[Update Feb 6, 2012: this promotion is now over. Lending Club will, of course, honor loans still on the platform that have a “No Fee” status but you will not see any new “No Fee” loans for the time being. No word on when or if it will be back.]
So if you invest in a loan of $20,000 of more Lending Club will waive their investor service fees until the loan is paid off. This should increase investor’s expected annualized return by between 0.42% and 0.75%. It will also remove the Lending Club prepayment penalty to investors that some have discussed on this blog.
The chart above shows the Net Annualized Return increases with the size of the loan. This is completely true – I confirmed this with Lendstats. But I think the main reason for this is that Lending Club adjusts their interest rates up for the higher dollar loans. So most, but certainly not all, high dollar loans carry higher interest rates.
No Service Fees is a Good Deal for P2P Investors
Still I think this is a good deal for investors. Most of the loans I invest in are for $20,000 or more so I will be certainly taking advantage of this new offer. Lending Club have made it easy for you – there is now a “No Fee” graphic next to all loans of at least $20,000.
When I visited Lending Club a couple of months ago they talked about possibly making a move like this. They must feel that these loans are less popular with investors than they should be. It will be interesting to see how long this promotion lasts and if it will make much of a difference.
What do you think? Will you be adjusting your investment strategy because of this move? Please provide your comments below.