How To Truly Earn Passive Income From Lending Club

by Hank Coleman

How To Truly Earn Passive Income From Lending ClubI thoroughly like investing in Lending Club and peer-to-peer lending where I can earn a higher rate of return than many other investing options and definitely higher than a savings account or money market fund.

I have been investing with Lending Club for almost four years now, and it has truly been a great experience that I would highly recommend to others who are looking for a greater rate of return on their investments than others.

Lending Club is a great way to earn a passive income that will supplement and diversify your investments. It is easy to earn passive income from Lending Club.

Lending Club Makes A Great Diversified Investment

One of the greatest advantages of Lending Club and peer-to-peer lending is that it allows you to be incredibly diversified in your investments. You have the option of investing in risky loans as well as a host of safe loans earning a good rate of return from people who have good credit scores, have been employed by the current employer for decades, have a mortgage, and even people who have not been delinquent on loan payments in the past two years.

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Additionally, by only having to invest a minimum of $25 in a single loan, you share only a very minor portion of the risk. There are a group of investors who pool their money together in each loan. Some investors risk more money, but quite a few like me only invest $25 at a time in any one loan. This significantly reduces your risk of default by spreading your money around to many loans throughout the Peer to Peer lending investing portal.

How To Earn Passive Income From Lending Club

Earn passive income from Lending ClubAs I mentioned earlier, you only need $25 to invest in a new loan with Lending Club. And with that $25, you will continue to earn an income stream each and every month as that borrower continues to repay his or her loan to you and the other investors through Lending Club.

Even if you never reinvest a single payment that you receive from a borrower, you will continue to receive between $0.50 and about $2.00 per month per loan you invest in depending on the interest rate that is being charged to the borrowers which is based on a host of factors such as the reason for the loan, length of loan, and of course their credit score.

These payments are in the form of both principle and interest payments like any other loan that we are used to paying ourselves. This time the only difference is that you are the bank with Peer to Peer lending. So, in order to earn a passive income, you simply have to collect the payments, and then you can decide either to cash out, let your cash build in your Lending Club account, or reinvest those funds into new Lending Club loans which is what I do in order to continue building my portfolio, diversify risk, and earn a passive income stream.

An Example Of Earning A Passive Income From Lending Club

You only need $25 to invest in a new loan with Lending Club. So, in order to earn a passive income and continue reinvesting in new loans, you simply have to have enough loans generating monthly income that produce $25 per month. For example, an ultra safe A4 rated loan charging a 7.9% interest rate to the borrower returns $0.50 in principle and interest to me each month.

Remember that I only invested $25 and 181 other people invested in the $15,300 loan as well. So, if you had 50 loans exactly like this one, your peer-to-peer lending investment account would generate that $25 per month needed to reinvest in another Lending Club loan. Reinvesting your investment proceeds will continue to let your investments grow with compounding interest.

Compounding Interest And Passive Income Over Time With Lending Club

Of course the power of compounding interest continues to work its magic with peer-to-peer lending as well. With the same 50 loan example above earning enough passive income to generate one new peer-to-peer lending loan per month to invest in, you will end the year with 62 loans.

Those 62 loans would generate $31 per month in passive income by the end of the next year instead of the original $25 thanks to those 12 additional loans from the previous year. Those 62 loans could generate the capital to invest in 15 or more new Peer to Peer lending loans the next year increasing your total loans to over 77. Over the following year, you could see an increase of 19 more loans if you didn’t add a single new loan with your own money and simply reinvested loan proceeds.

Lending Club is a great way to earn a passive income that will supplement and diversify your investments. It is easy to earn passive income from Lending Club.

Open a Lending Club IRA and boost your retirement

About Hank Coleman

Hank Coleman is the founder of Money Q&A, an Iraq combat veteran, a Dr. Pepper addict, and a self-proclaimed investing junkie. He has written extensively for many nationally known financial websites and publications. Hank holds a Master’s Degree in Finance and a graduate certificate in personal financial planning. Email him directly at Hank[at]

Hank Coleman has written 593 articles on Money Q&A. Learn more about Money Q&A on Twitter @MoneyQandA and @HankColeman.

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{ 6 comments… read them below or add one }


Right, you only need $25 to invest with Lending Club.

And a net worth of something like $75,000. ?_?



Sorry, I actually had that wrong. Here is what it actually says.

I have an annual gross income of at least $70,000 and a net worth (exclusive of home, home furnishings and automobile) of at least $70,000; or a net worth of at least $250,000(determined with the same exclusions)



I am WAY excited about Lending Club, too, but unfortunately, I live in Texas, which is one of the few states where it’s illegal. Sigh.


The Strongest Karate

I use another p2p lending service, Prosper, and have seen great results with it as well.

Up to 30% returns all without raising a finger after the initial investment? What could beat that?!



Loved the info in this post! Thank you so much for all these great ideas. I’m already doing some of them, but you’ve really planted some seeds in my mind. I appreciate you!


Daniel Palmer

P2P lending is definitely a good way to diversify, but everybody’s rushing into p2p loans like there’s no downside. Do you really think an investment with the returns of p2p lending doesn’t come with risk?


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