Lending Club Review

LendingClub Overview and Company ReviewLendingClub has become one of the more reputable destinations for online personal loans, usually an ideal method to borrow for a special need or consolidate credit card debt. It helped to originate peer-to-peer marketplace lending, which matches borrowers with investors who are willing to fund the loans. LendingClub is best suited to serve borrowers with responsible payment records and established financial histories.

The typical LendingClub client has a good credit score and a lengthy credit history (an average of 17 years). The average annual income for a LendingClub borrower is $79,145 and the average debt-to-income ratio is 18.29% (excluding mortgages).

Obviously, LendingClub loans have caught on because it’s the largest online lender for personal loans in the United States, with more than $35.9-billion in loans since the company was founded in 2007. LendingClub accounted for $8.987 billion in loans in 2017.

The purpose of these loans has been refinancing a home (43.36%); paying off credit cards (17.89%) and other (38.85%).

The top states for receiving LendingClub loans in the first quarter of 2018 are California ($331 million); Texas ($199 million); New York ($184 million) and Florida ($175 million).

How Does Lending Club Work?

LendingClub screens potential borrowers and services the loans once they’re approved. The risk: Investors – not LendingClub – make the final decision whether or not to lend the money.

That decision is based on the LendingClub grade, utilizing credit and income data, assigned to every approved borrower. That data, known only to the investors, also helps determine the range of interest rates offered to the borrower.

LendingClub’s typical annual percentage rate (APR) is between 5.99% and 35.89%. There is also an origination fee of 1% to 6% taken off the top of the loan.

Once approved, your loan amount will arrive at your bank account in about one week. There’s a monthly repayment schedule that stretches over three to five years (36-60 monthly payments).

LendingClub loans are generally pursued by borrowers with good-to-excellent credit (scores average 700) and a low debt-to-income ratio (the average is 12%). Borrowers can file a joint application, which could lead to a larger loan line because of multiple incomes.

LendingClub probably isn’t the best option for borrowers with bad credit. That would bring a high interest rate and steep origination fee, meaning you could probably do better with a different type of loan.

Lending Club Review

LendingClub requirements generally get high marks, but they might not be for everyone.

Here are some pros and cons that might help clarify the advantages and disadvantages:

Pros

Long Loan Terms: You can stretch the loan to repayment terms of three years and five years.

Soft Pull: No hard credit inquiry is needed to check rates, which comes in handy when comparing loan products. It will allow you to conveniently shop around without hurting your credit score.

Low Credit Score: The LendingClub credit score has a minimum acceptance of 600. Of course, the interest rate might not be ideal with that score, but it might be a good deal for borrowers with so-so credit who usually have to settle for subprime offers.

Cons

Longer Wait: In the online world, faster is better, especially if you need quick money for an emergency. LendingClub money usually requires about a seven-day period to become available. There are other places that could turn the money around in a day.

Origination Fee: After determining your credit risk, LendingClub will provide an interest rate, but part of that is an origination fee, which will cut into your loan. It’s worth comparing and contrasting options of companies that don’t have an origination fee.

Other Fees: There are an assortment of other fees. You are charged $7 if you pay by check, but no fee if you set up a debit through your bank account. It’s $15 if there isn’t enough money in your bank account to cover the monthly installment. Late payment fee is 5% or the unpaid installment amount or $15, whichever is greater.

What are LendingClub’s Requirements for Borrowers?

LendingClub loan amounts generally range from $1,000 to $40,000. A minimum credit score of 600 is required, along with a minimum credit history of three years. The debt-to-income ratio must be less than 40% for single applications and 35% for joint applicants.

You can apply for a loan on the organization’s web site —www.LendingClub.com.

The application process will ask for:
  • Loan amount
  • Reason for borrowing
  • Your personal information (address, telephone number, e-mail)
  • Personal information of co-applicants
  • Verifiable individual/joint income

LendingClub will conduct a “soft’’ credit check, which won’t affect your credit rating. Upon approval, you can view an online calculator with individual options, including the fixed monthly payment for a 36-month loan and a 60-month loan with the interest rates for each option.

Alternatives to LendingClub

If you are turned down by LendingClub (or only qualify for a high-interest loan), you have options. First, make sure all the information presented to LendingClub was correct. LendingClub might have uncovered a negative mark on your credit report that needs investigation.

Debt Management Plan/Credit Counseling —

This is an excellent option for anyone who is denied a LendingClub loan. Working with a nonprofit credit counseling agency can help you lower your debt payments, regardless of your credit score. The counselors at a DMP (not a loan) will work with creditors on your behalf to reduce your monthly payment. It’s good for unsecured debts (such as credit cards, medical bills and student loans).

Prosper – Perhaps a better peer-to-peer option if you carry substantial debt and have a high income. Prosper accepts credit scores of 640 and above, while accepting debt-to-income ratios up to 50%. The APRs are similar: 6.95% to 35.99%, which includes an origination fee of 2.4% to 5%. Loan amounts are $2,000 to $40,000 and the repayment plans range from three to five years. Money could be available in three business days. Overall, Lending Club vs. Prosper is an interesting comparison.

SoFi – Good choice for new credit borrowers. The APRs are generally manageable (5% to 15%, no origination fee), but there’s a higher threshold for credit scores (660 minimum). Loan amounts are $5,000 to $100,000 and the repayment plans range from three to seven years. Typically, the money is available within seven days.

Discover – It’s another alternative that doesn’t charge an origination fee. The APRs range from 6.99% to 24.99%. Loan amounts are $2,500 to $35,000 and the repayment plans range from three to seven years. Money can be available as soon as the next day in some cases.

What If I Can’t Make My LendingClub Payment?

For borrowers who have trouble making payments, LendingClub offers a hardship plan. Borrowers can make interest-only payments for three months, helping them get in better financial position.

Bill Fay

Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it seven years ago, helping birth Debt.org into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering college and professional sports, which are the fantasy worlds of finance. His work has been published by the Associated Press, New York Times, Washington Post, Chicago Tribune, Sports Illustrated and Sporting News, among others. His interest in sports has waned some, but his interest in never reaching for his wallet is as passionate as ever. Bill can be reached at bfay@debt.org.

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