All right so peer-to-peer lending that’s we’re going to be talking
about in this article. What it entails, the pros of it, some very
important cons that you’ll definitely want to be aware of before
you actually jump into this investment strategy.
WHAT IS PEER-TO-PEER LENDING?
It’s actually pretty self-explanatory its peer-to-peer lending. So, you as a person are
lending money to someone else. And, traditionally, what occurs is, “say somebody
needs a loan, right? And what do they do?
They go to their bank that’s usually what happens at least in the past, right? People
go to their bank and they ask for a loan from their banker, and then the banker.
Where do they get that money from?
They get it from people who put money into their savings account, and people who
get CDs (Certificate of Deposit) through the bank, and they might pay them like 0.25
percent, and then they take that money and they lend it out at a four, five, six, seven
percent interest rate to other people. And that’s generally how banks make money.
But with peer-to-peer lending what’s going on here is you’re cutting out the middleman,
okay, so you’re sort of cutting out the bank; and we’re going to get further into that in
this article. But you’re cutting out the bank, and you’re going straight from one person to
the other. So, you are lending money to somebody else who’s trying to start a business, or
refinance, or even pay for a wedding, or sometimes even go on vacation, and we’re going
to talk about some of the risks and rewards in this article.
Something that I find to be somewhat revealing is that when you look at these peer-to-peer
lending sites like LendingClub or Prosper or some of the other very large peer-to- peer lending
websites that we will list in this article, it’s actually sort of interesting to see that many times
banks are actually the majority shareholders in many of these companies.
So, LendingClub; the majority of lending clubs actually owned by banks, and that’s just something
interesting to think about. So, they actually do have their hands in peer-to-peer lending, they’re
probably being pretty smart with that because I think peer-to-peer lending is certainly posing a
threat to traditional banking now, and in the future, the writing is on the wall as they say.
The Future of Peer-to-Peer Lending
Lending Club started in 2006, by 2015 LendingClub had done close to 10 billion dollars in total
loans, yes Billion with a B. So it’s definitely something to be thought of and sort of seen as a
threat for many big banks.
Later in this article we will share with you the Top 10 Peer-to-Peer lending platforms. P 2P is
an abbreviation you may see in this article, which obvious stands for Peer-to-Peer.
In this game of peer-to-peer lending there’s really two different platforms that I’m going to
discuss in this article and that’s LendingClub and Prosper these are actually really the first
two peer-to-peer lending companies to hit the market.
They both were started in 2006. They got approved by all the government regulators in 2008.
So it is safe to say that most of the legal hurdles are behind P2P lending platforms.
Obviously you can look at P2P as borrower or as a lender.
Minimum Loan Minimum Loan
Maximum Loan Maximum Loan
3 or 5 Years 3 or 5 Years
APR (%) APR (%)
5.99 to 36.0 5.99 to 35.96
Fees (%) Fee (%)
Closing Fee 0.50 to 4.95 Origination 1.0 – 6.0
Generally speaking, if you’re looking for a loan you can borrow anywhere from $1,000
to $47,000 for a loan as a borrower through these companies. For example, if I wanted
to get a business loan for $10,000, I would have to go onto LendingClub and then put in
all of my information. They need to know your Social Security number; they need to
make sure that you’re actually a real person and you’re not just some scammer trying to
steal money from people. And once you go through that whole process then you’re signed
up for LendingClub and you can get offered loans.
As an investor what you’re going to do is “say you have $5,000.00 that you want to put
into LendingClub, and you can give out these loans sort of micro loans, in a sense, to
hundreds of different people, in this way, you are diversifying your investments and
With all Lending platforms you certainly incur risk here”. Think about a bank they’re
going to be cautious about giving loans to people who don’t have good credit. If they
do decide to loan money to someone with weak credit, they’re going to raise the interest
rate on those people because they’re definitely more risky.
They are more at risk of defaulting on those loans and they know that, That’s what’s
going to be going on with P2P lending platforms as well. You’re actually assuming the
risk of the bank, and so, there’s going to be people who might not be able to pay off those
loans. I mean you have to sort of account for that and adjust that with the interest rate
at the appropriate level. However if you are smart about it and spread out your risk like
banks do you can still make a pretty decent return on your investment with P2P lending
And so that’s why with LendingClub they sort of give these different grade letterings for
four different borrowers; so, for example, you have really good credit, you’re probably
going to have an A grade rating but if you have terrible credit absolutely just terrible just
absolutely terrible credit you’re probably going to have a rating somewhere around a D
or an F. You know, if your credit scores 500 you might be in the D range or even in the F
range, but if you have a credit score of 800, you’re going to be in the A range. And so, you
as the investor can actually choose who you want to lend your money to.
That’s why I would like to go with a company that’s pretty well-established, one of the larger
peer-to-peer lending sites. I would be careful with some of the startups which could go
belly-up pretty quickly, but that’s just something to sort of keep in mind as you get into
peer-to-peer lending, because when you’re giving out these loans they’re usually anywhere
from 36 to 60 months for the length of the loans. That’s three to five years, so what will
these lending platforms look like them?
So, for example, if you want to play it very safe you would probably lend most of your money
to A and B borrowers, this way, there’s a much lower default rate. With that being said the
interest rate on the loans that you’re giving out is going to be lower than the interest rate
on something like a D or an F grade which is going to have an interest rate you know fifteen,
twenty, twenty-five percent.
The reason for that and the reason why those interest rates are going to be much higher for
the people with bad credit is because they’re going to have a much higher chance at defaulting
on those loans.
So, the best way to sort of get around this whole issue with defaults on loans, is to loan out money
to enough people that you diversify enough to the point where it really won’t matter too much if
one person defaults on their loan if you have 300 other people that you gave twenty five dollar
loans to that will make up for a loss here and there. You won’t have to worry about that one
person who defaulted on the loan.
So that’s definitely something you want to consider thinking about. How much risk you’re willing
to take in which letter grade you would want to go after in terms of loans. Most lenders that I
speak with find the best returns somewhere between the B, C, and the D ratings for the loans.
If you get into the F ratings then may see a lot of people who just won’t pay and nobody wants to
deal with that, they’re going to absolutely just destroy your bottom line investment earnings.
If you stay in the A ratings, where most of those people are almost always going to pay off those
loans and it’s going to be a much lower rates; can be four or five or six percent on those loans,
so that’s something to take into consideration when deciding to participate in peer to peer
lending. It is better than a CD at your bank, but not the kind of returns most Save Your Bucks
readers are looking for.
So, you might be asking what’s going to stop people from taking my money and just completely
running away with it, and just stealing my money, never pay me back, never sending a single
penny of that money that I loaned them? Really the thing that’s going to stop them that’s going
to stop 99% of people is that it’s going to absolutely destroy their credit score.
So, if the person who borrows money from you, doesn’t pay you back it’s going to just annihilate
their credit score. It’s going to be bad; they’re going to default on those loans, their credit score
is just going to plummet.
That’s what’s kind of scary about people who already have very low credit scores. If they have a
500-credit score, you can’t go a whole lot lower than that. And so that’s why I don’t load to people
with very low credit scores. It is like convicting a dude or murder who is already doing life
without the possibility of parole.
Generally speaking, mature people don’t want to mess up their credit score it’s not something that
you can instantly fix it takes a very long time to fix that, and hopefully people who are borrowing
money on LendingClub are aware of that. I think a good majority of people are aware of that that
they don’t want to destroy their credit score and so most people will really take it seriously and
pay off their loans.
There are more cons of peer-to-peer lending, one of them could also be the fact that your total
annual return on investment is going to have a limit. It’s going to be capped at a certain amount
and that could actually be comforting to some people but it could also be limiting to some people
as well. If you are willing to do the work and get yourself educated there are many opportunities
to double your money every year. That is my goal with my sport card investing and FBA Amazon
sales that I do. However the problem is both of those methods are hard to scale. With
Peer-to-Peer lending platforms, I will never run out of people to lend money to, and I like that.
It is not like I have to find a Gem Mint Rookie card at below market value. There is an endless
supply of people to loan money to, but the same can not be said for collectible sports cards.
For example, if you’re lending money to say like C-grade borrowers well you’re going to be
capped at a certain percentage.
It changes from peer-to-peer lending platform, but currently most cap out around 14%.
Your actual returns will not be 14%, more like 8% or 9% because you can have a few
people who are going to be defaulting on those loans. So, that’s probably the biggest
downside; the fact that you can’t really get quick, high returns with peer-to-peer lending
it’s not easy to do that. But to say your can expect returns better than a bank CD would
be a major understatement.
Now on the flip side, this could actually be seen as a positive because, what this is also
going to mean is that, it could also sort of protect yourself from any type of
fluctuations in the market.
For example, like the stock market, if you put in a thousand dollars and you wait a year
you don’t really know where that’s going to be. It could be up thirty percent, or it could
be down twenty percent, and it can certainly fluctuate a lot more than something like
If you’re giving out loans to B-grade borrowers here and maybe you’re getting a nine
or a ten percent of annual return on those investments. Well, that can be seen as a
protection of your capital, because most of those people are still going to be paying
back those loans, so even if the stock market dips 20 percent in the future.
If the stock market drops drastically, or the sports card market plummets, you could
still be getting a six, seven or eight percent return through a P2P Lending Platform
But with that being said that actually also brings up another potential issue for
peer-to-peer lending and actually just for lending in general which is the default
rate. So, generally speaking you can sort of guess how much money you’re going
to make based off of the default rate.
What percentage it’s going to be, but the default rate can certainly change and it
can change somewhat drastically, if for example, we enter a very bad recession.
So for example if we see the unemployment rate rise like it did in 2009/2010 it
was almost ten percent at that time. At the time of this writing it is sitting around
four percent but there’s certainly a lot of issues within the economy that could
certainly affect these default rates.
Our consumer confidence could fall, gas prices could rise pretty drastically, and
so there’s going to be a lot of variables that you want to think about before you
actually get into peer-to-peer lending.
The default rates can certainly cut your earnings if the default rates rise pretty
substantially at any given time it could certainly hurt your earnings.
So, there is one more issue that I want to bring up here about peer-to-peer lending
and I’m really trying to give you both sides of the story, so that you can make your
own decision on whether peer-to-peer lending is something that you might be
interested in. An issue that some people have with LendingClub or Prosper for
example is what happens if they go under?
What happens if they go bankrupt? And that’s a question that people have been
asking since they started back in 2006. This has been debated. My guess is we
would probably be okay because, generally speaking, common stock shareholders
would be paid last and then we would be paid before them as a lender.
But what’s going to happen to the default rate if people see that LendingClub
goes under? Do they think that they still have to pay the loans? And so, there
can certainly be a lot of issues there. The truth is you can find any reason not
to step out of your comfort zone.
Now, with that being said most of these lending peer-to-peer lending sites are
actually have a small amount of debt and most of them are cashflow positive.
LendingClub, Prosper they’re both cashflow positive. I believe Lending Club
actually had a hundred and fifty-million-dollar investment from Google.
I do think that they are here to stay, but that’s something that you just want
to sort of keep in mind. Think about the long-term survivability of some of
these lending companies and actually any investment vehicle. Learning to
properly calculate the risk verses reward for you and your personal situation
is a good skill set to develop.
So what is my overall opinion on LendingClub, Prosper and the numerous
other peer-to-peer lending platforms out there? I think it can almost always
be better than putting money into the bank.
Especially if you’re able to assume a little bit more risk, If you’re certainly
depending on the money and you absolutely need that money, and maybe
you just want to keep it into something very safe like CDs or your bank
account. However if that is how you felt, I don’t think you would be reading
this article, or a save your bucks subscriber.
I don’t think these lending websites like LendingClub are going to be incurring
too much risk if you’re generally giving out loans to people who have A ratings
even if the default rate climbs a little bit. I think it’s going to be better off than
putting your money into your bank account and just leaving it there, and not
gaining any money on your money.
Below you will find info and links to easily access LendingClub, Prosper, and
the top rated peer-to-peer lending platforms, I hope you check out their websites
and you find this list valuable.
This type of money lending is also known as marketplace lending because it
matches up borrowers directly with lenders. Investors can take advantage of
higher yields than most traditional forms of investing and feel good that their
money is helping other people.
P2P Lending Affiliate Programs
Commission: 13% per loan origination
Cookie: 30 days
Prosper is a leading p2p lending online marketplace that connects borrowers with individuals who want to invest in consumer credit. They have been helping people tackle their financial goals since 2006. Borrowers can apply for fixed term loans between $2,000-$40,000 and investors have the opportunity to earn solid returns.
They use Impact Radius to run their affiliate program. Prosper provides their affiliates with banner ads, text links, their product catalog, and powerful reporting tools. Their proactive affiliate management team is available to assist with everything from set up to optimizing your marketing campaigns.
Why Should You Promote Prosper: First p2p lending marketplace in the US, empowered over 900,000 people, competitive commission rates
They are looking to partner with affiliates with audiences who would benefit from their P2P lending marketplace.
Commission: $200 per loan
LendKey is a p2p student loan refinancing platform that matches borrowers with local lenders. They help borrowers easily apply for low rate loans from lenders that prioritize people over profits. They also offer private student loans and home improvement loans.
Their affiliate program is powered by Ambassador. LendKey provides their affiliates with unique tracking links with no limits on how many people you can refer. Affiliates can share their links with friends, family, and acquaintances that can benefit form student loan refinancing.
Why Should You Promote LendKey: Student loan p2p lending, unlimited referrals, extremely high commission payouts
Your referrals also earn $200 to help pay off their student loans faster.
Commission: $100-$150 per funded loan
Cookie: 30 days
SoFi is an award winning p2p lending community. They help people reach their goals and achieve financial independence. Their membership benefits include complimentary financial advising, unemployment protection, career coaching, networking experiences, and rate discounts on additional SoFi loans.
They have teamed up with Commission Junction to oversee their affiliate program. SoFi gives their affiliates access to professionally designed banner ads, logos, and text links. Affiliates are allowed to use generic keywords in their SEO but not their name or domain name.
Why Should You Promote SoFi: Well known p2p lender, no hidden fees, great commission rates
Affiliates earn $100 per funded personal loans and $150 per funded student refinance loans.
Commission: $25 per business bond, $25 qualified loan lead, $400 per loan approval
Cookie: 30 days
StreetShares is an award winning financial service for Veterans and small businesses. They offer affordable, fast lines of credit up to $100,000 and up to $500,000 in contract financing. Their veteran business bonds offer a new way to invest with a flat 5% interest rate to grow your money faster.
Their affiliate program is hosted on Impact Radius. StreetShares supplies their affiliates with all the marketing materials and affiliate tools needed to start promoting right away. Affiliates can reach out to their affiliate manager with any questions or suggestions.
Why Should You Promote StreetShares: Award winning financial solutions, Veteran owned, affordable business loans
Affiliates can earn commissions when borrowers and investors are approved to join their p2p lending network.
Commission: $100 per funded loan
Cookie: 45 days
Upstart understands you are more than a credit score. They offer smarter loan rates that are also based on your years of credit, education, area of study, and experience. Investors can take advantage of their automatic investing and p2p lending retirement accounts.
Affiliates can sign up for the Upstart affiliate program with Commission Junction. Their affiliate management team frequently updates their library of banners and text links. They also offer mobile certified links.
Why Should You Promote Upstart:Competitive personal loans, performance incentives, no cap on earnings
They also offer increased commissions of $150 when you refer 25+ loans.
Commission: $10-50 per investor, $40 per borrower, 1.25% auto refinance loans, 1.5% small business loans
Cookie: 30 days
LendingClub is the largest online p2p lending marketplace in the US. They are transforming the banking system by connecting investors with borrowers looking for personal, business, education, and elective medical procedure loans. They have helped over 2.5 million people improve their financial health with their low rates on loans and attractive investment returns.
They use Impact Radius to run their affiliate program. LendingClub supplies their affiliates with a great selection of creatives and state of the art tracking tools. Affiliates can also check out their free tutorials and tips on how to make the most out of their program.
Why Should You Promote LendingClub: Largest p2p lending marketplace, transforming the banking system, multiple ways to earn commissions
Affiliates can earn commissions by referring investors and borrowers to their p2p lending marketplace.
Commission: $30 per accredited investor lead
Cookie: 45 days
PeerStreet is a p2p lending marketplace for borrowers wanting to find short term real estate loans. Their borrowers are real estate investors looking for capital to purchase and flip properties. They want to give their investors the opportunity to invest in real estate loans like the pros with attractive returns of 6-12% yield.
They’ve partnered with Commission Junction to oversee their affiliate program. PeerStreet gives their affiliates access to high converting banner ads and text links. Their dedicated affiliate management team is on hand to help with everything from setup to increasing conversion rates.
Why Should You Promote PeerStreet: Award winning real estate platform, high yield short term loans, generous per lead commission fees
Affiliates can also promote their numerous awards and positive media reviews.
Commission: 20% of the system fee
LendaBit.com is a blockchain-based p2p lending platform with no intermediaries. Borrowers can use Bitcoin or Ethereum crypto collateral to help secure their loan. This allows them to remove unnecessary steps in the lending process to make the terms more attractive to borrowers and lenders.
Their affiliate program is managed on their website. LendaBit.com provides their affiliates with unique referral links and easy to use HTML banner ads. Affiliates can track their clicks, registrations, conversion rates, and commissions on their affiliate dashboard.
Interested in Bitcoin and crypto? Other affiliate programs pay in Bitcoin, and you can also promote cryptocurrency affiliate programs.
Why Should You Promote LendaBit.com: Crypto p2p lending, active customers eligible to join, easy to use affiliate tools
It’s important to note, their affiliate program is only open to active customers.
Commission: $7.50 for Loan Forms, $15 for LoanBuilder
LoanBack helps you setup and manage personal loans for friends and family. Their LoanBuilder creates custom loans agreements. Their Loan Forms are downloadable blank promissory note forms. They have helped tens of thousands of people create $1.3 million of loans so their friends and family don’t have to rely on banks for loans.
Their affiliate program is managed in-house. LoanBack supplies their affiliates a wide variety of logos, text links, banners, and promotional content. Affiliate can share their links on their website, blog, newsletters, and emails.
Why Should You Promote LoanBack: Smarter personal friends and family loans, secure loans without high interest rates, two ways to earn commissions
Affiliates can also create their own marketing materials to better suit their website.
Commission: Up to 50% of Bitbond’s origination fees
Cookie: 90 days
Bitbond is the first global lending platform for small businesses. They leverage blockchain
technology to offer creditworthy borrowers affordable financing options. Investors can help
entrepreneurs worldwide while enjoying solid returns from their diversified loan portfolio.
Their affiliate program is hosted on their website. Affiliates must log in or sign up for Bitbond
to apply. They allow their affiliates to share their links and any of the provided banners on their
blog, website, social media pages, emails, and newsletters.
Why Should You Promote Bitbond: Small business p2p lending platform, quick and easy
sign up process, earn up to half of Bitbond’s origination fees
Commissions are paid instantly to your Bitbond wallet and paid for 2 years from the
Affiliate Website Ideas
Now that you’ve discovered 10 great p2p lending affiliate programs, it’s time to
pick a niche to target. You could focus on no prepayment penalty P2P loans so
you can get the money you need fast and pay it back as soon as you want. Upstart
offers smarter loan rates that take into account more than just your credit
score and offers no prepayment penalty. Affiliates receive $100 per funded loan.
Student loan refinancing p2p loans is another great niche for graduates looking
to save money with lower interest student loans. SoFi is an award winning p2p
lending platform that focuses on student loan refinancing and helps people gain
financial independence quicker. They offer their affiliates $100-$150 per funded
You could also promote small business p2p lending. StreetShare provides small
businesses with fast, affordable loans and a flat 5% interest rate for their investors.
Affiliates can earn $25-$400 per customer they refer.
Boost Your Affiliate Earnings
These 10 affiliate programs are just the beginning of what’s possible. There are
hundreds of ways to earn affiliate commissions with your website, including
product reviews, top 10 lists, how-to guides, and more.
But what about traffic and conversions? How do you make sure your affiliate
links get clicked?
I used the affiliate training here to turn my brand new website into a six-figure
income generator in less than two years. Build a business, not just a
pocket-money side project!