In July 2017, LendingTree reported a whopping revenue increase of 62 percent in its second quarter results. Known for its mortgage commercials – “when banks compete, you win!” – LendingTree’s increase is not limited to its mortgage products which were up 28 percent. Its biggest revenue increase came from its non-mortgage loan products, including personal loans. Overall non-mortgage product revenue was up 112 percent over the last year, with personal loan revenue contributing a 28 percent increase. No matter how you slice it, LendingTree is in a super growth mode across the board, and it is giving the newer online personal loan upstarts a run for their money.
What Does LendingTree Do?
LendingTree does not originate any loans. It is a lead aggregator for lenders. LendingTree does all of the work to get prospective borrowers to its website and then it sells the leads to the lenders. In effect, the lenders pay LendingTree for the chance to compete for its users’ business. Meanwhile it provides a valuable service to borrowers who want to save time and money in finding the best deal. LendingTree reports that borrowers who use its website to shop and compare loans save thousands of dollars in loan costs.
From Mortgage Leader to Personal Loan Lender
Launched in 1999, LendingTree is a true fintech pioneer and one of the first to offer online-only loan products. It is also an original dot-com company that managed to survive the bursting of the bubble in 2000, which is an indication of its sound business model and market leadership. As new fintech startups continue to flood the market, LendingTree continues its dominance with its ability to let homebuyers and mortgage refinancers quickly compare up to five free loan offers with no obligation. Over the last several years, LendingTree has expanded that capability to people who need personal unsecured loans.
When you go to the LendingTree website you can choose your loan amount — $1,000 to $35,000 – your terms — 3 to 15 years — and then complete one application. Within a matter of minutes, you will receive as many as five offers. The rate and terms offered will reflect your creditworthiness, but they should be very competitive. You have the opportunity to negotiate directly with any of the lenders if you think you can get better terms. Personal loans through LendingTree can be used for just about any purpose including debt consolidation, vacations, home renovation, weddings, medical expenses, and emergencies.
LendingTree’s Secret to Growth
LendingTree’s bread and butter has always been the mortgage market which comprises about 45 percent of its overall revenue. But over the years it has managed to diversify its revenue and grow its non-mortgage business, which has greatly improved its long-term growth prospects. The combination of its student loan, auto loan, credit card, personal loan, small business loan, reverse mortgage, and credit card segments now account for about 55 percent of its revenue, with its personal loan business outpacing all the others.
With an increasing number of consumers bypassing traditional banks and turning to online lenders, the market for online personal loans has been growing exponentially in the last few years. With its well-established marketing power, LendingTree has captured a big share of the online personal lending market. As credit card debt in the U.S. continues its climb, the need for lower cost loans to pay off high interest debt will continue to grow and LendingTree’s share of the market right along with it.
It is that diversification that protects LendingTree against any upticks in mortgage rates which could dampen that segment of its business. Although rising interest rates could hurt lending in general, the good news for LendingTree is that credit card interest rates will always be higher than personal loan rates and there will always be the need to use lower cost loan products to pay off higher cost debt.
Author: Jeff Gitlen
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