Lending Club Fees and Prosper.com Fees: Which Peer to Peer Lending Site Has the Lowest Fees for Investors?

Prosper.com and Lending Club are two companies which operate peer-to-peer lending marketplaces which allow their members to serve as lenders and provide loans to other members of the site. As with any investment, fees matter. Investors should be aware of what they will have to pay in fees to help determine which peer to peer lending website, if any, they should consider investing in.

Prosper:

Prosper charges investors a 1% annual loan servicing fee, which is accrued daily and based on the outstanding loan principal.

Prosper.com’s website gives the following example of what fees a lender would likely pay, saying “On a $5,000 loan at 10% interest, the servicing fee would be $80.70 over its full 3 year length. Because the servicing fee is based on the daily principal balance (which is an amortized value), it will change on a monthly basis, and the servicing fee for a loan will vary based on the interest rate and the length of the loan (if the borrower happens to pay it back in less than 3 years).”

In the event that one of your loans becomes 30 days late or more, Prosper will hire a professional collections agency to collect on the loan, which will result in fees for the investor. Prosper.com has a full list of fees that each of their partner companies charges.

Lending Club:

Lending Club charges investors a 1% service fee.

Lending Club’s website says, “Lending Club charges a service charge to investors for servicing loans, making Note payments and maintaining the accounts. The service charge paid by investors is one percent (1%) of all amounts paid by the borrowers to Lending Club. The 1% service charge impacts the investors’ annual returns by less than 1% because it is not an annual charge.”

Lending Club also charges investors fees if their borrower’s loan goes delinquent, which will range between 30% and 35% depending on how late the borrower is.

Conclusion:

Lending Club investors have the benefit that their service fee is only charged once and is not an annual fee. Prosper.com gives the example above on a $5,000 loan at 10% in which the investor would be charged $80.70 over the period of the loan. On Lending Club’s website, that fee would be a flat 1% on the principal plus interest of the loan as the borrower pays it back, which would total $58.08 throughout the course of the loan.