LendingClub Personal Loans Review
- October 29, 2016
- Posted by: Jeff Gitlen
- Category: Personal Loans
LendingClub originated in 2006 and is now headquartered on the West Coast at San Francisco, California. It was part of a trend of tech-companies who began servicing loans via online interface. This trend has become somewhat of a staple in today's peer-to-peer lending marketplaces.
Since being started in the 2000s, LendingClub has blossomed into an enormous technologically oriented company that leads the personal lending industry in peer-to-peer lending. Since fundraising over a billion dollars in 2014, LendingClub has secured its spot as the largest personal loan marketplace in the nation.
5.17% - 15.96%
5.99% - 35.89%
2.29% - 36.00%
3 - 5 years
2 - 7 years
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Being one of the largest personal lenders, LendingClub offers a full listing of different personal loans. These loans cover all sorts of expenses ranging from debt to home improvements. Here is a listing of what a potential borrower can receive from LendingClub.
- Credit Card Refinancing
- Debt Consolidation
- Home Improvement
- Major Purchase
- Home Buying
- Automobile Purchase
- Green Loan
- Starting a Business
- Going on a Vacation
- Medical Expenses
Just like any personal loan servicer, there are tons of options available to borrowers. If a case can be made to investors, than a personal loan can be taken out for just about any reason which is the beauty of peer-to-peer lending.
A borrower looking for a personal loan through LendingClub can qualify for any dollar amount between $1,000 and $40,000, and these personal loans can be used for any of the reasons stated above.
Like many other personal loan companies including Navy Federal, LendingClub has a wide range of annual percentage rates (APR) for its loans. The interest rates on LendingClub personal loans are heavily dependent on credit score; low credit scores have higher interest rates while high credit scores qualify for lower interest rates. The range of APR starts at 5.99% and ends at 35.89%. All interest rates on personal loans from LendingClub are fixed and not variable.
There is an origination fee with each loan that is also defined with a range. Once again each origination fee is dependent on the size of loan as well as credit score. Origination fees range between 1% and 6%.
Following the popular trend, LendingClub offers two different repayment terms: either 3 years or 5 years. This amounts to 36 monthly payments versus 60 monthly payments. Choosing the longer payment plan generally warrants a larger fixed interest rate on a personal loan.
There are a few penalties outlined by LendingClub for poor loan performance. There is a $15 penalty for an unsuccessful payment. An unsuccessful payment is when LendingClub attempts to access a bank account for an automatic payment, but the account for some reason cannot be accessed. Another $15 fee is charged for making a late payment which is applied after a fifteen day grace period. For those who do not sign up for online or automated payments, there is a $7 fee for processing paper checks.
Like many peer-to-peer personal loan servicers, the strongpoint of LendingClub is how quick and simple the loan application process is. The homepage has three simple questions with drop down bars that lead to projected interest rates. The entire process can take only a few minutes. On top of that, accepted applications lead to a loan disbursement in a few days which is a fairly quick turnaround in the personal loan industry.
If a borrower decides to take the fast track to paying off a personal loan, then there is no need to worry about prepayment penalties. For those who do not know, a prepayment penalty is applied when a borrower pays off a loan before its technical repayment term ends. Some companies charge this fee because it may be viewed as a breach of contract or it is a way to make back on lost interest. At any rate, these worries are not present with a LendingClub personal loan.
There are helpful resources provided by LendingClub that help the average borrower learn more about personal loans as well as credit score. One page on the LendingClub site is devoted to credit score education. It covers all the basics when it comes to the importance and impact of credit score; additionally, it describes the factors that define credit score which is extremely important.
Another good resource found on the website helps users figure out how much to apply for on a personal loan. There is a calculator that takes into account all different types of debt including credit card debt, store card debt, or any other kind of debt. Each APR, balance, and monthly payment is calculated to give an overall snapshot of the debt. This helps a potential borrower decide how much they need to help pay off this debt.
Overall, LendingClub is a decent source for personal loans. There are plenty of listed reasons when applying for aid, and there are plenty of resources to help the inexperienced understand what his or her loan involves. There are couple of points that drag LendingClub down however.
The underwriting process is a backward looking method which means it only takes into account credit history and current salary. There are normally more factors that some companies incorporate into the application process, but LendingClub treads the more normal route. While backward underwriting is proven to accurately assess loan performance capability, it has its flaws. This process accurately assesses the potential performance of a borrower with extensive credit history, but it phases out a portion of applicants with less history to report.
In spite of this, LendingClub provides a grade scale that tells applicants how good his or her loan is. The scale rates personal loans from "A" to "G" with better quality loans earning a "A" rank. This is quite a beneficial system. It is quick and efficient, so it communicates the message well. Applicants will have no trouble understanding the quality of his or her loan.
LendingClub is one of the largest peer-to-peer lending platforms to date, so it is a tried and true source for personal loans. It makes it quick and easy for its borrowers, so it is not a bad choice for a personal loan. These two aspects make LendingClub a solid choice for a personal loan.
All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage & history. The APR ranges from 5.99% to 35.89%. For example, you could receive a loan of $6,000 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at time of application. The origination fee ranges from 1% to 6% and the average origination fee is 5.49% as of Q1 2017. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months or longer.