Founded in 2007, LendingClub is one of the largest peer-to-peer loan providers in the world. Based out of San Francisco, California, LendingClub loans range from $1,000 to $40,000 and payback periods are typically three years. Potential borrowers can explore different loans based on information provided by available loan suppliers. Borrowers broadcast their needs and terms for a loan and are connected with investors and private lenders who then negotiate the terms and length of the loans. LendingClub itself is not a loan provider but connects borrowers with lenders on its platform
LendingClub at a Glance
- Competitive peer-to-peer loans
- Borrowers have up to 60 months for loan repayment
- Loan types include lines of credit, personal and business loans and medical and auto refinancing
- Loans range from $1,000 to $40,000 and borrowers can include co-signers
- Borrowers can set up a hardship plan (if applicable)
- Borrowers need high incomes and a minimum credit score of 600 to apply
- Borrowers and cosigners need low debt-to-income levels
- There are late fees and origination fees
- No discounts are available for auto-debit payments
- Loans aren’t available in Iowa or U.S. territories like Guam or Puerto Rico
What’s interesting about LendingClub
One of the benefits of LendingClub is that consumers can apply online for loans of up to $40,000 in a few minutes. They can review available loan packages offered from multiple providers and set up fixed payments each month. It only takes a few days to receive money and borrowers can find different types of loans like business loans, personal loans, lines of credit and refinancing for vehicles and medical bills. Consumers can use the money to pay off their debts by consolidating all the debt they owe under one loan with LendingClub. It’s not like a traditional debt consolidation company, however. Through LendingClub, borrowers receive one lump sum to individually pay off each of their debts but then are obligated to pay off the loan through LendingClub. This is beneficial for borrowers to consolidate debt under one monthly payment with one rate.
LendingClub also offers hardship plans if borrowers run into financial trouble or surprise heavy expenses.
Potential borrowers will find that having a lengthy credit history that’s in good standing can support their loan application. For potential borrowers who weren’t able to qualify on their own, filing a joint application might be another option. Potential borrowers can include a co-signer if their debt-to-income (DTI) ratio is low. However, the combined DTI lenders want to see should be 35%.
Things to consider
A concern some borrowers may find with LendingClub is they need good to excellent credit to be eligible for loans. About 80% of applicants are rejected and borrowers need a minimum credit score of 600 while average salaries are about $85,053. These high expectations for borrowers could be so that smaller investors can lend to low-risk borrowers and sustain LendingClub’s business model without worrying about losing thousands of dollars. Then LendingClub would be out of business!
Loan applications are completed online and borrowers need to feel comfortable with providing personal data like their date of birth and social security number online. Borrowers may have concerns about fees incurred with their loans since origination fees range from 1% to 6% while late fees are 5% of the total payment or $15, whichever is higher.
LendingClub offers personal loans with flexible terms for potential borrowers. Eligible borrowers can select the type of loan, amount and term based on what available lenders offer. With loans ranging from $1,000 to $40,000, borrowers can use the loan money to pay down debts, purchase vehicles, pay medical bills and more. As a peer-to-peer lending platform, it becomes easier for borrowers and lenders to connect and understand each other, even negotiating terms and rates, making LendingClub a top option for many looking to secure a personal loan.
Origination fees are deducted directly from the loan. For example, a $10,000 loan at 5% interest means the origination fee is $500. This reduces the loan amount to $9,500. While origination fees range from 1% to 6%, borrowers should remember the repayment would be for the full $10,000, not $9,500.
LendingClub does not offer mortgage loans. However, potential borrowers can explore mortgage loans with Quicken Loans. They’ve helped more than two million people find available financing for their homes.
Benefits with using Quicken Loans include low interest rates and customers can choose fixed-rate loans ranging from eight to 30 years. Quicken offers FHA-backed loans and loans by Freddie Mac and Fannie Mac and some loans only require a 3% down payment.
One of the main concerns that lenders could find with Quicken Loans is that the lender might not review additional credit data beyond credit reports, debt-to-income ratios and credit scores. For more flexibility, potential borrowers with credit concerns should reach out to alternative lenders.
LendingClub does not currently provide mortgage refinancing. However, potential borrowers looking for mortgage refinancing might want to explore LoanDepot. LoanDepot offers low-interest rates and is a preferred lender. Its digital platform is appealing to customers who prefer managing their financial transactions online.
A drawback with LoanDepot is that its rates can be high. Rates can include fees and prepaid interest that total up to three points. However, customers can enjoy added benefits like help from loan officers and digital back-office assistance that can expedite their loan applications. Required minimum credit scores are 620 while the minimum down payment is only 3.5%.
Home Equity Loans and HELOCs
LendingClub does not offer home equity loans. However, customers sometimes use their personal loans for home improvement changes. For traditional home equity loans, an alternative option is Flagstar Bank. Flagstar offers construction, renovation and FHA loans at low rates. Borrowers need a minimum credit score of 620 and a minimum down payment of 3%. They can complete their application online and select from VA, FHA and USDA loans.
Borrowers interested in a home equity line of credit (HELOC) might want to check out PNC. PNC works with borrowers interested in loans with low or limited down payments. PNC is also helpful for borrowers with lower incomes.
LendingClub offers refinancing for car loans with loans ranging from $5,000 to $55,000. However, loan amounts vary depending on the borrower’s state. For example, Kentucky residents can request a car refinancing loan but the amount will start at $15,000 and not $5,000.
Loan refinancing saves customers an average of $80 a month. Borrowers can use the simple online application and get instant access to available offers and they won’t be charged origination fees or incur prepayment penalties and interest rates are low. To qualify, vehicles should be 10 years old or newer with less than 120,000 miles and for personal use. Business and work vehicles are excluded from refinancing.
The Final Word
LendingClub offers peer-to-peer personal loans to consumers for big purchases, debt consolidation and more. Potential borrowers can explore available loans based on the term, interest rate and the amount they want. Cosigners are allowed and borrowers can select repayment terms of 36 to 60 months.
LendingClub loans are a good option for consumers who want to consolidate bills and pay off their debts. Consumers may also benefit from LendingClub loans if they are interested in a home renovation or remodeling project or want to use the money for a major purchase like paying for vacation, a wedding or purchasing a vehicle.