Peer To Peer Lending (P2P) is a new and unique way for individuals to borrow money and for investors to earn superior returns to CD's, savings accounts, and government bonds.  An individual seeking a loan fills out an application at a P2P lending site such as Lending Club, Prosper, or Peerform.  If their credit is approved, the loan is then funded by a group of investors.  Based on the credit profile of the borrower, the interest rate will then be determined. Investors can receive returns from 5 -13 percent.

Although the concept has been around for at least six years, it seems to just now really be hitting its stride.  The Lending Club just surpassed $1 billion in personal loans.  With Lending Club, borrowers can receive unsecured loans for up to $35,000.  The most popular use of these funds if to pay off credit cards.   

Investing In Personal Loans

From the Lending Club website -

"Most investors spread their investment across hundreds of Notes, investing as little as $25 and as much as $5,000 into each Note. You can choose Notes to invest in using the automatic portfolio builder, which helps you instantly create a portfolio of Notes based on your desired interest rate and risk tolerance. Or you can build your own filters--search for notes based on criteria such as Credit Score, loan purpose, loan term (36 or 60 months), Debt-to-Income (DTI) ratio or even specific keywords in the loan description."

How Easy Is It To Get Approved For A Loan?

From The Lending Club Website -

"We approve fewer than 10% of the loan applications, based on stringent credit criteria designed to focus on the most creditworthy borrowers. The majority of our members use the loans to pay off high interest rate loans, most often credit card debt."

Conclusion

I really love this concept, both as a source of loans as well as a new and interesting way to invest. With the anti-bank sentiment in the country, it seems like the time may be right for an innovative solution like this.

Other Articles You May Want To Read -

The Gamble Of Lending Peer To Peer

Peer To Peer Lending On Wikipedia

As Peer-to-Peer Lending Grows Up, Investors Seeking High Returns, Safer Bets Jump In

If you have received a loan or invested money with a P2P lender, please use the comments section below to share your experience and we can start a conversation.

Helping you make the most of God’s money!

James L. Paris
Editor-In-Chief ChristianMoney.com 
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