Lending Club, a company which offers a peer to peer lending marketplace, has now begun offering 5 year unsecured loans to borrowers in addition to the 3 year loans which are standard among the industry.
Lending Club Director of Product Development Rob Garcia wrote on the company’s blog on May 11th that “As of this morning, Lending Club now offers 5-year personal loans to our growing financial network of investors and borrowers, in addition to our existing 3-year personal loans.”
Garcia commented that the new 5 year notes benefit borrowers because they will be paying a lower monthly payment, which will “making budgeting and loan repayment easier.”
Typically longer term loans command a higher interest rate from borrowers, such as in the mortgage industry, 30-year loans command a higher interest rate than 15-year loans. This is also true for the new 5-year Lending Club loans.
In his blog post, Garcia noted the additional interest than investors can earn on by investing in 5-year notes, writing, “Investors can now earn more interest by choosing 5-year Notes and receive 0.74% extra yield on B graded Notes and 1.86% extra yield on C through G graded Notes*, as compared to 3-year Notes. Investors also benefit from a lower annual impact of the service charge on their return: 0.45% on a 5-year Note vs. 0.71% on a 3-year Note on average.”
