The idea behind Best Egg is that it’s a form of peer-to-peer lending where the company provides funding to individuals using money from large investors. The investors purchase whole loans in order to invest with Best Egg. So, loans from Best Egg are typically funded by investment managers, banks, and other financial institutions looking to provide wealth management for their clients.
LendingClub started as a small peer-to-peer investing platform where small business owners would request money, and investors would look over the proposals and decide which loans to fund. Since LendingClub is a fully online financial company, it can minimize operating costs and pass on the savings in the form of low-interest personal loans to clients.
Today, large institutional investors provide much of the funding for loans through LendingClub, but the company maintains its investment roots by allowing smaller, individual investors to purchase portions of loans as well.
Best Egg vs. LendingClub: Comparison
|Rates (APR)||5.99% – 29.99%||6.95% – 35.89%|
|Loan Terms||3 – 5 years||3 – 5 years|
|Loan Amounts||$2,000 – $35,000||$1,000 – $40,000|
|Origination Fees||0.99% – 5.99%||1% – 6%|
Costs and Fees
Personal loans from Best Egg can range in amounts from $2,000 to $35,000 with terms of either three or five years. Interest rates currently start as low as 5.99%, but can go as high as 29.99%. The interest rates are fixed for the term of the loan. There are no application fees, but some loans have origination fees that may vary from 0.99 to 5.99 percent of the loan amount. The origination fees are deducted from the amount disbursed to the borrower.
LendingClub loans range from $1,000 to $40,000. There are no application fees, but LendingClub charges an origination fee that is dependent upon the borrower’s application information and credit rating. Origination fees can range from 1.00 to 6.00 percent of the loan amount. The loan origination fees are deducted from the loan proceeds disbursed at closing. LendingClub has a 25-point system that it uses to evaluate a borrower’s application to determine the interest rate offered, which can currently range from 6.95% to 35.89%. Loan terms can range from one to five years.
Established in 2014, Best Egg is a relatively new online lender. They have, however, quickly grown in size due to their efficient operations and low interest rates. Unlike LendingClub, Best Egg only allows investment funds to come from large, institutional investors that are willing to back a whole loan. Best Egg also encourages investments by accepting some of the loan risk along with the investor.
In exchange for absorbing some of the default risk from the borrower, Best Egg takes a larger share of the profits. The good thing about this business arrangement is that more lenders are willing to provide loan financing at better loan terms. Loan approvals are also quick because the investment funds are already in place.
LendingClub provides a fast and efficient loan application process. Their loan terms and amounts are some of the most flexible in the online personal loan market, and borrowers may have the opportunity to choose from multiple offers. LendingClub points out that applying for a personal loan with them will not negatively impact your credit score. This is important for borrowers who may want to shop around with several online lenders to find the best rates and terms. Applicants can be assured that filling out LendingClub’s online application will not bring down their credit score and impact their ability to get approved elsewhere.
Although Best Egg advertises that it makes loans for as little as $2,000, some states may have higher minimum loan amounts. Personal loans for borrowers in Georgia must exceed $3,000. Loans in Ohio and Massachusetts must exceed $5,000. Funds are usually disbursed the next day, but it can sometimes take up to 3 days for borrowers to receive their funds.
LendingClub does not operate in Iowa, Idaho, North Dakota, Rhode Island, or Maine. Since investors backing the loans are competing for the borrower, an applicant may get multiple offers to choose from. Availability of funds is not arranged ahead of time, so the actual disbursement of funds can take some time. Most loans are processed and closed within one week, but in some cases it can take up to 45 days.
Best Egg Disclosures
To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you.
The Annual Percentage Rate (APR) is the cost of credit as a yearly rate and ranges from 5.99%-29.99%, which may include an origination fee from 0.99%–5.99% that is deducted from loan proceeds. Any origination fee on a loan term 5-years or longer will be at least 4.99%. The APR offered will depend on your credit score, income, debt payment obligations, loan amount, loan term, credit usage history and other factors, and therefore may be higher than our lowest advertised rate. Requests for the highest loan amount may result in an APR higher than our lowest advertised rate. You need a minimum 700 FICO® score and a minimum individual annual income of $100,000 to qualify for our lowest rate. Best Egg loans are unsecured personal loans made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC. Equal Housing Lender. “Best Egg” is a trademark of Marlette Funding LLC. All uses of “Best Egg” on this site mean and shall refer to “the Best Egg personal loan” and/or “Best Egg on behalf of Cross River Bank, as originator of the Best Egg personal loan,” as applicable. Loan amounts generally range from $2,000-$35,000. Offers up to $50,000 may be available for qualified customers who receive offer codes in the mail. The minimum individual annual income needed to qualify for a loan of $50,000 is $130,000. Borrowers may hold no more than two open Best Egg loans at any given time. In order to be eligible for a second Best Egg loan, your existing Best Egg loan must have been open for at least six months. Total existing Best Egg loan balances must not exceed $50,000. All loans in MA must exceed $6,000; in NM, OH must exceed $5,000; in GA must exceed $3,000. Borrowers should refer to their loan agreement for specific terms and conditions. Your verifiable income must support your ability to repay your loan. Upon loan funding, the timing of available funds may vary depending upon your bank’s policies. To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you.
Author: Jeff Gitlen
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