Lending Club Reduces Interest Rates for Borrowers
Tip It!This is just a quick note to say that Lending Club appears to have reduced interest rates for borrowers by around half a percentage point. I first noticed this when I logged in to select notes for investment last week, and have seen mention of it elsewhere on the web. Rates now range from a low of 6.39% for those with the best credit to high of 21.64% for the most risky borrowers.
As an investor, I’m not crazy about this change, as I’ll earn a bit less while shouldering the same risk that I’ve always faced. Prospective Lending Club borrowers, on the other hand, should be thrilled with this move. If you’re looking to refinance your high interest debt, now appears to be a good time to do so.
I’m still looking for an announcement to provide some context for this change, but haven’t found anything yet. I’ll update if/when I know more.
Published on February 8th, 2010 - 11 Comments
Filed under: Debt Reduction, Saving & Investing
About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!
Related articles...
» More on Lending Club’s Reduced Interest Rates» Lending Club $100 Giveaway
» Prosper Resumes Peer-to-Peer Lending
» Lending Club Now Available to Borrowers in North Carolina and Kansas
» Consolidate Your High Interest Debt With Lending Club
» Lending Club Update – October 2009 Performance
» Lending Club Historical Repayment Rates
» Lending Club – July 2010 Performance
Was this article useful? Please sign up to receive our content via e-mail:
11 Responses to “Lending Club Reduces Interest Rates for Borrowers”
Leave a Reply
Top Cards by Category
Earn $200 Bonus Cash Back after you make $500 in purchases in your first 3 months. 5% Cash Back on up to $1,500 spent in bonus categories each quarter.
Earn 3X points on airfare, 2X points on gas and groceries, and 1X points on everything else.
Earn 30,000 bonus miles toward Award Travel when you spend $500 on the Card in the first three months from account opening. Receive double miles on Delta purchases.
Enjoy a 0% introductory rate for 18 months on Balance Transfers and 6 months on Purchases. Earn up to 5% cash back in categories that change.
Enjoy no balance transfer fee for a limited time. 0% introductory rate on Balance Transfers and Purchases. Earn up to 5% Cashback Bonus in categories that change like gas, restaurants, department stores and more. Limitations apply*
Enjoy no balance transfer fee for a limited time. 0% introductory rate on Balance Transfers and Purchases. Earn up to 5% Cashback Bonus in categories that change like gas, restaurants, department stores and more. Limitations apply*
Enjoy amenities for you and your business, like: complimentary airport club access, including American Airlines Admirals Club(R) lounges.
5% Cashback Bonus in categories that change like gas, restaurants, department stores and more. Limitations apply*. Up to 1% unlimited Cashback Bonus on everything else. No annual fee
Earn 3X points on airfare, 2X points on gas and groceries, and 1X points on everything else.
Reports to 3 major credit bureaus monthly and acceptance at millions of locations worldwide, including website purchases and reservations.
- How to Become a Millionaire
- How to Get Out of Debt
- The Best Dollars I've Ever Spent
- How Our Estate Plan is Structured
- How We Paid Our Mortgage In Less than 10 Years
- Money Making Ideas
- How to Manage Your Asset Allocation with Multiple Accounts
- Consumption Smoothing - Save While the Saving's Good
- How to Save on Groceries
- How Much Life Insurance Do You Need?
- Eleven Great Books About Money
- Dave Ramsey is Bad at Math
- Dish Network Customer Service SUCKS
- $8,000 Homebuyer Tax Credit
- Pay Off Mortgage Early or Invest?
- How to Claim the First-Time Homebuyer Tax Credit
- Reduced Credit Limits? Share Your Experience
- $15,000 Homebuyer Tax Credit
- Ethanol Blended Gas = Lower Mileage?
- Termite Control: Sentricon vs. Termidor
- How Much Should You Pay a Babysitter?
- Federal Income Tax Rates Went Down but Your Federal Tax Withholding Increased. Here's Why...
- Would the "Fair Tax" Gut the Economy?
How to save money on insurance
- Double-Check Your Ally CDs
- Stocks are Not Bonds, CDs, or Savings Accounts
- The Best Values in Colleges - 2012 Edition
- Five Myths About Renter's Insurance
- Own Your Investments, Rent Your Fun
- Citibank to Issue Credit Cards in China
- Heartstrings and Pursestrings
- Saving Money at the Grocery Store: Store Brand Pricing on the Rise
- Missing Tax Paperwork?
- Is Your Investment Allocation Right?
February 8th, 2010 at 1:44 pm
In your experience, have you seen many people borrow money through Lending Tree to pay for education?
If a student is not eligible for a Stafford loan, it looks like the lower rates through Lending Tree would be better than some private student loans offered through larger banks.
Thanks!
February 8th, 2010 at 2:45 pm
Lending Tree is not Lending Club…
February 8th, 2010 at 2:47 pm
Sorry! I meant Lending Club.
February 8th, 2010 at 2:54 pm
Nickel,
You might not like the lower rates (what lender does?) but as a reformed (not former yet) Prosper lender, there’s something we should keep in mind:
Interest rates in and of themselves are adverse selectors. Would your rather get 6.39% return on your investment, or would you rather get 30%? Well, we all know that (the potential for) increased returns comes with increased risk. Would you recommend that a person in need of a loan borrow at 30%? If not, why not? What would you think about the finances and long-term ability to pay of a person who borrows at 30%?
Well, at the other end of the risk spectrum, us Prosper lenders had been complaining about the lack of quality borrowers. Well, quality borrowers need low priced debt options if it is financially prudent for them to borrow. I think I’ve read that Lending Club actually has more lending capital than they have suitable borrowers. And that tells me that Lending Club is pricing their rates too high for borrowers, and that this drop is welcome if LC wants to draw in more quality borrowers.
February 8th, 2010 at 3:14 pm
LC has just put their loans on sale. I guess this means that they weren’t finding enough people to borrow money.
Mr. Supply you have Mr Demand holding on Line 1.
February 8th, 2010 at 4:12 pm
DJ,
As a former Prosper lender, we found students to be tricky… their income sources are unreliable. I mean, “my part time job at the campus coffee shop” just isn’t long term, reliable income. (Remember, we’re making three year loans, using purported facts that we know about you now to guage your repayment ability in 35 months.)
Second, the payment terms aren’t that flexible — not compared to student loans, anyway.
Third, you can default on a P2P loan and get rid of it during a bk proceeding. You can’t do that with traditional student loans.
So, as a lender, I don’t like P2P for students.
February 8th, 2010 at 4:25 pm
It may be the case that demand for Lending Club loans has fallen off with the new CARD Act provisions going into effect. When banks were still jacking up interest rates and minimum payment percentages, many people seemed to look for P2P lending to provide a more predictable, transparent lending structure.
I don’t know all the details of the CARD Act, but I think one basic premise is that some of those practices will be curtailed.
February 8th, 2010 at 5:52 pm
DJ: I do see these sorts of loans, but they typically don’t fit my lending criteria. From the borrower perspective, though, it might make sense if the rate is competitive.
February 9th, 2010 at 1:27 am
I was always curious how someone could qualify for a LC loan and not have better options with lower interest rates. I see this change as a correction in supply/demand. When I first learned about LC I applied for a loan, but found I could easily have a lower-cost loan using traditional offers. Now I am an investor on a small scale.
February 9th, 2010 at 11:55 am
Since the rates went down I noticed a lot more available loans to invest in.
There are actually over 200.
March 18th, 2010 at 4:21 am
Dan,
As John says, if a borrower is so called “quality borrower” then he have would plenty of options in the traditional debt markets – banks, credit unions etc. will after him offering loans at good rates. Then why would such borrowers look towards LC or for that matter any other similar platform. Isn’t it the case that platforms like these are essentially the last avenue for those not worthy of getting the loans from traditional sources?
Sorry for sounding critical, but, I am just trying to absorb the logic behind this new concept..