LendingClub

LendingClub is an online financial service that connects borrowers with loans that fit their needs. It works best for borrowers with good to excellent credit who are looking for personal loans or debt consolidation.

LendingClub began offering loans in 2007 as a peer-to-peer online lender and has lent more than $85 billion in the years since. It’s also expanded its banking services to checking and savings accounts, and has 4.7 million members, making it one of the nation’s biggest online banks.

Despite the changes, the focus is still on digital products. The personal loan application takes about 10 minutes if the applicant has all the required information handy. It’s done totally online, which many LendingClub reviews cite as a plus.

LendingClub Review

Loan amounts range from $1,000 to $40,000 for terms of 36 or 60 months, and applicants can have a credit score as low as 600. However, the amount of the 3%-6% origination fee and interest rate, which ranges from 9.57%-36%, are based on credit score and debt-to-income ratio.

One plus for borrowers with bad credit is that co-borrowers are allowed.

Anyone who is looking to borrow money should do their homework to determine whether LendingClub, or some other option, is the best fit for their financial situation.

Let’s take a closer look at LendingClub pros and cons.

Pros of LendingClub

The benefits to borrowing from LendingClub:

• Debt consolidation loans offer an option for direct payment to creditors
• Available to borrowers with credit score as low as 600
• High review rating from users
• Approval as quickly as 24 hours
• No pre-payment fee
• Joint loan (co-borrower) option
• Pre-qualification option
• Payment date change option
• Online application
• Fixed interest rate
• Loan terms of 36 or 60 months
• No hard credit pull to check credit report

Cons of Lending Club

• Charge a high annual percentage rate (APR)
• No discount for automatic payments
• 3%-6% origination fee
• Personal loan terms of only 36 or 60 months
• Only available online
• Must have a bank account
• Social Security number required
• Late payment fee of 5%, with $15 minimum
• Allows co-borrowers, but not co-signers
• The mobile app doesn’t allow loan management
• Long wait for approval for some applicants
• Only available in U.S. states and Washington, D.C., not U.S. territories

What Is LendingClub?

LendingClub has become one of the more reputable destinations for online personal loans, a good option to borrow for a special need like credit card debt consolidation. The company was an originator in peer-to-peer marketplace lending, which matches borrowers with investors who fund loans, though it’s no longer peer-to-peer after expanding its banking options.

Because its origination fee and APR are based on credit score, LendingClub is best suited for borrowers with responsible payment records and established financial histories.

The average LendingClub loan amount is $15,800, with a 15.95% APR and a 5% origin fee. The average personal loan borrower makes $112,000 a year with a credit score of 711. LendingClub says that while its average customer may be a high earner, they also have high debt. The most common reason for a personal loan is credit card payoff and debt consolidation.

The company stresses that its loans aren’t only for high earners. Because it doesn’t rely on bricks-and-mortar branches, it is more available to people who have traditionally not had a range of banking options and strives to be attractive to all borrowers. It doesn’t have an income requirement, but uses debt-to-income ratio (how much money you owe versus how much you make) and credit history to determine if a borrower qualifies for a loan.

How Does Lending Club Work?

A borrower applies for a loan on LendingClub’s website, providing credit, employment and income information. Those factors are screened for approval, and LendingClub makes an offer that includes an APR, origin fee, and loan term. The better your credit, the lower the APR and origination fee. LendingClub will conduct a “soft’’ credit check, which won’t affect your credit rating. If approved, the offer will include options for the fixed monthly payment for a 36 and 60-month loan, with the interest rates for each.

Approval can take from 24 hours to two weeks, depending on whether the application is complete and how long it takes to verify the information. If approved, the loan, minus the origination fee, is directly deposited into the borrower’s account. The amount the borrower makes payments on includes the full amount before the origination fee was subtracted.

If the loan is for debt consolidation, the money may go directly to the borrower’s creditors.

Monthly payments automatically come out of the borrower’s bank account, or they can opt for payment by check or wire transfer.

Loan Details

LendingClub loans are:

• Between $1,000 and $40,000
• For either 36 or 60 months
• Are paid through automatic bank withdrawal, check or wire transfer

Loan Costs

• Interest rates of 9.57%-36% APR
• 3%-6% origination fee
• 5% ($15 minimum) late payment fee
• No prepayment penalty

Loan Perks

• Payment due date change allowed temporarily or permanently for customers in good standing
• Customers can track application status, loan details and autopay information online
• Customers in good standing can take out more than one personal loan
• Other types of loans, including auto, medical financing, and bank transfer are available to customers

What Are LendingClub’s Requirements for Borrowers?

LendingClub loan applicants must be at least 18 years old, have a Social Security number and verifiable bank account. The applicant must live in a U.S. state or Washington, D.C.

There are also financial requirements. The company doesn’t specify a minimum credit score, but many online sources state a 600 score may qualify for a loan. LendingClub also requires a minimum credit history of 37 months and a debt-to-income ratio of 40% for single applications and 35% for joint applicants.

Credit Score

Applicants must have a credit score of at least 600 to qualify for a LendingClub loan. The higher an applicant’s credit score, the lower the APR and origination fee will be. The average LendingClub personal loan borrower has a credit score of 711 and pays an APR of 15.95%.

Income

LendingClub doesn’t have a minimum income requirement, but also won’t approve an applicant unless it’s clear they can pay back the loan. That’s where debt-to-income ratio comes in. An applicant’s combined debts can’t add up to more than 40% of their gross income. When applying, an applicant will be required to supply proof of employment and income, which will be verified before the loan is approved.

Application

The online application will ask for:

• Loan amount
• Reason for borrowing
• Personal information (address, telephone number, email)
• Personal information of co-applicants
• Verifiable individual/joint income (specific forms will be requested)

Co-Borrower Option

If an applicant doesn’t qualify on their own, they can apply with a co-borrower who has better financial standing. A co-borrower has an equal obligation to pay the loan. This is different from a co-signer, who is backup if a borrower can’t pay, but otherwise isn’t responsible for the loan.

Is LendingClub Legit?

LendingClub is a legitimate online financial services company, certified by the Better Business Bureau, which gives it an “A” rating. It has more than 4.7 million customers and has been in business since 2007.

LendingClub reviews are generally good, with high ratings on the BBB website, Trustpilot, and other online sources. LendingClub’s poor reviews cite long waits for approval or money and difficulty connecting with customer service.

One issue that has dogged LendingClub is that its name has been used for online scams, particularly advance-fee scams. The company does not ask for fees upfront (the origination fee is paid when the loan is deposited in your account). The advance-fee loan scam is one of the most common reported to the Federal Trade Commission. LendingClub has a webpage that outlines what to look for to make sure the company you’re dealing with is legitimate and not a scammer.

Another issue that’s apparently resolved is that after a four-year FTC investigation, LendlingClub in 2022 had to return more than $10 million to customers who made hidden fee complaints. The company now puts all fee information on its website.

What If I Can’t Make My LendingClub Payments?

LendingClub borrowers have a 15-day grace period to make a payment before the 5% late fee is charged. If borrowers have trouble making payments consistently, LendingClub has a customer service email and phone number they can call to talk about options, which are specific to the borrower’s situation. If enough payments are missed, the borrower will default on their loan, which will be sent to a collections agency and have a negative impact on their credit.

Alternatives to LendingClub

If you are turned down by LendingClub, or don’t feel the terms offered a good financial solution for you, there are other options to get a loan with bad credit. First, make sure all the information presented to LendingClub was correct, including checking your credit report. An erroneous mark on your credit report can be corrected and will improve your score.

Other online loan options are:

Upstart — Borrowers with credit scores as low as 580 can apply for an Upstart personal loan. Like LendingClub, the loan term is either 36 or 60 months, and borrowers can get as much as $50,000. There are origination fees on some loans. Money is usually available within days.

Credible — Another option for borrowers with low credit scores. Credible, Upstart’s parent company, has a minimum credit score of 600 and lends as much as $100,000 for 12-84 months. APRs range from 5.40%-35.99%. Credible works with multiple lenders, so applicants may get several offers to choose from, some of which may have origination or other fees.

Prosper — Prosper is the original peer-to-peer lending company and is similar in many ways to LendingClub. Like LendingClub it doesn’t specify a required credit score, but its website says scores under 600 likely won’t qualify. It allows up to a 50% debt-to-income ratio, offers loans from $2,000-$50,000, and repayment plans from 2-5 years. APRs range from 6.99%-35.99%, with origination fees of 2.41%-5%. Its online application is similar to LendingClub’s, and approval and the loan deposit may be available as soon as 24 hours.

SoFi — A good choice for borrowers with good credit, SoFi’s APRs are generally manageable (8.99%-23.43%), with no origination fee. While the website doesn’t specify a credit score minimum, multiple sources say it is 680. Loan amounts are $5,000-$100,000 and repayment plans range from 3-7 years. The money is usually available within days.

Discover — Another alternative that doesn’t charge an origination fee. APRs range from 6.99%-24.99%, loan amounts are $2,500-$40,000 and repayment terms are 36-84 months. Money can be available as soon as the next day in some cases. Discover also has a “buyer’s remorse” option. If you return the money within 30 days of receiving it, you pay no interest.

Alternatives to Personal Loans

The solution for too much credit card debt, or any debt, doesn’t have to be a loan. If you’d prefer to reduce or eliminate debt, rather than replacing it, there are alternatives to borrowing money.

Credit Counseling — Talking to a counselor at a nonprofit credit counseling agency is free, and they are required to offer advice that’s in your best interest, rather than pitch a product. They will review your finances, help you create a budget, point you toward financial information resources and offer suggestions for debt reduction.

Debt Management Plan — Offered by nonprofit credit counseling agencies, this is not a loan. Counselors work with creditors on your behalf to get lower interest rates, reducing your monthly payments. You pay a fixed monthly amount to the credit counseling agency, and they pay off your unsecured debt, such as credit cards, student loans and medical bills.

Debt Consolidation — A LendingCard personal loan can be used for debt consolidation, but traditional lenders (banks and credit unions) also offer debt consolidation loans, which is one big loan that’s used to pay off credit cards or other high-interest debt. The interest rate is usually lower than the original debt, but even if it’s not, you are making a fixed monthly payment for a set amount of time, instead of the never-ending payments on revolving debt. Credit unions, in particular, offer favorable terms with the requirement that you become a member, which means opening a checking or savings account.

Debt Settlement — This is a debt-relief option in which you pay less than what you owe, and one consumers with a high amount of debt may want to consider. It comes with a financial hit. The debt settlement company negotiates a lower payment with creditors as you pay a monthly sum into an escrow account. It usually takes 2-3 years, then the creditor is paid with the lump sum. Your credit score will take a hit for seven years, because you’re not making payments on the debt during that time, and because you didn’t pay the entire balance, it appears on your credit report as a negative. You also will have to pay fees to the company, and taxes on any unpaid balance higher than $600.

Nonprofit Debt Settlement — This is a fairly new option that is offered by nonprofit credit counseling agencies for consumers who have high debt, but don’t have the income to pay it off. The program is also called “Less Than Full Balance.” Like for-profit debt settlement, you’ll only pay 50%-60% of what you owe. Unlike for-profit debt settlement, there is no negotiation period because lenders already have an agreement with the agency. Debts are paid off over a 36-month period with a fixed monthly payment and no interest charged. The caveat is that there are strict qualifications, and since it’s new, many creditors haven’t signed on yet.

Bankruptcy — Consumers who have more debt than they can deal with may consider the last-resort option of bankruptcy. It will have long-term financial consequences, but allows a chance to start over, debt-free. Chapter 7 bankruptcy allows the person who files to keep their house and car, Social Security payments and other necessary assets, while unnecessary assets are sold by a court-appointed trustee to pay creditors. Chapter 13 has a 3-5-year repayment plan, and the consumer keeps their assets as long as they keep up with payments. Once the plan ends, any unsecured debt that’s left is discharged. Bankruptcy stays on your credit report for 7-10 years, and will make it hard to get credit for loans.