I had an interesting conversation with some blogging buddies recently. We were discussing debt, and I declared, as I often do, that debt is bad.

One astute friend remarked, “Then what about that ad at the top of your sidebar?”

Ah, yes, the Lending Club ad. How do I feel about Lending Club? Well, I wouldn’t be allowing them to run an ad on my site, if I didn’t think there was no positive value.

A Way for People to Help People

This video was recently brought to my attention. It tells the story of a man who returned from a tour of duty with the army, to find he owed 4 years of payments to his pension…about $16,000. He couldn’t qualify for a regular loan from a bank, so he turned to the Lending Club.

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Through the Lending Club, he got a loan to pay the money he owed toward his pension. When he pays it off, he plans on lending to others who need help.

So is This Good or Bad?

You all know that I hate debt, especially debt for things that don’t have lasting value. That said, I think peer to peer lending organizations, such as the Lending Club, have their place.

Especially with banks on such shaky ground right now, obtaining a loan through Lending Club is a good option, if you are responsible in taking out loans. Even though I hate debt, I realize that there may be times when loans are necessary. Starting a business comes to mind. Or maybe if your credit card interest rate got hiked up, and you need a lower interest rate, but can’t find a good low balance card. Finding 0% transer cards is becoming harder and harder.

Using a loan for debt consolidation might be a good thing, too….if and only if you’ve already changed your spending habits. After my experience with Citibank, I’d definitely prefer peer to peer lending over credit cards! Working with people is generally easier than working with outsourced customer service reps.

Lending with Lending Club Intrigues Me

Though I won’t be going into debt with Lending Club, the lending side of peer to peer lending interests me. As a lender, you can set your own criteria for borrowers, such as a minimum credit score, to minimize the risk involved.

I remember my mom telling me once that my grandfather invested money in real estate. And sometimes he would provide owner financing for young people, so they could get into a house.

I like the idea of investing to help people. Perhaps it’s in my blood. And someday, when my debt is paid off, and I have all of my other financial ducks in a row, I may just check out this thing called peer to peer lending and see if I can’t help someone else out.

What do you think? Is peer to peer lending a good thing, if used responsibly?

Photo by quaziefoto.