As of the end of 2009, Lending Club is now originating over $6 million in new loans per month, almost three times what its primary competitor, Prosper.com, is putting out. Although it’s currently getting a lot of attention while Prosper.com is languishing with low amounts of capital, there are still some things that Lending Club could do to provide a better experience to its investors.

We don’t have too many Lending Club complaints, but the company could do a better job of explaining the rates of return that its investors are receiving. Lending Club currently boasts that its investors are averaging a 9.67% rate of return, which is technically accurate, but that rate of return is only so high because the average age of loan is only 14 months.

Why does this matter? We know that about 9-10% of loans will be delinquent or go into default over the 3 years that loans on Lending Club amortize and when most of the loans are relatively few, most of them had not had the time to go delinquent yet. Perhaps a better way to gage performance would be to look at loans that are close to being fully paid off, such as loans that had originated in June and July of 2007 when the company was first founded. Looking at these loans alone will give investors a better idea of how Lending Club loans perform over the life of each loan.

The other Lending Club complaints that we have largely revolve the investing process itself. Quite often, you’ll find yourself with some money in your account that you’ve received from a payment and haven’t had a chance to re-invest it yet. In essence, there will always be some percentage of your money that’s sitting and doesn’t earn any rate of interest. When you bid on a loan, that money is also locked up for a week or two before the loans is technically originated.

With Lending Club, you’re going to lose out on the time value of money in the process. Lending Club could mitigate some of these problems by paying lenders a fixed interest rate as a money market fund for the funds they do not have invested like PayPal offers with its balances.

The other improvement we would like to see is to provide a way to invest a fixed amount of money and then automatically fund new loans as investors collect the $25.00 minimum to partially fund a loan. Lending Club does offer a “click free” investment option where they will invest your funds for you, but it’s currently only available to investors with $10,000 or more.