The Offer
- LendingClub is offering a bonus of up to 100,000 United miles. You receive 1 mile per $1 invested for taxable accounts. The minimum you can invest to receive miles is $2,500
The Fine Print
- This offer is valid for individual LendingClub investors. For investors to receive miles, an investor must open or have an eligible taxable LendingClub investment account, enter an eligible United MileagePlus number above or at www.lendingclub.com/investor/settings/mileageplus, transfer New Funds of at least $2,500 and invest the New Funds through the LendingClub platform between October 9, 2017 and January 9, 2018. An investor’s United MileagePlus number must be provided to LendingClub prior to the transfer of any New Funds for such New Funds to be eligible for this offer. LendingClub will submit records of qualifying activity to United for processing after the conclusion of the offer period.
- For purposes of this offer, “New Funds” means the amount of increase in the Available Cash of an eligible taxable investor account (as displayed on the Summary account page) resulting from the transfer (in one or more transfers) of funds from an external bank account (i.e. excluding principal and interest received on Notes then held in such account) during the offer period of October 9, 2017 through January 9, 2018. For purposes of this offer, “invest”, “investment”, or “investing” means funds have been used to purchase Notes through the LendingClub platform. Purchases of Notes on the Folio Investing Note Trading Platform* or any other secondary market do not qualify as investing
- Upon the transfer and investment of the first $2,500 of New Funds, an investor will qualify to receive 2,500 miles. For every dollar of New Funds transferred and invested in excess of $2,500, a new investor will qualify to receive 1 mile, up to a maximum aggregate bonus of 100,000 miles during the offer period of October 9, 2017 through January 9, 2018. One bonus per United MileagePlus® account. Offer expires on January 9, 2018. Offer not valid for non-taxable IRA accounts or entity taxable accounts. Notes on LendingClub platform may have limited inventory or availability and Investor ability to invest in Notes is subject to Note inventory and availability on LendingClub platform.
Our Verdict
LendingClub is a peer to peer lending platform. The idea is that individuals apply for a loan and then this loan is crowdfunded by multiple borrowers (in this case, you). Obviously not all borrowers pay their loans back on time so this is far from a risk fee investment. LendingClub takes a 1% fee for the acting as the intermediary. Personally I think you’re better off sticking with a federally insured savings account and some of these offer an APY of 5% with virtually no risk (again, federally insured). I also don’t think a bonus of 1 mile per $1 invested should be enough to sway readers into deciding whether to invest with LendingClub or not. I’d strongly recommend you to do your own research, it’s also important to take note of when reviewers are/aren’t receiving a commission for new LendingClub sign ups.
Use lending robot
Does LC let you pick the borrower? So can I “lend” to my spouse and have her pay it off once the miles are posted?
That’s not how it works.
Yes, in theory, but it’s a terrible idea.
Your spouse’s loan goes up on the platform and everyone else is allowed to invest in it too. Loans get funded quickly so you don’t have a great chance in funding her loan in full before other people come in and fund parts of it (loans are broken down in $25 increments)
There’s underwriting fees, I think around 1%, while borrowing. So you’ll be paying a $400 fee to borrow $40,000 (the max loan amount).
I’ve received two business loans from LC but I’ve never used the service as an investor.
I tried Prosper a few years ago and won’t touch P2P lending ever again. My returns haven’t been bad per se but they’re taxed at marginal rate, there is a limit to taxable losses, and they are by far the most time consuming aspect of my taxes. Doesn’t help that Propser shut down their note trading platform so I’m stuck with the notes until they mature.
That said, I wonder for this deal if we could purchase LC notes and then turn around and sell them ASAP on Folio. I don’t know what kind of loss one would incur doing that.
Prosper is much, much worse than LC. Their collections team is, unless something has changed, ridiculous and non-transparent. That’s why there are class actions against them. I think LC is far superior, although as I say, they don’t have enough solid loans, IMHO.
Yeah about a year ago Prosper said something like “oops! we were calculating your returns wrong all this time!” and the calculated returns dropped by something like 1 or 2 percent for me. Bush league.
Lending club sends out a consolidated 1099-INT now.
I invested in Lending Club before and the person who I helped fund declared bankruptcy a year into the 36 month loan…..
That’s why you only invest $25 per note and diversify. If you bet it all on one person, that’s the wrong way to go.
Well, yeah, I would expect that to happen if you only invest in one note. You need to invest in many to offset chargeoffs.
I have been using Lending Club for many years. I have a regular account, and a self-directed IRA with them. It is very rare these days that I find a loan that I feel is a good bet. I use the filter when I look at loans, including, of course, credit score, years of credit, etc. These days, a loan almost never comes up once I have filtered out the loans I don’t think are viable. But then, I am pretty selective.
For the loans that I still have, I am making about 5.5%. I am slowing moving my money out of LC, however.
p.s. Keep in mind that you only receive a return on the money that has been lent; any stagnant monies do not earn interest.
I invested in Lending Club and now I am moving my money out as quick as I can (and it takes a long time). I wouldn’t recommend this to anyone. Prosper has a lot better track record if you are looking for Peer-to-Peer, but I would stay away from this type of investment period.
PS– my returns in my three accounts are all hovering around 4% and getting lower every month.
I find my net rate of return similar in both. Propser seems to have higher interest rates, but also higher charge-offs, so basically nets out (although still the Propser rate is a little higher). I think if you’re going to play in P2P go 50:50 Propser/Lending Club.
Thanks for the post! great to see your opinion on it!
Has anyone had experiences with LC they’d be willing to share? I’ve seen average returns online when I researched around 6-7%. However, obviously during recessions the numbers were around 0%.
During recessions, I am sure you will lose money.
I’ve invested with them for a couple years now and it currently shows a annualized return of 5% (net of charge-offs and past-dues). That doesn’t include the tax writes off from losses (4% of my portfolio value last year – so that would add 1% to my return). Generally my experience has been good and I plan to continue. But yes if the economy goes to shit returns will go down, but so will most other investments.
The way I use this promo – it applies on all money you transfer in, not just net new money. So I turned off auto-reinvest at promo start, periodically withdraw all the cash in the account, and then before the deadline transfer all that back in + a little bit more.
The returns are fine, around 6%. The issue is that the way taxes are structured, you pay around 50% tax rate bringing returns down to 3%.
how do you get a 50% tax rate? Because losses are mostly long-term which only offsets dividend income?
MMM has one
http://www.mrmoneymustache.com/the-lending-club-experiment/
It’s false “returns are around zero during a recessions,” I have no idea where you get that information from. https://www.lendacademy.com/lending-club-prosper-data-10-years/