HisHersMoney

So in order to take advantage of free money, Hers and I both opened up Lending Club and Prosper accounts. I’m going to post my initial reactions of both sites now and post updates as I go along.

While I don’t plan on investing heavily on either of these sites for now, I AM looking for a decent return. Especially when you look at how the interest rates are falling in all of the online savings accounts. I need to start funding my IRA fully, but am waiting the few months until Hers and I get married. She has a pretty large account with Ameriprise and I can just get added to her account after the wedding.

So with that in mind, here’s the lowdown below the fold:

Prosper is the elder statesman of the two sites, having been established in early 2006. It now boasts over 580,000 members and $117 million in funded loans. This is both a curse and a blessing for the site. It always appears to me that there are more lenders than qualified borrowers here. That tends to drive the rate of return down just as many people bidding on something on eBay drives the price up. So their approach is novel in that you actually bid as low as you’re willing to accept for a return.

It was very easy to set up and verify my bank account, just as it tends to be with most online financial businesses these days. Once this was done I received my $25 bonus and I loaded $100 into my account. Looking for loans is very easy. You just decide on whether to do them individually or let Prosper build a portfolio for you based on how much risk / how much return you’re looking for. Once you place a bid on an individual loan, you sit and wait until it is fully funded and the time remaining to bid ends. If you bid is accepted, then you receive an email and you’ll start seeing the payments into your account.

Overall, Prosper seems like a good place to diversify. I will probably look to use their portfolio plan though because as I said, it can be hard to get a bid accepted at the rate you want with this many lenders.

Lending Club is one of the new kids on the block, with much less in the way of both members and funded loans. However, they have recently gotten another infusion of venture capital and their numbers are growing rapidly. LendingClubStats is an excellent site to check up on the current numbers there.

Account setup was very similar to Prosper. Once again I added my bank account and received a $25 bonus. One thing that immediately struck me though was how much better then LendingClub website is at showing your account details. At a glance you can see your portfolios, both ones you build yourself or ones that you allow them to build for you. In addition to this, it’s extremely easy to see your account broken down into cash, money waiting for loans to be fully funded, and loans in repayment. I really appreciate the attention to easy navigation here

I also like the fact that I don’t have to wait to see what return I will end up with. When you fund a loan, you see right then what the interest rate will be. The only question is whether there are other lenders that see that loan as a good investment. I narrowed down my choices using the search filters and was still given 138 loans to review that met my criteria. I chose one to fund at 11.38% interest, waited another day for it to be fully funded, and now have it in my portfolio. A great experience

I also just found an article at Money Walks that speaks about some issues with Prosper, especially compared to how the site has lost some sense of community compared to the beginning. I reinforces my initial impressions about the two sites.

In summary, I think you can figure out from this article that I like LendingClub better at this point. I will continue to fund small amounts there and probably only leave my initial deposit on Prosper until I get a better feeling about the site.