LendenClub Review: Peer to Peer Lending in India

When my father asked me if I am familiar with peer to peer lending or investing, I told him I have 3 years of experience in investing in P2P platforms already. In China and in the USA the peer to peer lending is fairly popular. In India it is a new concept, I do not expect many to have heard about it. I started investing in this platform somewhere November – December of 2019. So it has been almost 1.5 years now and I am updating LendenClub Review post with all the information I have gathered so far ( 16th May,2021).

Lendenclub is a peer to peer lending/ borrowing platform in India. Per the website, it started in 2016. One information was crucial for me that lendenclub is registered with RBI as P2P NBFC. Although, I did not find any registration number or anything else. Even if you and check RBI website, you will not see lendenclub’s name. You can check the registered P2P platforms here. But, we do not see lendenclub because their parent company is registered. I looked upon the internet if there are other sites claiming that lendenclub is registered with RBI, and I found news articles in news portals confirming that they are recognized by RBI.

I personally found their FAQ to be weak and did not explain many things. Such as they offer 3 types of membership for investors/lenders. The differences do not tell me how are they/lendenclub profiting from offering 3 different types of memberships. Or, is there any basic investment amount. There are such basic questions went unanswered so far.

How Long Does It Take To Sign Up As an Investor in Lendenclub?

The signup process was fairly simple. You can provide Adhaar and Pan card details and they will require a scanned copy of those as address and identity proof. If you want you can use something else as address proof. Anyway, the whole process was simple, one thing though, make sure your cell number is legit because they send you one OTP to verify your number.

While you signup, they will offer you 3 different membership options. Basic, Silver, and Gold. There are differences you will understand easily, such as Basic members cannot call the call center for help and so on. But, when you signup, regardless of membership option you select you to pay a flat 500INR as processing fee. If you sign up for Silver membership you can invest in loans up to which are given out for 12 months and Gold members can invest in 2 yrs long loans. According to Lendenclub these are safer options.

I signed up on 24th December and as we all know 25th was a day off, so my account was approved on 26th. I moved 3000rs to my lenden account. And I did an IMPS. It takes less than 10 minutes for the money to show up in lenden account. I tried twice already. Apparently there is no minimum investment amount. But I got a call from Lendenclub asking/ requesting me to invest 100,000 rs, when I asked where was it mentioned and what is the minimum investable amount? Then the person replied that it is 10,000 rs. But honestly, I did not find that anywhere mentioned in the website. Maybe I missed it or maybe they forgot to mention it.

How Much Should I Invest With Lendenclub?

Personally I have invested 10,000rs with lendenclub. And, please remember that this is high risk investing. Most of the borrowers did not go to banks or did not take the money from credit cards and paying high interest to lendenclub, I believe because they can borrow from this platform conveniently.

I am receiving these emails requesting for funds, but wihout knowing more about this platform I am not ready to invest more. I do not see any problem with Lendenclub to be fair to them, but I do not know about the people who are borrowing. Think about it, the economy is not good and what if they lose job? How will they repay their loans? And if they fail to repay, I will lose money. 

You may find videos where lendenclub being promoted as a new portal for a new asset class. But, please think of crypto, some people sold their house and bought crypto, right before bitcoin crashed. The people who are promoting lendenclub, have vested interest, maybe because they work for the company, own the company, or in other words, maybe the company is paying them to promote the company. I am just trying to make you aware that, this is a high risk asset class, so be careful with the amount you invest. You should not invest any significant chunk of your portfolio in this asset class. First, get into the water and learn swimming. As your portfolio grows in size, you can increase investment size in lendenclub.

Update: After investing in 1.5 years and mostly this period was under the long shadow of Pandemic, I can tell you, when people are losing job and losing income, it is not a good idea to lend out money to people who do not have regular income. If you want to help people who need money, just give a hand out to the needy. Remember in this Lendenclub review, I am sharing my own experience and reasonings behind them. After the pandemic is gone and people get employment, most probably they will not come for these loans, and even if they do, they will be able to repay, so our returns will be better. So with time, my views might change again.

How Much Return should I Expect from Lendenclub Investments?

I think it really depends on how much risk you can take and if you are lucky. In my past experience, you can beat inflation by a 100% margin. So if the inflation is 2%, you can expect to make 4%. And people default or fall behind their payments. Not everyone, but people do. Review the profile of borrowers when you are investing in them. Check where they work, how long they have been working, Do they own their house or do they rent? Do they have other loans? If the answer to las two questions is yes then you have to understand that the person has to meet those obligations too.

And that makes him or her a risky bet. All I am trying to say is, you can check the lendenclubs credit score and cibil credit score but these credit scores factor in past behavior. You should use your own judgment to determine if the future would be secured or not.

Every loan shows what is the interest the borrower would be paying and based on the interested borrower is paying, Lendenclub will take it’s cut. After that, you will get your money. But again, remember that the return is not guaranteed. The borrower can miss their EMI and you won’t get paid.

Like I mentioned, I have just opened the account and made my first few investments, I am yet to see any return. I am expecting my first payment in February 2020. As and when I gather more data and information, I will know better about returns, so I will be able to share better information. So, you can expect more posts on this from me in the near future. Until then, take the very best care of yourself and your money.

Here Is My LendenClub Review After 1.5 Years on the Platform:

I decided to update the Lendenclub review post yesterday, as I checked the portfolio there. I have been pull out my cash from that account anyway for last few weeks. It is not much but in few hundreds. But why did I decide to take money out? First, I am seeing people losing incoming left , right and center. I cannot expect them to payback such high interest loans, especially when they were turned away by banks or they have exhausted their other credit lines. As a result I see, 3 of the loans are default and 9 are written off.

Secondly, I cannot keep cash with them, otherwise they will autoinvest in some loans. And that might be bad choices. These are my latest relizations. Currently I am making over 4% on my investment. Which is due to pandemic in my understanding. This is not a time to invest in peer to peer platforms. Here is my honest Lendenclub review.

Alternatively, you can read an article here, and find out why you should invest in dividend paying stocks.