If you follow the peer-to-peer lending arena, you might recall that back in April, Lending Club closed to new lenders as they began the SEC registration process. There was a lot of discussion and speculation regarding this move, but as of now, Lending Club has completed the registration process and is now open for lending once again.
This is all good news, but what does this SEC registration mean for you? According to their announcement:
- Under the registered offering, Lending Club lenders will now invest in notes that correspond to portions of loans made to borrower members. The notes have stated interest rates ranging from 6.69 percent to 18.63 percent, after a 1 percent service charge is applied.
- By partnering with FOLIOfn Investments, Inc., a registered broker dealer, Lending Club becomes the first social lending network where lenders have the option of a trading platform. On the trading platform, lenders who become customers of FOLIOfn will be able to put notes up for sale in the event they need liquidity before the completed term of a note.
- We believe this will accelerate the mainstream adoption of social lending, which will help more borrowers get funded faster.
I have to say, I haven’t had a chance to use any of these peer-to-peer lending services, but the ability to trade notes in a secondary market is fantastic. That was one thing I was always a little uneasy with, as I didn’t want to be stuck with a particular loan for any great length of time. So, the ability to get in and out of different notes is attractive. But we’ll have to see how well this works out. It will depend on how big and active the market is for this trading to really determine how useful it will be. Either way, this is a great step in the right direction in this growing form of lending.
Of course, with any registered investment product, you should read the prospectus before investing your money. Thankfully, Lending Club has a very easy to read and navigate prospectus that can be found here.
I still have some money in my Lending Club account that I never got around to investing before they closed for the registration, so this might be a good time to take a look at how it works in more detail. If I do, I’ll be sure to provide a detailed review.
Author: Jeremy Vohwinkle
My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.
I like the partnering LC did to create a secondary market - very innovative. If you want to keep your borrowing more private there is another option called www.zimplemoney.com
This is a great Blog! I thought I would let you know about yadyap.com since your Gen X Finance Title is right down our alley.
Yadyap is a new lending platform for payday loans. I know what you are thinking, PAYDAY LOANS! There is a huge gap in the financial market that does not allow many subprime borrowers to get any type of financing except a traditional payday loan.
Since inception Prosper.com has turned away (or rather they have not received funding) almost 200,000 subprime borrowers. These people go to Prosper because they cannot get traditional bank financing.
Yadyap which will be ready to launch soon, will allow borrowers to get a payday loan through a competitive auction system thus bringing the rates they pay as low as an efficient market will allow.
Visit yadyap.com where you can give us your email to stay updated and find a link to our blog.
I wish these peer to peer lending services were able to secure these loans. It would make private lending much more attractive.