In this Review..
Lending Club is a peer to peer marketplace offering personal loans with a minimum of just $1,000.
Where Lending Club stands apart from other lenders is that it allows co borrowers on personal loan applications. This can be helpful if you think you may need an additional applicant who has better finances to improve your chances of qualifying.
Lending Club loans can be used for almost any purpose including debt consolidation, balance transfers and major expenses. However, you cannot use a Lending Club loan for post secondary education, making investments or purchasing securities.
Loans are available from $1,000 to $40,000. However, your state of residence may impact the minimum loan amounts. The loan repayment terms are either 36 months or 60 months. The fixed rate APR for loans ranges from 10.68% to 35.89% and it includes an origination fee of up to 6%.
Lending Club also applies a late payment fee of $15 or 5% of your unpaid balance if your monthly payment is more than 15 days overdue.
LendingClub is the largest peer-to-peer marketplace that matches lenders with borrowers, instead of going through a lending institution such as a bank.
APR
6.16% – 35.89%
Loan Amount
$1,000 -$40,000
Term
36 to 60 months
Min score
600
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.
Lending Club Loan Pros & Cons
As we know, each lender has its own pros & cons – here are the relevant things we found for potential borrowers:
Pros
- 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.
- Joint Borrowers – LendingClub allows for joint borrowers on their personal loans. Many loan providers do not.
- 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
- 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.
- 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.
- 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.
Loan Details
Here are the basic specifications & requirements of Lending Club Personal Loan :
Loan Amount Range | $1,000 -$40,000 |
Interest Rate Range | 6.16% – 35.89% |
Term | 36 to 60 months |
Origination Fee | 1% to 6% |
Late Payment Fee | $15 or 5% of the amount due |
Returned Payment Fee | $15 |
Check processing Fee | $7 |
Prepayment Fee | None |
Minimum Credit Score | 600 |
Funding | Up to 7 days |
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.
- Pay for Something Planned
- Unexpected Payment
- Debt Consolidation
Application Process
- 1.
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.
- 2.
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.
- 3.
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.
- 4.
LendingClub will have a list of information for you to provide. They may request documentation to verify your identity, income, or employment.
- 5.
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 is the largest peer-to-peer marketplace that matches lenders with borrowers, instead of going through a lending institution such as a bank.
APR
6.16% – 35.89%
Loan Amount
$1,000 -$40,000
Term
36 to 60 months
Min score
600
Alternatives Lenders For Consideration
Here are our 3 choices of lenders which can use as a great alternative to LendingClub personal loan:
- LightStream Personal Loan
This company is an online lender that offers very high loan amounts yet at low interest rates. LightStream is part of the Truist Bank group, formerly the SunTrust Bank. You can use the loan for any purpose, including home improvements, debt consolidation, etc.
LightStream does not charge fees. So, there are no late payment fees, processing fees, or pre payment fees. They even offer $100 to customers if they are unsatisfied with their loan processing experience and are willing to beat competitor’s rates by 0.1%.
If you find a lender offering a better rate than LightStream, the company will offer you a 0.1% decrease to highlight that they are a better option.
Most of the loans have a term of two to seven years, but this may be extended to 12 years for solar financing, home improvement loans, or swimming pool loans.
- RocketLoans Personal Loan
Rocket was founded to offer a rocket fast loan processing system to provide personal loans to eligible borrowers. Rocket is part of the Quicken group, which includes Rocket Mortgage and Rabid Advance.
Qualifying for a Rocket loan is contingent on creditworthiness rather than business type. You can use your loan for any purpose, including starting a business.
However, Rocket only qualifies people with a credit score minimum of 640 and a good credit history. You also need to have a permanent source of income and a low debt to income ratio.
Where Rocket stands apart is that loans are processed very quickly. 85% of borrowers receive loans within a day.
- FreedomPlus Personal Loan
This company mostly caters to people with great credit. They offer fixed rate loans to consolidate debt with a two to five year repayment period. The lowest interest rates are typically reserved for borrowers with the best credit scores.
FreedomPlus is one of the few lenders willing to offer joint or co-signed loans to those with poor credit. Approximately 30% of FreedomPlus borrowers have taken advantage of this, as it helps borrowers to access lower interest rates.
For example, if you qualify for a loan at 15% interest, it may reduce to 10% if you use a co signer with good credit.
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.
