With the rapid development of financial technology, online lending platforms like Lending Club are gaining more and more popularity. For investors looking for new assets, lending club stands out as a worthwhile investment option. This article will explain in detail the steps to invest in lending club loans, helping investors better understand this emerging investment product.
First of all, Lending Club is an online P2P lending platform that connects borrowers and investors directly. It was founded in 2006 in San Francisco and went public in 2014. Lending Club has facilitated over $55 billion in loans by 2021. As the largest P2P lending platform in the US, lending club offers investors a new fixed-income investment product with attractive returns. Therefore, more and more investors start to ask: how do I invest in lending club?
Below are the 4 key steps to invest in lending club loans:
Open an investor account on Lending Club website
The first step is to open an investor account on Lending Club’s website (www.lendingclub.com). Click on the “Become an investor” button and follow the instructions to set up your account. You will need to provide personal information such as name, address, SSN and link your bank account. This process is similar to opening a brokerage account. After your account is approved, you can start browsing investment options on Lending Club.
Choose loans to invest
Once logged into your Lending Club investor account, you can browse and pick loans to invest based on criteria like loan amount, loan grade, interest rate, employment length etc. Each loan is assigned a grade from A to G indicating the risk level, with A being the least risky. For beginners, it’s recommended to build a diversified portfolio across risk grades. You can invest as little as $25 in a single loan. Loans with higher interest rates tend to have higher risks as well. Investors should compare risk and return to find a balance.
Transfer funds to investing account
When you have selected the loans to invest in, it’s time to transfer funds from your linked bank account to Lending Club investing account. The minimum initial fund transfer amount is $1,000. Once the funds are available in your Lending Club account, you can proceed to invest in those loans you have picked previously. Note that your funds need to fully cover the total amount you wish to invest across loans.
Receive monthly payments
After investing in loans, you will start receiving monthly principal and interest payments from borrowers. The payments can be automatically transferred to your bank account. You can track detailed payment activities in your Lending Club account. As loans get repaid monthly, you will gradually recover your invested principal plus interest earnings. The typical investing period is 3 or 5 years until the loans are fully repaid.
In summary, investing in Lending Club loans involves 4 key steps: open an investor account, browse and pick loans, transfer investment funds, and receive monthly payments. By starting with small investment amounts and diversifying across many loans, investors can tap into this emerging fixed-income product while managing risks. Lending Club makes P2P lending accessible for individual investors to potentially earn attractive returns.