LendUp Personal Loans Review

Payday lending has earned a reputation for compounding the problems of those who are struggling with their finances. When you think of payday lenders, you may envision a check cashing store in the strip mall. LendUp, a loan company founded in 2012, aims to transform both the mission and the business model of payday lending.

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LendUp says it wants to help subprime consumers improve their financial health by offering loans that traditional banks don’t. About 150 million people have credit scores below 720, and that’s who LendUp tends to target for its loans. Traditional banks typically avoid borrowers with lower credit scores because they are seen as a higher risk.

Taking out a loan through LendUp is a fast way to get money, but it’s not for everyone. While the company bills itself as a way to help those struggling with finances, LendUp charges significantly higher interest rates compared to traditional loans, so consumers with these loans may actually dig themselves deeper in a financial hole if they are not careful about how they will repay their debt.

In this review:

• Applying for a LendUp Personal Loan
• LendUp Loan Rates, Terms, Fees, and Limits
• Benefits of a LendUp Personal Loan
• Downsides of a LendUp Personal Loan
• Who Should Use LendUp?

Applying for a LendUp Personal Loan

Applying for a LendUp personal loan is fairly straightforward. You provide your name, address, Social Security number, birth date, and email address, which is pretty standard for most financial transactions today. You’ll also need to provide bank account and routing information for an institution that accepts ACH transfers.

Additionally, be aware that some states require you to send proof of income. LendUp’s website allows you to scan and upload the required information. You can apply online anytime and receive a decision within minutes. Once your loan is approved, you’ll receive your funds fairly quickly, usually within a business day. Your repayment schedule is based on the amount you borrow, and your repayment date.

Applying for a LendUp loan doesn’t require a review of your credit history. Instead, LendUp customers just need to have a valid checking account and provide the required information.

LendUp Loan Rates, Terms, Fees, and Limits

Before you borrow, be sure to learn the important basic information regarding LendUp loans. Here’s what you need to know.

LendUp’s interest rates are much higher than the personal loans you would pay on a traditional bank card and even higher than many credit card interest rates. The rates vary based on how long your loan lasts, whether you’re on the “ladder” with LendUp, and the amount. However, they start at around 30% APR and range up to what amounts to more than 1,000% APR.

LendUp personal loans can be repaid in a lump sum, or you can set up to make multiple installment payments. And APRs can include finance charges, and those charges are translated into APRs. For example, a $500 short-term loan set for repayment as a lump sum in 14 days might have a rate of 664.14% APR. However, if you get a loan for $500 and agree to nine regular payments, your APR would be 35.88%.

Your loan term depends on the payment plan you select and the amount you borrow. You can select a term as short as 14 days for lump-sum repayment, or monthly installments of up to 12 months.

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LendUp Personal Loans

• Apply in as few as 5 minutes to get an instant decision
• Money as soon as one business day
• Good credit not required
• Applying does not affect your FICO® score

Benefits of a LendUp Personal Loan

The main benefit to LendUp personal loans is that you can get a loan, even if you have poor credit. In addition, you can get fast approval online, without the need to go into a physical location. Some of the other features include:

• Reports to credit bureaus: If you don’t have credit, or if you’re trying to rebuild your credit, some installment payments are reported to the major credit reporting agencies, allowing you to improve your situation.
• LendUp Ladder: The LendUp Ladder is available in some states, allowing you to get discounted rates. If you watch financial education videos provided by LendUp and make on-time payments, you get “points” that move you into a different tier.
• Choose your repayment date: LendUp allows you to choose your desired repayment date, within its terms.
• Extended payment date: Depending on state laws, it’s possible to extend your repayment on a lump-sum loan without a late fee.

The financial education resources are a plus, and the fact that LendUp has a mechanism for repeat borrowers to catch a break on added costs is a nice touch. Most traditional payday lenders pile on the fees for extensions.

>> Read More: Personal loans for bad credit

Downsides of a LendUp Personal Loan

Of course, there are also downsides to using LendUp. One of the biggest issues is that LendUp, although it tries to set itself apart from payday lenders, is subject to the same state laws governing payday lending practices.

Be aware that the fees, APR, amount you can borrow, extension options, and other features are governed by state law. That said, here are some of the other drawbacks associated with using LendUp:

• Not all payments are reported to the bureaus: If you’re hoping to use LendUp to build credit, it could backfire. Not all payments are reported, particularly the lump-sum payments. You’re probably better off using a secured credit card if you want to rebuild your credit.
• High interest rates: Even if you’re in the “prime” category on the LendUp Ladder, you could still be paying fees that translate into an APR of above 30%. When you have good credit, it’s possible to get much lower rates through personal loan providers like SoFi and Avant.
• You might be limited in eligibility: LendUp uses Veritec in some states to determine loan eligibility, so you could end up not getting a loan, or having restricted repayment terms.

For the most part, LendUp is similar to options like Rise and OppLoans. You’ll find similar repayment options and interest rates, so it’s important to compare rates.

Be aware that some consumers have reported serious problems with LendUp. The Consumer Financial Protection Bureau ended up fining LendUp $3.63 million in 2016 because it didn’t live up to some of its claims. Since then, the company has been more careful about its promises regarding building credit and offering low-cost loans.

However, just because LendUp is an alternative to going to a check cashing place or engaging with other, more traditional, payday lenders, it doesn’t mean it’s the right choice for you.

Who Should Use LendUp?

For the most part, LendUp — like any payday lender — should be considered a lender of last resort. You should only consider LendUp if you can’t get cash elsewhere due to credit problems. Before going with LendUp, consider getting money from other sources, if possible.

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If you’re struggling with credit, and you’re facing an emergency and need quick cash, LendUp can be an option. However, you’re usually better off taking steps like building up an emergency fund or keeping a credit card with a sufficient limit for emergencies.

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LendUp probably isn’t a good option for debt consolidation, since there’s a good chance your fees will amount to an APR much higher than what you could get with other debt consolidation loans with companies like Avant or SoFi.

Bottom Line

While LendUp is an alternative to traditional payday lenders, it is similar to other lenders in its category. Additionally, while its installment loans might help you reach other goals, like building credit, the reality is that its effectiveness is spotty at best, depending on what state you live in.

Instead, you might be better off by looking for emergency cash through cheaper alternatives and applying for a secured credit card if you want to give your credit score a boost. You could also consider checking out the LendUp Credit Card as a way to build credit if you like LendUp as a company.