Unsecured Debt Consolidation and Personal Loans Being Handed Out at Record Rates

For those with reasonably good to great credit the idea that the bank is the only place to obtain a debt consolidation loan are just incorrect. For quite some time now I’ve been going on and on about peer-to-peer lending networks like LendingClub.com. Lending Club connects people who want an unsecured debt consolidation loan with small investors that help to fund those loans.

Peer-to-peer lending has really exploded in the last four years.

The amount of unsecured debt consolidation loans through LendingClub.com will most likely continue to accelerate but at this point they are funding about $1 million in new loans each day. This is not some dark alley pipe dream opportunity to find a trull unsecured debt consolidation loan. It’s real.

Lending Club says it is attracting a record number of new investors also. Lending Club now receives more than $30 million a month in new investments from a base of over 50,000 retail investors and a rapidly growing pool of institutional investors, with more than 50 investor accounts over $1 million and several accounts over $10 million.

But really anyone can become a Lending Club investor, just like I am. From big to small, those in search of better rates of return than the bank can offer have been putting money into LendingClub.

The average annual return for investors has been between 5.8 percent to 12.3 percent depending on loan grades.

My experience has been kind of right in the middle. My average return as an investor over the past couple of years has been 9.23%.

Being an investor is not without risks. Of the 200 unsecured debt consolidation loans I’ve helped to fund, some of them have defaulted and charged off.

Of the 14 that charged off, their credit status at the time they issued was:

  • B-2
  • C-3
  • D-3
  • E-5
  • F-4

Of the 28 loans I invested in that have been fully paid so far the results by credit grade are:

  • A-2
  • B-8
  • C-3
  • D-7
  • E-4
  • F-3

It certainly appears that groups like LendingClub.coma and Prosper.com are actively making unsecured debt consolidation loans and people investing in the these loans get a much better return than simply putting spare cash in a savings account.

Looking to borrow or looking to invest, either way it seems that a Lending Club presents some valid opportunities.


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Damon Day - Pro Debt Coach

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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