings account or a bank CD. Its main competitor, Prosper, is still in the process of being SEC certified and is not actively accepting loans. In addition, Lending Club puts it money where its mouth is, sponsoring Uncrunch America, a movement to stimulate the lending environment by increasing the awareness and usage of social lending.

Disclaimer: All information posted to this site was accurate at the time of its initial publication. Efforts have been made to keep the content up to date and accurate. However, Credit Karma does not make any guarantees about the accuracy or completeness of the information provided. For complete details of any products mentioned, visit bank or issuer website.


  1. I really like the idea of social lending, but the risks seem unclear. What type of default protection is offered to the personal lenders? Believe me I understand that with greater returns comes greater risk, but there must be transparency on the borrower approval process. I see that you can search by credit score and DTI, but how is that information verified? Does Lending Club use underwriters to qualify consumers? I’d like to see some stats, like what percentage of loans have gone delinquent, as well as some type of risk meter associated with your search criteria. Thanks, Ryan

    Ryan Adami at 11:39 am on April 22, 2009
  2. Ryan, there are stats available at http://www.lendingclubstats.com/ and https://www.lendingclub.com/info/statistics.action

    Lending Club’s numbers look very good. That said, because the service is so new, any stat must be viewed skeptically. Prosper’s stats looked good too initially. The site needs to be around longer for the data to be trustworthy.

    Money Granola at 6:29 pm on April 22, 2009

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