Peer to Peer Lending Sites: An Exhaustive Review

The entire US p2p ecosystem in a single list

Many people like peer to peer lending for its low loan rates. Others celebrate its consistent and generous ROI. But the truth is that neither of these benefits are very profound. For example, while it is crucial to get out of debt (perhaps through a p2p loan), the process isn’t all that fun. Quite the opposite; making those monthly payments can be a real chore.

This applies to investing as well. Earning a return is key to a healthy retirement, but it really isn’t all that interesting. A dull number on your screen slowly grows over a 2-4 decades until a certain retirement threshold is reached and you’ve “made it” — a long time to wait for a party.

My favorite aspect is something altogether different. What captivates me about peer to peer lending is its transparency and collaboration. Certainly competition exists, but the long storied history of peer to peer lending is really one of people figuring this out together.

To illustrate this, today I’ll review every peer to peer lending website in the United States, highlighting the collaborative part they play in the overall lending ecosystem.

Two American P2P Lending Companies

Many online lending companies have launched in the United States, but only two are purely peer to peer. Only two connect everyday investors to borrowers: Lending Club and Prosper. Additional platforms will launch in the future, but for now these are the sole two.

Lending Club

Lending ClubYou really can’t talk about peer to peer lending without starting with Lending Club. The industry leader, founded in 2007, has gone on to issue over $9 billion in loans. Their site has the best user interface and the largest 3rd-party investor ecosystem. Recently, Lending Club went public on the New York Stock Exchange, becoming the first publicly traded online lender in history.

Lending-Club-Total-Issued-Loans-2015

They offer loans between $1000 to $35,000. Interest rates range from 6.6% to 29.9%. Their average loan is for $15,000 and has a 13.4% APR. Read: our Lending Club review for borrowers.

Lending Club investors: typically earn between 5% and 9%, depending on how much risk is taken on. Read: our Lending Club investor review

Prosper Marketplace

Prosper-Logo-SmallProsper made history when they launched in 2006. They were the first ever American peer to peer lending company. Since then, the company has experienced tremendous growth and success, having recently issued an incredible $3 billion in loans. Recently, they were named by Forbes as one of the most promising companies in America.

Prosper-Total-Issued-Loans-2015

Prosper offers loans between $2000 and $35,000. Interest rates range from 6.6% to 35.9%. The average loan at Prosper is for $13,000 and has a 13.9% interest rate. Read our loan review for Prosper.

Loans up to $35,000

Check your rate at both, go with the lower rate.

Won’t hurt your credit score.

Prosper investors: typically earn between 5% and 9.5% depending how much risk is taken on. Read: our Prosper investor review

P2P Lending News and Education Sites

A wide variety of news and education sources have sprung up around these two companies.

Lend Academy

Lend-Academy-logoPeter’s Lend Academy blog has been the go-to source of anything involving online lending for years. His approach to lending basics and filtering is how many of us got our start. Week after week, him and Ryan continue their coverage of the latest p2p lending news and analysis.

LendAcademy.com

CrowdFund Insider

crowdfundinsider-logoCrowdfund Insider is probably the most prolific lending news site in the nation. For example, they published thirteen news stories today alone (May 8). Lending Club and Prosper are common featured stories here. Also, if you’re interested in the wider non-P2P lending space, CFI has got you covered there too.

CrowdfundInsider.com

Orchard Platform

Orchard PlatformOrchard is another mainstay in the peer to peer lending world. Though their main offering is technology for institutional investors, Orchard’s blog has continued to be a wonderful source of interesting and novel analysis of Lending Club and Prosper’s open data.

OrchardPlatform.com/blog/

P2PLendingExpert

Stu Lustman is a credit professional who brings his own value to this space. Furthermore, he has a unique take with peer to peer Bitcoin lending re: his coverage of BTCJam.

P2PLendingExpert.com

LendingMemo

Launched in January 2013, this site continues to be a joy and privilege to work on. Thanks for reading :)

Secondary Blogs

Even though PeerCube and LendingRobot are more known for their savvy p2p tools, they operate blogs on the side that are filled with interesting and helpful information on this investment.

PeerCube Blog: PeerCube.com/blog
LendingRobot Blog: blog.LendingRobot.com

P2P Lending Investing and Analytics Tools

Since all of peer to peer lending’s data is available to the public, and both the platforms allow access to their sites over API, a large tool ecosystem has evolved that offers investors a deeper way to analyze and invest in these loans.

NSR Invest

NSR Invest logoProbably the main investor analytics site for years has been NSR Invest (originally Nickel Steamroller). NSR offers a fast and robust backtesting tool that allows investors to breakdown the historical loan data in pretty much any way they desire.

NSR-Invest-Screen

Click to enlarge

On top of that, they offer great charts of industry growth, the most advanced portfolio analysis in the country (including Prosper), and fund management for accounts over $10,000.

Serves: Lending Club and Prosper
Cost: NSR Platform is free! (NSR Invest costs from 0.45% to 0.9%)

NSRplatform.com

LendingRobot

LendingRobotLendingRobot is the biggest auto-investing tool in the space, having received a lot of positive press as of late (TechCrunch). Their tool automates Lending Club and Prosper investments in a variety of interesting ways. Not only can you auto-invest with filters (video), but their Estimated Return parameter invests with an algorithm, allowing you to increase your returns without needing to learn filtering at all. They have pre-set filters for conservative and aggressive investment strategies.

LendingRobot-Screen

Click to enlarge

Lately, LendingRobot even added functionality for the Folio secondary market, allowing you to automatically place loans for sale on Folio that, for example, drop a certain amount in FICO.

Serves: Lending Club and Prosper
Cost: free for small accounts, 0.45% of investment for accounts > $10,000

LendingRobot.com

BlueVestment

BlueVestment logoNathan’s automated-investing site has been a staple of p2p lending for years. Its API is lightning fast and trustworthy, picking up loans before most other investors ever could. It even allows investing through Dr. Bryce Mason’s P2P-Picks algorithm.

BlueVestment Screen

Click to enlarge

Serves: Lending Club
Costs: 0.45% and 0.2% of notes they invest. First $1000/month is free.

BlueVestment.com

PeerTrader

PeerTrader-logoMike Deck’s PeerTrader is also a trusted name in the industry, allowing free auto-investing and analytics on Prosper, even through Dr. Bryce Mason’s trusted P2P-Picks algorithm. His site offers realtime monitoring of Prosper’s available loans:

PeerTrader-Screen

Click to enlarge

Serves: Prosper
Cost: currently in public beta, and it is free during this period.

PeerTrader.com

Peer Cube

PeerCube logoAnil Gupta’s PeerCube has its own dedicated following. Of all the tools in this list, PeerCube is probably the most detailed. It has large descriptive charts for everything: from the average markup of loans on Folio to which year of your investment earned you the most money. The list really is too long to cover in a single paragraph.

PeerCube-Screen

Click to enlarge

Further, it can take this analysis and automatically invest in loans on your behalf at both Lending Club and Prosper. Pretty great!

Serves: Lending Club and Prosper
Cost: Pro Plan is $19/month (free option available)

PeerCube.com

Peer Lending Server

Peer-Lending-Server-logoPLS is unique among the rest because it is only automated investment option that runs through your home computer, which has two benefits. Firstly, your password and API key are kept private. Secondly, automation happens through your setup alone. No other investors are in line before you, which PLS sees as increasing the speed of your investing. Like other tools, you can analyze historical loan data and invest via specified filters. You can also invest via PLS’s machine learning function (video).

Peer-Lending-Server-Screen

Click to enlarge

Serves: Lending Club
Cost: free!

PeerLendingServer.com

Interest Radar

Interest Radar LogoRev’s investing tool Interest Radar has been a trusted method of investing for many years. It was the first to allow automated investing through Lending Club, and contains a large degree of secondary functionality. For example, here Interest Radar has broken down my Lending Club returns by portfolio.

Interest-Radar-Screen

Click to enlarge

Interest Radar also offers auto-sell features for your Lending Club Folio account. If one of your loans drops a certain distance in FICO, it can automatically place the loan on the secondary market for you.

Serves: Lending Club
Cost: 30 days free (then $9/month or $59/year)

InterestRadar.com

Peer to Peer Quant

PeertoPeerQuant-logoJJ’s Quant tool is one of the most interesting of the bunch because it does just one thing — invests your cash through a “genetic algorithm”. According to the website, this is a savvier, more refined algorithm than others. See JJ’s methodology here. With a portfolio age of 9 months, the site says its algorithm has returned 11.2%.

Peer-to-Peer-Quant-Screen

Click to enlarge

Serves: Lending Club
Price: $0.15 per loan referral (first five are free)

PeertoPeerQuant.com

Lending Alpha

Lending Alpha LogoI have not personally used Lending Alpha. They are a newcomer to the space, and their tool is completely free. Essentially they offer investors another way to invest via an advanced algorithm.

Serves: Lending Club
Cost: free!

LendingAlpha.com

Peer to Peer Lending Discussion

Here are the four main places people discuss peer to peer lending:

Lend Academy Forum

Peter’s forum over at Lend Academy remains the most active discourse on the internet, with a diverse community of lenders in talks about a multitude of topics. It has sections for both Prosper and Lending Club, as well as all the major tools.

LendAcademy.com/forum/

LinkedIn

inGroups: Group A and Group B

Twitter

Hashtag: #p2plending

Reddit

/r/SocialLending: Reddit.com/r/SocialLending

[image credit: Wyman Laliberte “1917 Map of Winnipeg” CC-BY 2.0]

Comments

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  1. Brandon says

    Looks like Bluevestment charges you based on notes invested for you and not on account value. It is free if you invest <$1000 per monthly cycle.

    Thanks for the great info Simon!

  2. Joe P says

    Simon,

    Perhaps I am looking at this too simplistically, but I am concerned about the risk needed to make even the stock market average return by using P2P.

    Let’s say I used $5000 to fund a P2P account. If I were to invest it in loans that paid 10% annually over 3 years, using an amortization calculator, I would accrue $808.09 in interest payments. However, Prosper states that over the course of 3 years, it would charge $80.70 in fees. Thus, my net profit would be $727.39 during that time. This of course assumes no charge offs during time which seems highly unlikely.

    Instead, let’s say I invested that same $5000 in another investment. In order to make $727.39, I would only need an annualized gain of about 4.65% for three years (for a total gain of $730.43). That seems quite doable.

    Am I missing something?

    Thanks,
    -Joe

    • says

      There is no direct comparison between return from P2P loans versus other investment (ex: stock) due to difference in when original investment is received back. With stock, you receive the original investment plus any gains at the time of stock sale. With P2P loan, you receive a fraction of original investment plus interest every month. P2P loans are amortized loan.

      With stock you invest $5,000 and at the end of 3 years you receive $5,000 of original investment plus gains of $730.43 for the annual gain of 4.65%. This stock is equivalent of a 3 year bond with coupon rate of 4.65%, interest and original investment payable at the end of 3 years.

      With 3 year 10% $5,000 P2P loan you receive $161.34 every month which includes interest plus a small fraction of original investment for 3 years.

      For example, first month payment of $161.34 includes $41.67 in interest and $119.67 in original investment. In first month, you gains were $41.67/$5,000 = 0.83%.

      Unlike with stock where all of your original investment $5,000 was locked for 3 years, with P2P loan, your original investment $5,000 was locked for one month, and after one month only $4,880.33 of original investment is still locked. To do a fair comparison between P2P loan and stock, you will need to re-invest $119.67 of original investment you received for another 2 year and 11 months.

      I hope this explains your confusion.

  3. says

    @joe, P2P lending is also different from stocks in that diversification is free. For stocks, there’s a price based on trade commissions when you acquire the portfolio as well when you rebalance it. Risk-adjusted, the returns are significantly better than almost every other investment asset class out there. Couple that with automation of the investment process, it’s difficult to not participate in this movement.

    Lending Alpha provides a completely automated experience (curated loan selection strategies, dynamic trade execution, and continuous portfolio optimization).

    https://www.lendingalpha.com

  4. Tom Eggert says

    Simon

    Your title implies that you’ll be naming services other than Lending Club and Prosper. What about Upstart? What others are out there?

  5. Nathan says

    I have a very basic question. It looks like none of the P2P cover a significant loan amount. I’m referring to something along the lines of a home mortgage. Are there any that do, and such that they are actually worth making the move? For the rates quoted above there isn’t much gained for the borrower. At least in the US, it seems like a big portion of the lending woes are for mortgage holders that are stuck with their high rate loans and no way out. And yes, I fit that bill. If I had a better rate the monthly payments would be doable, but of course the bank has no vested interest in budging. A P2P loan that offered relief would be an option, but is that amount too much risk for the industry?

  6. Din says

    Hi Simon,

    Thanks for the great writeup. Would it be wise to open accounts on both LC and Prosper as an investor? Main reason I ask is that I’m afraid of being in the risk of funding duplicate loans which a user opens on both sites, with more chances of defaulting. Is this pretty rare in regards to LC and Prosper knowing if a duplicate loan has already been started?

    Thanks!

  7. Jean says

    The Lending Club and Prosper websites indicate that Pennsylvania does not let investors invest in P2P lending. Are there any P2P websites that Pennsylvania DOES allow investing? (I googled PA Securities and Exchange Commission, but to no avail.)

  8. Scott says

    Are any other Prosper investors getting sick and tired of their IT problems? I’ve been unable to access my account for several days. This is really unacceptable!

    • Din says

      Scott, I hear ya! Logging in has been a hassle the past few days for me. I either have to refresh the log in page numerous times or simply give up and try a while later and pray it works. But really, refreshing the log in page seems to fix it for the most part.

  9. Pamela Hollinget says

    I need a BIG personal loan. ASAP. I work part time and am on SocialSecurity benefits. I can afford a monthly payment of $275. I would like a $9000 loan with at least 36 months to repay. Please help me . I can be reached at 925-594-0022 or my email. Thank you

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