Lending Club Personal Loan Review 2019
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Lending Club – About The Lender
LendingClub is the largest peer-to-peer marketplace in the world. Established in 2006 out of San Francisco, CA, it has lent over $42 billion in personal loans.
Peer-to-peer lending is a platform that matches lenders with borrowers, instead of going through a lending institution such as a bank. This means you can have common investors or investment groups funding your loan.
The LendingClub platform started out facilitating only personal loans but has expanded into loans for business, auto and medical. The information below is for the personal loan product.
Loan Specifications
- Loan amount range$1,000 -$40,000
- Interest rate rage6.16% – 35.89%
- Terms36 to 60 months
- Origination fee1% to 6%
- Late payment fee$15 or 5% of the amount due
- Returned payment fee$15
- Check processing fee$7
- Prepayment feeNone
- Minimum credit score600
- FundingUp to 7 days
Pros
Joint Borrowers – LendingClub allows for joint borrowers on their personal loans. Many loan providers do not.
Soft Pull Inquiry – LendingClub allows for an initial soft pull inquiry so the borrower can get an idea of the options for which they may qualify.
Diversity – LendingClub began by allowing only borrowers with strong credit history and cash flow. They have now allowed more diverse borrowers on their platform, but those with good credit histories can get good rates.
Competitive Interest Rates – Interest rates are competitive and rates are not as high as those of many other lenders for personal loans.
Peer-to-Peer – LendingClub matches up borrowers with investors. Many borrowers like the idea of knowing that their payments and interest goes to lenders who are everyday people.
More than One Loan – The borrower can get two loans at a time from LendingClub.
Business Use – LendingClub allows for borrowers to use their personal loans for business purposes. Other lenders do not allow for personal loans to be used for business. They also have a business lending arm, but you should check out the requirements before you apply because a personal loan may be the best way to get your business off the ground.
No Prepayment Penalty – The borrower can pay off the loan early without any fees
Cons
Potentially Long Turn-Around Times –It can take many days to fund your loan and then a few days after to send your money. If you need money more quickly, there are other providers that can turn around your application much faster.
Origination Fee –Lendingclub deducts a one-time origination fee of 1 to 6.00% of your loan amount directly from your loan funds. This should be considered in the pricing of your loan when you apply.
Not Available in All States –LendingClub does not operate in West Virgina or Iowa.
Potential to Go Unfunded –There is a possibility that your approved loan might end up not being funded. If investors do not want to invest in your loan, you will not be able to move forward.
Processing Fee –If you pay LendingClub using a check they will charge a $7 processing fee.
CEO and Founder Stepped Down –Renaud Laplanche had to step down for violating LendingClub business practices. This was on the investing side, but as a borrower you want to ensure you are getting your loan from a quality institution.
What Can a LendingClub Personal Loan Be Used For?
LendingClub offers personal loans for many different reasons and groups them into 3 categories: to pay off high-interest debt, to pay for something unexpected, and to pay for something planned.
Debt Consolidation
LendingClub debt consolidation is paying off one or more prior unsecured loans with the new loan. Instead of multiple payments to multiple lenders you can create one payment to one lender. The advantage of a debt consolidation loan with LendingClub is that the payment and term are fixed so you know exactly when you’ll be out of debt. The idea is that you can take a high revolving interest credit card and save money by replacing it with a low rate fixed installment. LendingClub also has a debt consolidation calculator, so you can get an idea on how much you can save.
Unexpected Payment
LendingClub loans can be used for unexpected costs like medical bills, or the death of loved one. Many times in life unexpected expenses come up and if you do not have emergency savings, a LendingClub loan can help you pay.
Pay for Something Planned
LendingClub loans can be used for a wide range of costs that you expect in the future. For example, loans can be used for home improvement. They can be used for expected medical costs, wedding expenses, vacations, moving, business expenses, and can even be used to help buy a home. The great thing about using a personal loan instead of credit cards for these types of expenses is that the terms will not change over the course of the loan.
LendingClub Application Process
LendingClub is a peer-to-peer marketplace, so you not only apply but also create a profile for potential investors to evaluate you as a risk and accordingly lend you money for a portion of the loan. You start the process by checking your rate through a soft pull.
You will fill out some basic information and they will give you a couple of rates and loan options. You will choose the option you would like to apply for. Then you fill out the rest of the application. At this point, LendingClub will do a hard pull and check your credit. Then you will need to provide verification information. LendingClub will have a list of information for you to provide. They may request documentation to verify your identity, income, or employment.
Your listing will then be posted on LendingClub’s marketplace where investors can look at your profile and decide whether to invest in your loan. Many listings are funded in the first few days. You will sign documents electronically for the loan and then the funds will be sent to your bank.
LendingClub Personal Loan is Best for..
LendingClub has a high standard for their personal loans. Those they approve are borrowers who have well-established and good credit history with very strong cash flows. LendingClub is best for those with good credit and those who do not mind waiting a few days to receive the funds.
There are faster options available. but LendingClub has competitive rates for those with excellent credit. It is worth the wait to get a good interest rate. Watch out for the origination fee – it can be high and greatly increase the cost of your loan.