This digital age has brought to the market many new and unique ways for investors to make a return on their money. Let's face it, the stock market can be brutal at times, or can be your absolute best friend.

But what if there was a type of investment that gave you consistent returns? Ever wonder how banks make their money? That's right, through lending money to its clients, aka you and me!

The digital age has allowed consumers like us to play the bank, and lend out our own money to help fund the requested loans from others in need of capital.

That's where “Peer to Peer Lending” has come into play. If you have read up on peer to peer lending, you probably have come to the conclusion that there are really two companies to choose between when starting to invest. Those companies are A) and B)

In this article I am going to compare Prosper vs. Lending Club.

There are definitely pro's and con's to both, and it is absolutely worth knowing when deciding where to start.

I will also briefly cover the basics of what peer to peer lending is and how you can make money in it, followed by reviewing the two companies, and I will cover the pro's and the con's in each, and give some info on who each company is best suited for.

What is peer to peer lending?

As briefly stated above, peer to peer lending is when two consumers come to an agreement on a loan. Person A needs a loan, and Person B is willing to lend money. Person B will charge an interest

What is peer to peer lending?
rate for the cost of lending his money to Person A, just as a bank would.

But to make things a bit easier and far less risky than just that, many companies have formed to be the middle man between the borrower and the lender. That is where and come into play.

Both companies serve as the underwriters to help determine the risk of each borrower, so that the lender can know how credit worthy the person is when lending out their money. Make sense? If not, here is a quick example:

  • James needs a $15,000 loan to pay for the costs of updating their outdated kitchen. John is an investor looking for ways to diversify his investments and make a return on his money. James has decided to submit an application to a peer-to-peer lending platform ( or to see if he can get a loan for his kitchen renovation. The peer-to-peer lending platform has reviewed his credit worthiness, and posted his loan to their website for their investors to see. John is an investor on the platform and decides to contribute $1,000 to the loan, along with multiple other consumers helping contribute to the total amount James is requesting. Once the loan amount is reached, James signs the note and agrees to the terms, and is issued the money to renovate his kitchen. The $15,000 is paid back within a 3-year period, and both James and John (along with the other contributing investors) benefit and live happily ever after!

The overall average long term return of the whole stock market is around 10% give or take (keep in mind that is over a 30+ year average, with some years much higher/lower). With peer-to-peer lending you can make returns of over 20% on your money! Do I have your interest? If so, keep reading. Lets discuss the pro's and con's of the two leading peer-to-peer investment platforms. has been around almost as long as the concept of peer-to-peer investing, and thus has established itself as one of the trusted and strong platforms. They were established in 2007 and have some amazing statistics worth noting (according to

  • 99% of investors with investments in multiple loans have seen a positive return on their money
  • Investors can see a 2-5% cash flow on their money through the monthly incoming loan payments
  • Currently have over 150,000 investors
  • Over 1.5 million borrowers
  • Over $31 billion invested

The Pro's of

  • Market experience and long track record
  • Large pool of borrowers, thus more loans to choose from when deciding investment options
  • Option to set up automatic investments based on a predetermined strategy
  • Added help and tools for determining investment strategy
  • Access to a mobile app for quick and easy monitoring and accessability
  • High % of positive historic returns for their investors
  • Low fees for investors ( keeps between 1%-3% of interest rate on loan based on repayment terms)
  • Options to open retirement accounts such as an IRA (Individual Retirement Account)

The Con's of

  • Lower historic returns when compared to for its investors (6% on average according to
  • High minimum balance requirement to start investing. requires a total minimum balance of $1,000 to open an account, with options to invest as little as $25 per note.

Who is best suited for? appeals very well to the investor looking for options to diversify their stock portfolio. They have a deep and strong understanding of underwriting each investing risk, and as a result their returns are on average conservative and overall positive.

If you are within 15 years of retirement, is a great option to ensure you have all the tools you need to ensure you invest only in the notes that meet your retirement goals.

If you have at least $1,000 to begin and want to work with the most experienced and accessible peer-to-peer lending platform, is your best bet! has been around since the beginning. As established as America's marketplace lending platform, they have definitely brought a very competitive product to market for the peer-to-

Invest with Prosper
peer lending investors (and borrowers). has been in the peer-to-peer lending industry since 2006 and has helped investors contribute over $10 billion dollars in loans. Here are some other statistics to consider:

  • $25 minimum investment per loan, and to open an account
  • 83.5% of active investors on state they met or exceeded their expected return on their money
  • 710 is the average FICO score of borrowers seeking loans
  • $89,142 is the average household income of its borrowers seeking loans

The Pro's of

  • Low minimum of just $25 to open account
  • Minimum of $25 to invest per note allows more consumers to enter the peer-to-peer lending market as an investor
  • Ability to automate your investments based on desired risk tolerance
  • 710 average FICO score of borrowers gives investors peace of mind knowing their money is being lent to credit worthy borrowers
  • Borrowers have higher than national average household income
  • Higher average investment returns when compared to (7% on average return according to

The Con's of

  • No app for mobile access
  • Investor online account could be better. Not as detailed information on your invested money.
  • I have had times when there were no loans to select when looking for investments, suggesting their pool of borrowers is smaller

Who is best suited for?

If you are just getting into the peer-to-peer lending market as an investor and don't want to risk a lot of money to start, is your best bet with the ability to open an account with just $25 and invest in as many notes as desired with just $25 each. seems to have a bit higher return on average for their investor, suggesting that they A) have lower fees or B) the loans presented are riskier (higher risk suggests higher loan interest rate, resulting in potentially higher investment returns). If you have a long way till retirement (15+ years), I'd say is an excellent choice.

The time to act is NOW!

When all is said and done, you can't go wrong with either or Both are fantastic companies with long track records of success, and reputable names.

Personally, I started out with long ago as I wanted to test the waters of the peer-to-peer lending market. I started with a few hundred bucks to learn the ropes, and now I've invested a large amount of money with the investments put on automation.

My personal average return with is just above 14% (not bad ehh?). Now that I understand the market, and feel more comfortable investing more money in this industry, I also have an account with

Despite who you decide to begin with, the time to start is NOW! Years down the road you will wish you had started setting aside money to build a great stream of passive income! With my lending portfolio, I now get a decent size amount of money deposited into my account almost daily with all the different loans I have invested in, creating passive income for me and my family!

==> Click here to open an account with

==> Click here to open an account with

Have you invested in peer-to-peer lending? What do you like/dislike about your chosen platform?  Post your comments below!

Want to see my top pick for creating passive income? See a more detailed explanation in this article..