How would you like to lend money to someone other than some bank paying a measley 1-2%?
You can now get returns of 7-25% by loaning money to individuals versus banks.
P2P(Person to Person) websites like Prosper and Lending Club both allow individual investors to pick their loans.
If you have ever seen these sites they have hundreds of loan listings that pay various rates depending on the borrowers credit score.
Obviously the lower rated borrowers will pay a higher interest rate on their loans.
A word of warning since I have some experience as an investor of these sites, stay away from any type of medical loans unless you don’t mind losing your investment.
Time and time again I have heard of countless investors complaining that their medical loans to individuals did not get paid back.
I don’t know if these loans go bad is the fact that the borrower is dealing with bigger issues than financial problems or if they actually intend to pay it but can’t.
In any case, don’t loan to medical borrowers. Except for these specific type of loans many investors get all their investments back and at great rates.
This is not a traditional way to make loans but I like the fact that you can actually help real people in a big way.
The minimum loan amounts are $25 for Lending Club and $50 for Prosper so you are not taking a whole lot of risk if you make investments.