Lending Club Review

Written By Jeff Hindenach
Last updated February 21, 2018

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August 11, 2017

Simple. Thrifty. Living.

Lending Club was one of the first online companies to offer peer lending services. Today, Lending Club remains one of the most popular peer-lending companies. The lender, however, has a lot of competitors. Before you decide which is the best peer-to-peer lending option for you, you should learn more about Lending Club and similar companies. The following Lending Club review will give you plenty of information about the company’s services, interest rates and other features so you can make a smart decision.

Lending Club Review

Lending Club website

Lending Club Review image
  • Interest rates: Lending Club’s rates fluctuate depending on your credit and other factors that it uses to determine your eligibility for a loan. The APR ranges between 5.99 percent and 32.99 percent. There is also an origination fee, which ranges between 0.99 percent and 5.99 percent. Lending Club’s late fee is $15 or 5 percent, whichever is greater, and the check-processing fee is $15.
  • Loan qualifications: Like traditional loans, you need certain qualifications to get approved. Lending Club looks for an average credit score or above, along with proof of income and a low debt-to-income ratio. You must also be 18 to apply.
  • Loan amounts: The maximum loan amount for Lending Club is $40,000, which is in line with most other online loan providers, while the minimum loan amount is $1,000, which is the lowest minimum among online personal loan providers, which makes it a good option for those who are looking for a quick, low-cost loan.
  • Partial loans: Lending Club offers partial loans. If investors commit to at least 60 percent of your loan, you can decide to accept the partial amount or turn it down and apply for a new loan.

Peer-lending websites work differently than traditional lenders. When you get a loan from your bank, credit union or other financial institution, the money that you receive comes directly from the company.

The best peer-to-peer lending sites take a different approach by matching independent lenders with borrowers. Instead of borrowing money from Lending Club, you borrow from another person or institution. Lenders sign up because they want to earn money from interest. Borrowers sign up because they need access to money for medical expenses, opening new businesses, going to school and other major life events.

Now that you know the basics of peer-to-peer lending, you can take a closer look at how Lending Club facilitates transactions between lenders and borrowers.

Lending Club’s Application Process

Before you can use Lending Club, you need to complete an online questionnaire. The website will ask you questions like:

  • How much money do you want to borrow?
  • What is your credit score?
  • What type of loan do you want?

Some lenders will ask for additional information, such as your tax returns, to help them decide whether they want to extend an offer to you.

Lending Club also collects basic information such as your contact information and address. After all, the company has to make sure that you’re not using someone else’s information to commit fraud.

Once you submit your information, Lending Club gives it to the lenders registered with its system.

Choosing a Loan Offer

Within a day or so, Lending Club will let you access offers from its lenders. Each offer will include the interest rate that the lender wants to charge. Most lenders base their interest rates on your credit score. They may also consider whether you want to get debt consolidation loans, business loans, personal loans, auto loans or other types of loans.

The Lending Club website makes it easy for you to compare offers from all of the lenders that are interested in working with you. If you have used other peer lending sites, then you might worry about the difficulty of comparing offers so you can choose one that matches your needs. Lending Club gives you a straight-forward list of your lending offers.

Take some time choosing which loan offer you want to accept. Lenders can do more than set their interest rates. They can also decide how long you get to repay your loan.

When choosing a loan offer, it’s wise to consider:

  • How much interest the lender charges.
  • How much the loan’s fees cost.
  • The term of the lender’s loan (in other words, how long you have to repay).
  • The overall cost of accepting the loan.
  • The monthly cost of repaying your loan.

In most cases, you will get the best deal by choosing the offer with the lowest interest rate. Until you calculate the loan’s total repayment cost, though, you won’t know whether it will truly help you save money.

Receiving Your Loan From Lending Club

After choosing an offer from one of Lending Club’s lenders, it typically takes seven business days for the money to get deposited into your account.

Lending Club automatically subtracts your loan origination fee, so you won’t get the full amount of your loan. For instance, if you borrow $35,000 from a lender that charges a $5,000 loan-origination fee, then Lending Club will deposit $30,000 in your account.

The money that you borrow gets deposited directly into the borrower’s checking account, which most people find convenient.

Repaying Your Lending Club Loan

Since Lending Club uses so many independent lenders, a lot of factors can affect how you repay your loan. In most cases, you will make a monthly payment to Lending Club. The company then directs your payment to the lender.

If you choose a 36-month loan term, then you will make monthly payments for three years. If you choose a 60-month loan term, then you will make monthly payments for five years.

Lending Club gives you a 14-day grace period for late payments. If you don’t submit your payment within 14 days of the due date, then you could face fines. The lender may also report your delinquent payment to one or all three of the credit bureaus. If this happens, then you can expect your credit score to fall. You may also receive a negative mark that stays on your record for up to seven years.

Since you already know how much your monthly payments will cost, you shouldn’t have difficulties keeping up with the payments. Use the 14-day grace period if necessary, but don’t exceed the time Lending Club gives you. Lending Club will not let you defer payments or renegotiate the terms of your loan.

One of the best things about Lending Club is that the company doesn’t charge prepayment fees. Many lenders will charge you an additional fee for repaying your loan early. By doing so, they ensure that they can make a good profit from the loan. With Lending Club, you don’t have to worry about prepayment fees.

Many Lending Club reviews praise the company for its fast application process. Qualifying for a loan can take weeks in today’s economic climate. After the recession, lenders started to follow strict rules that made it harder for people to access personal and business loans. Lending Club makes the process as easy as possible.

Lending Club gets a wide range of reviews from its customers. Some Lending Club reviews point out that the company makes lending more competitive, which can help drive down interest rates. Lenders know that they face competition from each other. In response, some of them lower their interest rates to attract more business. Depending on how much money you borrow, even one percentage point can make a big difference in your overall repayment amount.

Other positive Lending Club reviews focus on how the company makes the loan-application process less intimidating. Getting scrutinized by a bank’s loan officer can feel very intrusive. With Lending Club, you never have to talk directly to your lender. You just provide the information that they need. It feels good to know that you don’t have to sit in the same room with a loan officer while he or she goes over your financial history.

Some Lending Club reviews warn consumers to stay away from the company. A lot of people complain that the company automatically deducts loan-origination fees. Lending Club, however, is clear about its loan-origination fee deductions. If you’re surprised that you receive less money than you applied for, then you didn’t pay attention to the website.

Other negative Lending Club reviews complain that the website’s lenders will only work with people who have excellent credit scores. If you have a credit score under 600, then you almost certainly will not qualify for a loan through Lending Club. Unfortunately, you may not have many options since banks, credit unions and other financial institutions also prefer lending money to people with excellent credit scores. If you do find someone who accepts your application, then you will probably have to pay a high-interest rate.

Some customers don’t like that Lending Club charges fees for processing personal checks. If you want to avoid the $7 fee, then you should use electronic payments. If your check bounces, then you get an additional $15 fee. While these fees may seem unfair to some, Lending Club publishes them on their website.

While people have complaints about Lending Club, most of the negative Lending Club reviews seem to come from borrowers who didn’t understand the lending and repayment process. Always read agreements carefully before you accept a loan from any provider.

Lending Club stands out as one of the best peer-to-peer lending websites for borrowers who have excellent credit scores. If you have poor or mediocre credit, then you probably will not get approved for a loan. Those who do will pay high interest rates.

Overall, Lending Club is a good choice for people who need to borrow up to $40,000 (the maximum that you can get from the website) and know that they have the ability to repay their loans on time.

The Lending Club website will give you an interest rate quote based on your credit score, how much you want to borrow and what you plan to do with the loan. Using this tool will help you decide whether Lending Club is the right choice for you.

About the Author

Jeff Hindenach

Jeff Hindenach is the co-founder of Simple. Thrifty. Living. He graduated from Bowling Green State University with a Bachelor's Degree in Journalism. He has a long history of financial journalism, with a background writing for newspapers such as the San Jose Mercury News and San Francisco Examiner, as well as writing on personal finance for The Huffington Post, New York Times, Business Insider, CNBC, Newsday and The Street. He believes in giving readers the tools they need to get out of debt.

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