Earn High Returns with Peer Lending

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Back in 2009 I was the guy borrowing from peer lending investors.  Not anymore baby!

Investing in peer loans is paying me about $25/month… and that number grows with every loan I invest in.

Invest in peer lending

Peer lending is just another term for peer to peer lending, social lending, p2p lending, etc.

Now-a-days I’m the guy getting paid to loan money… and it feels really, really good.

One way I invest – and earn high returns – is by using peer lending platforms to loan money to people who are in the same position I used to be.  I enjoy doing this for two main reasons:

  1. I can help them get out of debt.
  2. I can earn high returns on my money.

I usually stay away from loans (a.k.a. notes) being used to finance things, like weddings or automobiles, and stick primarily to debt consolidation loans and sometimes business loans.

How much you earn will depend mostly on the notes you choose, how you choose them, and your use of the secondary market.

How much I earn with peer lending

I currently have nearly $4,000 invested in 90 notes.  I have had one note default and am earning a NAR (net annualized return) of 8.55%.

The average peer lending investor earns approximately 10% on their investment… so I’m a little behind the curve, but I’m learning – and will take a 8.5% return any day.

To date I have earned $212 in total interest… and I’m pulling in about $25 in interest a month, and this number grows monthly as I invest in more notes.

Tips for earning higher returns

Here are a few tips for those who want to start investing with peer lending:

  1. Before you choose loans be sure to pick solid criteria then save the criteria search.  I will elaborate more on this in a future post dedicated wholly to the subject, but for now just understand that you can filter the loans based on criteria like “no defaults in the past 3 years” and “credit scores of 700+”, etc.
  2. Keep an eye on the notes you invest in and resell troubled notes on the secondary market.  Again, I will drill down on specifics later, but just be aware that selling troubled notes on the secondary market is a crucial part of earning higher returns.  Don’t be intimidated by this either because it’s easy peasy, all you basically need to do is pick the loans you want to resell, price them at a discount and click “submit”.
  3. Diversify your notes.  By this I mean to invest in notes of different grades to balance risk and returns.  Peer lending platforms grade the loans based on borrower credit history and allow you to drill into the details and pick loans paying higher returns while still offering less risk – they’re there, you just have to look.

Those are the basics.  Feel free to ask questions in the comments section below.

How you can get started with peer lending

If you like the returns peer lending is delivering and want to get started, there are two companies I recommend in full confidence… Lending Club and Prosper.

Personally, I have more experience investing with Lending Club, but know both companies are sound and proven, so choose Prosper if their platform suits your needs better.

Betterment is one of my two favorite ways to earn interest on my savings! They have an awesome program for the Average Joe to save and invest simply and effectively. There are no minimum balance requirements and no transaction fees. Read my Betterment Review or open an account to get started earning now.

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