Lending Club Interview
Lending Club CEO Renaud Laplanche was recently featured on CNBC’s Power Lunch program where he gave the scoop on how Lending Club can save borrowers money and investors can lend money at good interest rates.
Lower Lending Costs
Bill Griffeth started off the interview asking, “So you match borrowers and lender, isn’t that what banks do?”
Laplanche explained how social lending companies have a huge advantage since they operate at a fraction of the cost that the banks can. The reason is they don’t have the same infrastructure to pay for. Lending Club doesn’t have thousands of employees, only a website that directly matches lenders with borrowers.
Although Lending Club does use some of the same technologies that banks do in terms of identity verification, credit verification, and money tranfser they don’t have the same overhead costs.
How Much Can You Borrow?
Of course, the next obvious question is how much money can a person borrow? With Lending Club someone could start with an amount as low as $500 or they could borrow up to $25,000.
Who Are the Lenders?
Next Griffeth wanted to know who the lenders were, who are the people investing in these loans?
Of course since it’s person to person lending the people lending the money at Lending Club are individual investors looking to make a return on their money. Laplanche went on to say:
“Instead of being in a situation where a person with money would go to the bank and put that money in a savings account and get 3-5% back from the bank; and on the other side of the equation borrowers going to the bank and getting a loan from the bank at 13-15% interest rate on unsecured credit or 18% on a credit card.
Both of them, lenders and borrowers, meet online and exchange money at 10-12% interest rate which is a very attractive rate on unsecured credit for borrowers.”
What Can Borrowers Use the Money For?
Griffeth noted that many people are using the loans to pay down high interest debt but wanted to know what else people could do with the money they borrowed through Lending Club. Laplanche explained:
“We have many ways borrowers are using the site. The main way is refinancing high interest rate credit card balances at 18 sometimes 24% and borrowrs can refinance at 10-12% rate and sometimes lower.
We also have borrowers financing a one-time event. We got loan requests for weddings or buying an engagement ring. So you see all kinds of patterns but the rates on average for borrowers is about 20-30% less than they’d get on unsecured credit from the bank.”
If you’d like to learn more about investing or borrowing through Lending Club signup for the free Lending Profits course below. Enter your name and email address and we’ll send you instructions on how to access this free course. If you sign up soon we can show you a no-risk method to make your first loan on Lending Club!