I’m liking Lending Club thus far. If you’ve been reading my blog for a while, you already know that I was pretty happy over at Prosper lending out money at good rates to borrowers, but then Propser went into a quiet period and I was left with no where to lend my money… or so I thought. Then I found Lending Club. I have $250 out right now at an average rate of 11% – which is way better than what the stock market is doing.

One thing I haven’t focused on much is how great these P2P lending sites are for people who need to borrow cash. Apparently it’s near impossible to get a loan these days, even if you have good credit. And even if you do get a loan, the rates suck. If I needed cash, I’d definitely look into borrowing through Lending Club. Actually, as a borrower I don’t see a reason not to borrow through lending club if you have a decent credit rating. The risk in Lending Club comes from the lender, not the borrower. Just pay back the money on time and it’s a good deal all around.

The latest deal I read about for those with good credit? Personal Loans at rates as low as 7.88%. Borrow up to $25,000.

Have any of you used Lending Club as a borrower? What have your experiences been?

As the stock market continues to take a nose dive to the depths of despair, making a short term profit in the markets (unless you’re brilliant at shorting) seems near impossible. Meanwhile, getting a loan is getting increasingly difficult now that banks have finally figured out that high-risk lending doesn’t work out so well for anyone in the end (unless the government bails you out with $700 billion, but anyway).

So I’m not surprised that P2P lending is getting a lot of press these days. Just last night, I was listening to CNN and they were touting Propser as an option for a place to invest.

Now, Prosper is a dangerous place to invest too, but it seems a little less risky than the markets for short-term investing, if you’re smart about it. Here’s why…

On Prosper, you can invest just $50 per loan, and that goes into a giant pot of loans from lots of different people. So even if one person fucks you over and you lose $50, you’re still getting a good rate on the other loans. If you’re lucky, and smart, you can come out making a profit in the end.

Right now, I have 10 active loans. 9 are current and one fucked me over. Fair enough. I wasn’t smart about that loan. I learned not to bid on anything that looks like “Help Me Study Abroad ** Relist #2**” — that’s the one that got me into trouble.

I’m not that pained about it, that was a learning experience. I’ve also been fortunate enough to make $50 from Prosper through its referral program (you get $25 a person if someone signs up through you and lends money on the site), which at least helped me break even despite my stupidity.

Don’t get me wrong, I’m nervous about my other 9 investments. With the economy tanking and unemployment rates rising, it won’t be long before someone else may not be able to pay me back. But maybe that won’t be the case. 8 of my 9 remaining loans are to people with good credit ratings (B or higher) who wanted a lower rate on repaying credit cards. If they can pay me at a rate of 18% versus paying their credit card companies 27%+, then it’s a win-win for both of us. As long as they pay. And so far, all of them have paid up.

I think I’ve made about $23 on my loans so far, after canceling out the $50 loss and the $50 I made for referrals. Which, on a $450 investment, isn’t so bad. Especially considering everything I’ve invested in the stock market is losing hundreds of dollars. So Prosper may not be a safe bet, but these days it seems like the better bet. Just be smart about it and you can come out ahead.