Lending Club Reviews For Mom and Pop Investors

Lending Club and other peer-to-peer lending platforms have gotten a lot of attention in recent years because of the promise of double-digit income returns that can obtained by lending money to borrowers at a generally high rate of return.

My review of the Lending Club platform is that investors are once again somewhat intoxicated by the idea of high returns and are ignoring the fact that: (1) Lending Club relies upon Kroll to supply half of its ratings of borrowers, and Kroll predicts the lowest rate of default in the entire industry; (2) the debt is unsecured—that is, fully dischargeable in bankruptcy and likely not worth the hassle of collection in the event of default; (3) some investors are grumbling about high default rates now, which makes me really worried about what will happen during the next recession; and (4) the interest paid out through Lending Club is taxed at … Read the rest of this article!