After a great blog post at Poorer Than You, I was inspired to join my first P2P lending site. I had been intrigued by the idea ever since I first looked into Prosper. I had heard of this site before, but had never looked. I decided on Lending Club.
I have been a member of the site for nearly a month now. I should get my first payment around April 1st. I love the great interest rate, but it does not come without risk.
As a lender, you get the interest payments from a loan. It is like a bank without the middle man. The borrower makes interest payments directly to the community of lenders that funded the loan.
The risk is that the borrowers will stop paying. Like a bank loan, the peer loan is on their credit report. Unlike a car loan or mortgage, the loan is not secured with collateral. The only incentive for a borrower to continue paying is for their credit score.
I am not sure if I would go as far as to recommend this as a wise investment option, but it is a fun investment option. As long as the free $50 keeps going I am happy to give you a referral. Just send me an e-mail to eric (at) narrowbridgeadventures.com and I will send you an invite within a couple of days.
Lending Club is registered with the government and offers a prospectus on their website.