LendingClub has emerged as a prominent player, connecting borrowers with loans that suit their needs. Since its inception in 2007, LendingClub has facilitated over $85 billion in loans, making it one of the largest online banks in the United States. While initially known as a peer-to-peer lender, LendingClub has expanded its offerings to include personal loans, debt consolidation, as well as banking services such as checking and savings accounts. In this comprehensive review, we will delve into the details of LendingClub personal loans, exploring their features, benefits, drawbacks, and everything you need to know before considering them as a lending option.
LendingClub Personal Loan Features
LendingClub offers personal loans ranging from $1,000 to $40,000, with repayment terms of 36 to 60 months. These loans are suitable for a variety of purposes, including debt consolidation, home improvement, medical expenses, or other personal financial needs. One notable feature of LendingClub personal loans is their accessibility, as borrowers with a credit score as low as 600 may qualify for a loan. However, it is important to note that the interest rates and origination fees associated with these loans are determined based on credit score and debt-to-income ratio.
Pros of LendingClub Personal Loans
When considering LendingClub personal loans, there are several advantages that borrowers should be aware of:
Debt Consolidation Option
LendingClub provides borrowers with the option to use their personal loans for debt consolidation. This allows borrowers to directly pay off their creditors, simplifying their financial obligations and potentially saving money on interest payments.
Accessible to Lower Credit Scores
Unlike traditional lenders, LendingClub offers personal loans to borrowers with credit scores as low as 600. This makes LendingClub a viable option for individuals who may have struggled to secure financing from other institutions. Positive User Reviews
LendingClub has garnered positive user reviews, with many borrowers expressing satisfaction with the loan application process and loan terms. This positive reputation indicates a level of trust and reliability in the lending industry.
Quick Approval Process
LendingClub boasts a relatively fast approval process, with some borrowers receiving loan approval as quickly as 24 hours after submitting their applications. This quick turnaround time allows borrowers to access funds promptly when they need them.
No Prepayment Fees
Borrowers who wish to pay off their LendingClub personal loans early can do so without incurring any prepayment penalties. This flexibility allows borrowers to save on interest costs by paying off their loans ahead of schedule.
Co-Borrower Option
LendingClub allows borrowers to apply for a loan with a co-borrower, also known as a joint application. This can be advantageous for individuals with lower credit scores, as the inclusion of a co-borrower with a stronger credit profile may improve the chances of securing a loan or obtaining a more favorable interest rate.
Pre-Qualification Option
To help borrowers gauge their eligibility and potential loan terms, LendingClub offers a pre-qualification option. This allows borrowers to check their rates without undergoing a hard credit pull, which would negatively impact their credit score.
Payment Date Flexibility
Borrowers who need to adjust their payment due dates can do so with LendingClub. Whether it’s a one-time change or a permanent adjustment, this feature provides added convenience and flexibility for borrowers managing their loan payments.
Online Application Process
LendingClub offers a streamlined and user-friendly online application process. Borrowers can complete their loan applications entirely online, eliminating the need for in-person visits to a physical branch.
Fixed Interest Rates and Loan Terms
LendingClub personal loans feature fixed interest rates, meaning that the interest rate remains constant throughout the loan term. This provides borrowers with predictable monthly payments, allowing for better budgeting and financial planning.
Cons of LendingClub Personal Loans
While LendingClub personal loans offer numerous advantages, there are also a few drawbacks to consider:
1. High Annual Percentage Rates (APRs)
One of the main drawbacks of LendingClub personal loans is the potential for high APRs. Depending on the borrower’s creditworthiness, the APRs can range from 9.57% to as high as 36%. Borrowers with lower credit scores may be subject to higher interest rates, resulting in increased borrowing costs.
2. Lack of Automatic Payment Discounts
Unlike some other lenders, LendingClub does not offer discounts for borrowers who opt for automatic payments. This means that borrowers will not receive any interest rate reductions for setting up automatic loan payments, potentially missing out on potential savings.
Origination Fees
LendingClub charges origination fees ranging from 3% to 6% of the loan amount. These fees are deducted from the loan proceeds upfront, meaning that borrowers receive a slightly lower loan amount than the requested sum. Borrowers should factor in these fees when determining the total amount they need to borrow.
Limited Loan Term Options
LendingClub personal loans only offer two loan term options: 36 or 60 months. This lack of flexibility may not suit all borrowers, especially those who prefer shorter or longer loan repayment periods.
Online-Only Availability
As an online lender, LendingClub does not have physical branch locations. While this allows for a convenient and efficient application process, it may not appeal to borrowers who prefer the in-person assistance and support provided by traditional brick-and-mortar banks.
Bank Account Requirement
To receive a LendingClub personal loan, borrowers must have a verifiable bank account. This requirement ensures that loan funds can be deposited directly into the borrower’s account and that loan payments can be withdrawn automatically.
Late Payment Fee
Borrowers should be aware that LendingClub imposes a late payment fee of 5% of the payment amount, with a minimum fee of $15. It is essential to make loan payments on time to avoid incurring additional charges.
Co-Borrowers Only, No Co-Signers
While LendingClub allows for co-borrowers to apply for loans together, they do not offer the option for co-signers. This means that borrowers cannot rely on a co-signer with better credit to strengthen their loan application or improve their chances of approval.
Limited Mobile App Functionality
LendingClub offers a mobile app for borrowers to manage their loans; however, the app does not provide comprehensive loan management features. Borrowers may need to access their accounts through the website for certain functionalities.
Approval Process Wait Time
While LendingClub aims to provide quick loan approvals, some applicants may experience longer wait times due to the need for information verification and application completeness. Borrowers should be prepared for potential delays in the approval process.
12. Availability Limited to U.S. States and Washington, D.C.
LendingClub personal loans are only available to residents of the 50 U.S. states and Washington, D.C. Individuals residing in U.S. territories are not eligible for LendingClub loans.
Applying for a LendingClub Personal Loan
To apply for a LendingClub personal loan, borrowers can follow these simple steps:
- Visit the LendingClub website and click on the loan application page.
- Complete the online application, providing accurate and up-to-date personal, employment, and financial information.
- Submit the application and await approval.
- If approved, review the loan offer, including the loan amount, interest rate, and loan terms.
- Accept the loan offer and provide any additional required documentation.
- Once all requirements are met, the loan funds will be deposited directly into the borrower’s verified bank account.
- Set up a repayment plan and make timely monthly payments to repay the loan.
How LendingClub Compares to Competitors
When considering personal loans, it is essential to compare LendingClub with other lenders in the market. Here is a brief comparison of LendingClub with two popular competitors:
LendingClub vs. Prosper
LendingClub and Prosper are both peer-to-peer lenders that offer personal loans. While LendingClub accepts co-borrowers, Prosper does not offer joint loan applications. However, Prosper provides higher loan amounts, with loans available up to $50,000. It is important to consider individual loan terms, interest rates, and fees when comparing LendingClub and Prosper to determine the best fit for your borrowing needs.
LendingClub vs. Avant
Avant is another prominent lender in the personal loan space. Avant offers personal loans with similar terms and APRs to LendingClub. However, Avant has a slightly higher starting APR and does not allow joint loan applications. Avant’s minimum credit score requirement is lower, making it more accessible to borrowers with fair credit. Additionally, Avant offers a wider range of loan repayment options, with terms ranging from 12 to 60 months.
Conclusion
LendingClub personal loans provide borrowers with an accessible and convenient online lending option. With loan amounts ranging from $1,000 to $40,000 and repayment terms of 36 to 60 months, LendingClub caters to a wide range of borrowing needs. While the APRs and origination fees may be higher compared to some other lenders, LendingClub’s flexibility in accepting co-borrowers and their positive user reviews make them a viable option for individuals with fair to excellent credit. Ultimately, borrowers should carefully evaluate their financial situation, compare loan terms and rates, and consider alternatives before choosing LendingClub or any other lending option.
