Introduction to Lending Club
LendingClub is a popular peer-to-peer lender offering different online loans including personal loans, lines of credit and business loans, patient solutions and auto refinancing. The peer-to-peer nature of the company means that it connects borrowers to individual lenders and not banks. This makes LendingClub beneficial not just to the borrowers but also to potential investors who want to join the platform as lenders.
In this review, we will be looking at LendingClub from a borrower’s point of view. We will give you a highlight of the personal loans that you can get from this lender and how the loans and overall services of the company compared to other personal loan lenders in the market.
LendingClub is a good destination for people with good credit reports. That’s because you will need a minimum credit score of 600 to qualify for their personal loans. In addition to that, you’ll need a relatively long credit history to boost your eligibility.
On average, the approved borrowers at LendingClub have a credit score of 700 and a 17-years credit history. The debt-to-income ratio of LendingClub borrower’s averages at 18.29% and this is excluding mortgages. Meanwhile, the average annual income is $79,145.
From all the figures above, you can already tell that this lender focuses on individuals with both a good credit report and a well-established financial background.
If you qualify for LendingClub personal loans, you can apply for as little as $1,000 or as high as $40,000 which is higher than what most other personal loan lenders in the market offer. The loan terms range from 3 to 5 years depending on the exact amount borrowed. The APRs at LendingClub is also a bit friendlier. They range from 6.95% going all the way to 35.89%. An origination fee of between 1% to 6% will also be charged on loan.
Now, Lending Club can charge just 6.95% in APR, but the number of people who qualify for this interest rates is really low. That is because it’s only individuals with the best credit scores and the longest credit histories that are eligible for the lowest APR. The other lot will be subjected to higher interest rates. This means that if you are the least qualified for a LendingClub personal loan but you happen to get approved, you will probably end up paying a lot of money in interest rates. Additionally, individuals with the lowest credit scores will also have more origination fee taken off their loans.
When it comes to loan repayment, LendingClub gives the borrower various payment modes. We’d urge you to enroll for the automatic repayment plan that deducts the funds from your bank every due date. This is not just convenient, but it is also cheaper than paying via check which will attract a fee of $7 for every payment done.
Apart from the payment by check fees, LendingClub performs relatively well when evaluated the other types of the fee applicable. Unlike other lenders, LendingClub does not charge any prepayment fees. This means that you can prepay your loan and save hundreds of dollars that could have otherwise been charged as interest. Also, while LendingClub has a late payment fee, they do provide a 15-day grace period during when you can clear the balance before the fee is applied. This is a lot more than what other online personal loan lenders provide.
One major issue with LendingClub personal loans is their turnaround time. On average, it will take 6 days to receive funding for your loan. That’s a long period yet some of their competitors, such as Avant, can fund your loan in as little as one business day. It’s therefore, fair to say that you will need to look for other alternatives if you need the loan urgently.
LendingClub Personal Loans Eligibility
You must fulfill the following requirements to qualify for a personal loan from LendingClub:
- Be a United States citizen or a permanent resident or on a long-term visa
- Be at least 18 years old
- Have a valid bank account
- The debt-to-income ratio must be less than 40% for single applicants and 35% for joint applicants
- Have a credit score of at least 600
- You must also be living in an eligible state
How to apply for LendingClub Personal loans
One positive thing about LendingClub is that you can check your rates online without tampering with your credit score. As you may know, frequent credit checks are usually interpreted as a desperate need for credit and hence they negatively affect credit scores. The ability to check the loans one qualifies for, and the rates for the loans without affecting credit scores should never go unappreciated.
To check these rates, you have to create an account with LendingClub. You’ll be required to provide information such as your official names, year of birth, email address, physical address and annual income.
LendingClub will then analyze the data before they provide you with several loans offers that you qualify for. Under each loan offer, they will present you with information on the loan maturity, the amount to be paid monthly and APR. With this information, decision making becomes much easier, and you will also be in a position to compare the offers of LendingClub to other lenders in the market.
If after your analysis you decide to go with one of the offers from LendingClub, you’ll be required to provide further information like your phone number, social security number, employment status, and bank account details. LendingClub will then make a hard pull on your credit report (which may affect your credit score) for further verification. You should then receive the funds within a week.
Take note that the entire process takes place online. All the information required has to be filled on their website or through their mobile applications. Any documents required will also be uploaded online.
It’s important to know that LendingClub reports both positive and negative account experiences to the three credit reporting agencies. This is good news to everyone who pays their balances on time as it will reflect on your credit reports thus boosting your scores. On the flip side, if you make late payments or you miss the payments altogether, LendingClub will report to the credit reporting agencies, and it will definitely affect your credit score.
- The soft credit check allows you to check your rates without hurting your credit score
- They offer a relatively long grace period before the late payment fee is applied
- No prepayment fees
- You can qualify for a loan with a credit score of just 600
- You can stretch the repayment period to between 3—5 years
- Long turnaround time
- They charge various fees including $7 when you pay by check and $15 or 5% of the unpaid installment, whichever is greater. If you don’t have sufficient funds in your bank to cover the monthly installment, you will be charged an extra $15.
Alternatives to LendingClub
Unlike LendingClub, Prosper allows you to have a debt-to-income ratio of up to 50%. The APRs of the two lenders are also similar. Prosper will charge you an origination fee of between 2.4% – 5%. This lender offers loans starting from $2,000 to $40,000, and the repayment terms vary from 3-5 years. The downside with Prosper is you will need a credit score of at least 640 to qualify for their loans.
So-Fi is a good option for borrowers who need more than the $40,000 that LendingClub has to offer. With this lender, you can get between $5,000 to $100,000. Meanwhile, the APRs start at 5% to 15%, and the loan terms range from 3 to 7 years. There is also no origination fee charged here. On the flip side, you need a minimum credit score of 660 to qualify. It also takes 7 days to receive funding for your loan.
You can only borrow up to $30,000 from OneMain Financial. On the brighter side, they don’t have any minimum credit score requirements. Unfortunately, they charge pretty high interests rates ranging from 16.05% to 35.99%. OneMain Financial is only a good option if you have a poor credit score.
LendingClub is a good option if you have a very good credit score and you are willing to wait for up to a week to get the funds. If you have lower credit scores, you may still qualify for LendingClub loans, but you will be charged high interest rates and origination fees. It’s therefore wise to avoid loans from this lender and look for other alternatives such as Avant if you don’t have a very good credit score.
David is a financial expert who graduated from the University of Fordham (Master in Finance) in 2001. He has 10+ years of experience in private equity and wealth management. With strong expertise in senior-level financial planning, personal financial analysis, and mortgages, David knows his way around personal finance. Before working at CCR he used to be a financial analyst at McKinsey.
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