With”high” yield savings account rates dropping to some of the lowest rates we have seen most people in the PF Blogging world are talking about the great returns you can get over at Lending Club. I was pulled in by this constant reminder of better, or possibly better, returns in this new medium of peer to peer lending. It turns out they aren’t quie as upfront with their lending requirements as you might think. While I don’t dispute the returns that are possible from peer to peer lending I don’t think people get the full picture of what criteria you have to meet to be able to lend.
They only allow investors to invest in loans if they are residents of one of the following 25 states: California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Louisiana, Minnesota, Mississippi, Montana, New Hampshire, Nevada, New York, Rhode Island, South Carolina, South Dakota, Utah, Virginia, Washington, Wisconsin, West Virginia, and Wyoming. Right of the bat over 50% of America is out (Doesn’t include territories or D.C.)
Of course the state requirement may be the easier requirement to meet. In addition to having to live in one of the aforementioned states you have to have an annual Gross Income of at least $70,000 and a net worth (excluding your home, home furnishings, and automobiles) of at least $70,000. If you don’t have a gross income of at least $70,000 you could invest if you have a net worth of at least $250,000.00 using the same exclusions as the previous net worth. If you live in California you must have a gross income of at least $100,000 and a net worth of at least $100,000 (excluding home, home furnishings, and automobiles) or a networth of at least $250,000 (same restrictions).
You have to also agree to not invest more than 10% of your net worth. All of these exclusions do not prevent you from participating in the “Note Trading Platform” but do prevent you from participating in the standard Lending Club system.
Photo by: (Helico)