Maybe youre looking for a lucrative place to invest your money.
Peer-to-peer lending platforms likeLending ClubandProsperallow people to apply for credit from the general public.
(This is also known as social lending.)
Our team has compiled alist of creative waysyou can fatten your bank account this week.
This is a long list, so dont get overwhelmed.
Well keep it updated as offers changes or expire.
Lending ClubandProsperpretty much dominate this market.
Heres our rundown of how each company works for borrowers and for investors.
Did you know?
ProsperandLending Clubare pioneers in this field, having been founded in 2006 and 2007, respectively.
Think of them as eBays for money,says Consumer Reports.
No matter which way you go, know that these two websites are a lot alike in important ways.
(This credit check is a soft inquiry.)
The process:Your loan will get posted on the companys website.
Individual investors browsing through lists of loans will be able to choose your loan for their portfolios.
Theyll decide how much of it theyd like to fund, starting with as little as $25.
This fraction is called a note.
Are P2P loans safe for borrowers?
As you make payments each month, that money gets funneled back into your investors accounts.
Fees:Both companies charge you a fee for taking out a loan.
Once again, theyre pretty comparable.
For most loans, the fee will be 5% of the loan amount.
Borrowers with great credit pay lower fees.
This might make your decision for you:Lending Clubs minimum credit score for a loan is 660.
However, Prosper will make loans to people with scores as low as 640.
If youre still trying to choose between the two, get out your calculator and a scratch pad.
Heres the complicated part.
However, your results might be different.The YMMV rule applies here: Your Mileage May Vary.
For a big loan, that could save you hundreds of dollars.
By the Way, What State Do You Live In?
In most states, youre good to go.
You cant borrow from Prosper if you live inIowa, Maine, North Dakota or Pennsylvania.
You cant invest in Prosper if you live inIowa, Maine, North Dakota, Pennsylvania or Vermont.
Man, North Dakota is tough.
For Investors: How These Two Choices are Alike
Hey, did you just hear that noise?
Thats the sound of this story suddenly shifting into a higher income bracket.
Fair warning: You need a pile of money to read this part.
Or you must have a net worth of at least $250,000.Prosper has the exact same requirements.
Despite those requirements,Lending ClubandProsperkeep attracting growing numbers of investors.
Thats because they typically offer better returns than, say, investing in a CD.
Lending Club boasts historicalreturns of 5% to 7%.
Kyle Taylor, founder and CEO ofThe Penny Hoarder, invested in P2P lending andfound it rewarding.
As with most investments, you should enter into the P2P lending sphere with a long-term wealth building mindset.
Worried about borrowers defaulting on their loans?Each company evaluates borrowers credit scores and assigns them a grade.
Diversify, diversify, diversify.Both companies make it easy to diversify your investments.
Hes been watching this industry for years.
However, there are some honest reasons someone might chooseProsperinstead.
Lending Club has more loans.It generally has far more loans to choose from than Prosper does.
For investors willing to assume some risk, those loans can be a lucrative investment.
Prosper edged out Lending Club for five of six years and tied with it the other year, Ludwigsays.
But Prosper allows you to invest any sum of at least $25 or more.
You could invest $26 or $30 or $40 in a loan if you wanted to.
No matter which way you go, many market analysts say youll be in good shape.
However, Ludwig wont make a recommendation betweenLending CluborProsper.
Disclosure: This post contains affiliate links.
May we all be a bit richer today.
We cant personalize articles for our readers, so your situation may vary from the one discussed here.
hey seek a licensed professional for tax advice, legal advice, financial planning advice or investment advice.
Mike Brassfield ([email protected]) is a senior writer at The Penny Hoarder.
Hes working on improving his credit rating.
(Can you sense my millennial sarcasm there?)
You know which ones were talking about: rent, utilities, cell phone bill, insurance, groceries…
