What Is Lending Club?

Lending Club competes with other P2P lending platforms, including Prosper and Peerform, as well as online direct lenders like Avant (which doesn’t follow the P2P model) and alternative business lenders (also not P2P) such as OnDeck and Kabbage. Its original business line is unsecured personal loans for individuals. It also offers unsecured loans to business owners and two niche products: medical loans and auto refinancing loans.

Lending Club’s individual loans range from $1,000 to $40,000 principal and have terms of 3 or 5 years. Borrower interest rates range from 6.16% APR to 35.89% APR, depending on credit score, credit history, and past borrowing record with Lending Club. Lending Club doesn’t tie its rates to an index such as Libor, but it advises that rates may rise or fall depending on “market conditions” – in other words, prevailing interest rates.

Lending Club’s business loans and lines of credit with terms of 1 to 5 years and principals of $5,000 to $300,000. Business products’ annualized interest rates range from 5.99% APR to about 36% APR, though they’re subject to change with prevailing rates and other market conditions.

See the Key Features section for more details about Lending Club’s niche products, which aren’t as popular as its unsecured personal and business loans.

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What If I Can’t Make a Payment?

While all borrowers have a 15-day grace period to make payments with no penalty, interest will accrue on your loan daily. If you accumulate extra interest because you delayed your payment, you may end up with an additional payment at the end of your loan term.

Payments that are not received within the 15-day grace period window are subject to a late fee. Depending on how late your payment is, your loan may be sent to a collection agency to recover the loan proceeds owed to investors.

Keep in mind that your loan repayment record will be shared with credit bureaus. As such, this can either positively or negatively affect your credit score. All late or missed payments and other account defaults will be reported and may affect your credit.

Alternatives to LendingClub

If you are turned down by LendingClub (or only qualify for a high-interest loan), there are other options to get a loan with bad credit. First, make sure all the information presented to LendingClub was correct. LendingClub might have uncovered a negative mark on your credit report that needs investigation.

Debt Management Plan/Credit Counseling — This is an excellent option for anyone who is denied a LendingClub loan. Working with a nonprofit credit counseling agency can help you lower your debt payments, regardless of your credit score. The counselors at a Debt Management Program (not a loan) will work with creditors on your behalf to reduce your monthly payment. It’s good for unsecured debts (such as credit cards, medical bills and student loans).

Prosper Perhaps a better peer-to-peer option if you carry substantial debt and have a high income. Prosper accepts credit scores of 640 and above, while accepting debt-to-income ratios up to 50%. The APRs are similar: 6.95% to 35.99%, which includes an origination fee of 2.4% to 5%. Loan amounts are $2,000 to $40,000 and the repayment plans range from three to five years. Money could be available in three business days. Overall, Lending Club vs. Prosper is an interesting comparison.

SoFi Good choice for new credit borrowers. The APRs are generally manageable (5% to 15%, no origination fee), but there’s a higher threshold for credit scores (660 minimum). Loan amounts are $5,000 to $100,000 and the repayment plans range from three to seven years. Typically, the money is available within seven days.

Discover It’s another alternative that doesn’t charge an origination fee. The APRs range from 6.99% to 24.99%. Loan amounts are $2,500 to $35,000 and the repayment plans range from three to seven years. Money can be available as soon as the next day in some cases.

LendingClub Personal Loans Compared to Other Lenders

LendingClubAvantUpgrade
Loan Term Range36 and 60 months24 to 60 months24 to 84 months
Loan Amount$1,000 to $40,000$2,000 to $35,000$1,000 to $50,000
Credit Score Needed600580620
Prepayment PenaltyNoneNoneNone
Origination Fee1% to 6%Up to 4.75%2.9% to 8%
Unsecured or Secured DebtUnsecuredBoth unsecured and secured optionsUnsecured
The NextAdvisor editorial team updates this information regularly, though it is possible that certain loan and fee details have changed since this page was last updated. For the most up-to-date information about APRs, fees, and other loan details, check with the lender directly. Also, some loan offerings may vary depending on your location.

How Does Lending Club Compare?

Whether you are an investor looking for an above-average rate of return, or a borrower looking for more affordable loan programs, you’ll find what you’re looking for at Lending Club. Here’s how Lending Club compares to a few competitors.

Get StartedNo Longer offering P2P LendingEst APR: 10.68-35.89%Loan Term: 36-month or 60-monthLoan Amount: $1,000-$40,000Min Credit Score: 600

Get StartedEst APR: 7.95 – 35.99%Loan Term: 3 to 5 yearsLoan Amount: $2,000 – $40,000Min Credit Score: 640

Get StartedEst APR: 5.99 – 21.20%Loan Term: 2 to 7 yearsLoan Amount: $5,000 – $100,000Min Credit Score: 648

Remember, only you can make the determination of what’s right for you when it comes to peer-to-peer lending. I wouldn’t recommend putting all your eggs in the Lending Club basket, but it’s certainly an appropriate choice for well-established investors or borrowers needing some money.

For more information, you can read a full review of Prosper and Sofi.

Disadvantages

1. Minimum Investment of $1,000 Lending Club requires a $1,000 minimum investment for all investors. If you have a modest amount to invest or just want to try Lending Club without jumping headlong into the P2P lending world, this could be prohibitive.

2. Financial Restrictions for Investors Lending Club’s financial restrictions for investors – limiting total investments to 10% or less of net worth and requiring minimum net worth or income thresholds – excludes some potential lenders from participating. While Prosper investors face similar restrictions if they live in states that impose them by law, it doesn’t impose them across the board like Lending Club. For investors with modest incomes or net worths, this means that Prosper may be the only option.

3. Not Suitable for Borrowers With Middling or Impaired Credit Lending Club is designed for borrowers with decent to excellent credit. While your financial profile doesn’t need to be perfect to score a higher-interest loan here, you’re unlikely to be approved for a loan at any rate with a credit score south of 640. If your credit is impaired, look into a secured credit card instead (check out our roundup of the best secured credit cards on the market today for details). Avoid payday loans and other forms of predatory lending – they’re usually more trouble than they’re worth.

Pros

Long Loan Terms: You can stretch the loan to repayment terms of three years and five years.

Soft Pull: No hard credit inquiry is needed to check rates, which comes in handy when comparing loan products. It will allow you to conveniently shop around without hurting your credit score.

Low Credit Score: The LendingClub credit score has a minimum acceptance of 600. Of course, the interest rate might not be ideal with that score, but it might be a good deal for borrowers with so-so credit who usually have to settle for subprime offers.

Personal Loans from Other Lenders

If you need a personal loan but have decided that Lending Club isn’t for you, consider applying for a loan from one of these providers:

Upstart

Upstart is a personal loan provider that puts a twist on the usual loan approval practices.

Like any lender, Upstart will look at your credit history and debt-to-income ratio when deciding whether to lend money to you.

What makes Upstart unique is that the company takes other factors into account. Upstart looks at your education history, area of study, and job history when making a lending decision.

If you have held a stable job for years or are highly educated in a high-demand field, Upstart’s unique risk assessment protocol may be able to get you a better deal on your loan.

Read Upstart Personal Loans Editor’s Review

Santander Bank

Santander Bank offers personal loans that range from $5,000 to $35,000. You can apply for a loan from Santander to consolidate other debts, fund home improvements, or to pay unexpected bills.

All of Santander Bank’s personal loans have a fixed interest rate.

That means that the interest will stay the same for the life of the loan, even if market interest rates rise.

That way, you’ll know exactly how much you’ll have to pay over the life of the loan and your monthly payment never changes.

If you already bank with Santander, you can take advantage of a loyalty bonus.

By enrolling in autopay from a Santander checking account you’ll reduce your loan’s interest rate by 0.25% automatically. That can result in big savings on a large loan when you take the full term to pay it off.

Discover

Discover is best known for its credit cards, but it’s also a bank that offers savings accounts, checking accounts, and personal loans.

You can borrow up to $35,000 from Discover and take as long as seven years to pay the loan back.

That gives you the flexibility to pay back the loan on your terms since there’s no early payment penalty.

Discover offers a 30-day return policy, which allows you to return the loan in full with no penalties or interest.

It also employs a 100% U.S.-based customer support staff. That makes it easy to get help when you need.

What to Expect From a Lending Club Loan

The Lending Club loan application process is relatively simple. You can apply online in minutes by filling out an application indicating how much debt you want to consolidate.

From there, you will:

  • Review your options for monthly payments and interest rates.
  • Pick the consolidation option that works best for you.
  • Have the loan deposited into your bank account.

How Much Can You Borrow From Lending Club?

You can get loans ranging from $1,000 to $40,000 and get your money in as little as seven days. In some cases, this may take a little longer, depending on what information you need to provide. You can complete the entire process online or by phone.

Once your loan is approved and backed by investors, the money is deposited into your bank account. This step can take anywhere from one to several days, depending on your bank’s policies.

Lending Club Rates and Fees

Lending Club interest rates vary between 6.46% and 27.27%, depending on the loan grade. Loans are graded from A to E, with A being the best grade with the lowest rate. There are no application, brokerage, or prepayment fees.

There is an origination fee you pay for each personal loan. The fee ranges between 1 and 6% of the loan amount. How much you pay depends on your credit rating and what information you provide in your application.

Keep in mind the APR includes the origination fee. The fee is also deducted from the loan when it’s issued, so the funds received when you get the loan are less than the total amount of the approved loan. Make sure to factor this when requesting the loan amount.

If you’re late on your loan payments, you may be charged a collection fee of up to 40% on all amounts collected on a delinquent loan in cases involving litigation. The charge is up to 30% for cases not involving litigation on all payments collected on a delinquent loan.

You can go on the website and check your rate before applying for a loan. According to Lending Club, checking your rate won’t affect your credit score. Applying for a Lending Club loan generates a soft inquiry, which is only visible to you. If your score needs to improve, you can check out Experian Boost to see how it can help.

Who is LendingClub best for?

Investors who want to diversify their portfolio

If you’re interested in peer-to-peer lending and okay with it being a somewhat riskier investment route (loans are unsecured and can default), you have the opportunity to gain with higher rates of returns than other investments you may have in your portfolio.

One strong advantage of peer-to-peer lending is that you don’t have to fund another person’s entire loan, effectively minimizing the risk with each of the loans you issue.

8. Best Peer-to-Peer Lending Websites of September 2021

If you accept your rate and proceed with your application, we do another (hard) credit inquiry that will impact your credit score. If you take out a loan, (24)

Jun 27, 2021 — How long does it take to get your money from the Lending Club? Typically, you will be able to get your loan within 3 to 4 business days. What is (25)

LendingClub enabled borrowers to create loan listings on its website by supplying details about themselves and the loans that they would like to request.(26)

How Bankrate rates LendingClub

Overall score 4.4
Availability 4.3 LendingClub has a fast funding timeline and a low minimum loan amount, but it doesn’t disclose many eligibility requirements.
Affordability 4.3 While it’s not unreasonable, LendingClub’s minimum APR is higher than that of competitors.
Customer experience 4.7 LendingClub has a good online platform but slightly limited customer service hours.

Methodology

To evaluate lenders, Bankrate considered categories of availability, affordability and customer experience. Availability included factors like time to get a loan, required income and credit score and loan amounts. Affordability included factors such as fees and APR. Customer experience included factors such as online access, customer support and app availability.

Factors that contributed to LendingClub’s rating included its low minimum credit score to qualify, joint application availability, fast funding after approval, origination fee and the higher interest rates compared to competitors.

Editorial disclosure: All reviews are prepared by Bankrate.com staff. Opinions expressed therein are solely those of the reviewer and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in the review is accurate as of the date of the review. Check the data at the top of this page and the lender’s website for the most current information.

Who Should Get a LendingClub Loan

LendingClub offers unsecured loans with a minimum credit requirement of 600, making it a good option for those who don’t have good or excellent credit but also want to avoid secured loans. But temper your expectations; a lower credit score likely means qualifying for a lower loan amount and a higher interest rate. The ability to check your rate without a hard credit inquiry makes it easy to shop around for the best rate and lets you check out LendingClub’s options without risk. 

LendingClub makes it easy to use its loans for a variety of purposes, from covering an emergency expense to completing home improvement projects. And if you’re planning to use your personal loan to consolidate debt, the company can save you a step by transferring some or all of your loan money directly to your creditor.

Pricing for LendingClub

But there will be some other fees associated with your use of this service. LendingClub charges a loan origination fee, which will be a percentage of the total amount of the loan. That fee will be combined with the interest rate to form your APR. As long as you pay your monthly payment on time, though, you won’t pay any extra fees, only that APR

Loan origination fee1%-6% of the total loan amount
Prepayment fees$0
Applications fees$0
Brokerage fees$0
Late payment penalty (after 15 days)5% of unpaid payment or $15, whichever is greater

LendingClub Personal Loan Details

Loan Amounts & Terms

  • Loan amounts. LendingClub offers unsecured personal loans from $1,000 to $40,000, with the average loan being $15,800. Unlike some lenders, LendingClub loan minimums do not vary by state.
  • Loan terms. LendingClub borrowers can choose from loan terms of 36 or 60 months—or three or five years. The average term for a LendingClub personal loan is 36 months. This is in contrast to many competitors that offer a wide range of loan terms, often up to seven years or more.

Loan Costs

  • APR. LendingClub personal loans feature APRs between 7.04% to 35.89%, but the average APR offered to borrowers is 15.95%. The rate an applicant qualifies for is based on a number of factors, including credit history rating, desired loan amount and debt-to-income (DTI) ratio. The lender does not offer any rate discounts for borrowers who sign up to make automatic payments.
  • Origination fees. LendingClub charges a one-time origination fee between 3% and 6% of the total loan amount. The origination fee is based on the borrower’s credit rating and is subtracted from the loan amount at funding. On average, borrowers are charged a 5% origination fee.
  • Late fees. Borrowers who make late payments are charged a fee of 5% of the late payment amount or $15, whichever is greater. Notably, however, LendingClub does provide borrowers a 15-day grace period for late payments.
  • Prepayment penalties. LendingClub does not charge borrowers any prepayment penalties for paying off loans prior to the end of their loan term. This means you can pay off your loan early without incurring additional costs.

Note: According to the Better Business Bureau (BBB), LendingClub’s name and logo have been fraudulently used as part of loan scams, including the collection of security, insurance or other fees. LendingClub does not charge any upfront application fees in exchange for receiving a loan.

As such, any company claiming to be LendingClub and charging such fees should be reported as a scam. These fraudulent advanced fees are different from LendingClub’s standard origination fees, which are subtracted from loan funds at disbursement.

Perks & Features

  • Payment date flexibility. Borrowers with a current account in good standing can change their payment due date temporarily or permanently. To make a permanent change, LendingClub borrowers can sign into their online account and navigate to the Payment Due Date section; the update can also be made via telephone. Temporary payment date changes must be made via phone or email at least three days before the current due date.
  • Online account management. Currently, LendingClub’s mobile app is only available for banking products. However, LendingClub’s website is optimized for mobile use, making it easy for customers to track their application status, loan details and autopay information.
  • Additional services. In addition to personal loans, LendingClub offers auto refinancing and patient financing. What’s more, LendingClub is now considered a digital marketplace bank due to its recent acquisition of Radius Bank.

Fees and penalties

LendingClub connects investors with potential borrowers and charges an origination fee of 3 percent to 6 percent for the service. The fee is taken out of the loan proceeds up front. For example, if you borrow $10,000 with a 3.5 percent origination fee, you’ll only receive $9,650. Keep in mind, though, that you’ll be making payments on the entire $10,000. You should factor in the origination fee when calculating the total amount you’re looking to borrow.

LendingClub doesn’t charge a prepayment penalty, but it may charge a late fee.

What are the Risks?

Every investor should consider the risks of an investment before committing their money.  Investing with p2p lending has a number of risks:

  1. Borrower defaults – the loans are unsecured so an investor has little recourse if the borrower decides not to pay. The annual default rate across all grades at Lending Club is around 6 or 7% with higher risk borrowers having a higher default rate.
  2. Lending Club bankruptcy – This is a much smaller risk today than it was several years ago because Lending Club is making money and has had an influx of cash with the recent IPO. But the risk will always be there. In the unlikely event of a bankruptcy, there is a backup loan servicer who will take over servicing the loans but there would likely be some disruption and investors could lose some principal.
  3. Interest rate risk – the loan terms are three or five years so during this time interest rates could increase substantially. If an FDIC insured investment is paying 6% it makes investing in a Lending Club loan at 7% not the best investment.
  4. Poor loan diversification – many new investors get caught in this trap. They do not take advantage of the $25 minimum investment. If you invest in 20 loans at $250 you are running a much higher risk than if you invest in 200 loans at $25. If you only have 20 loans one default could wipe out most of your gains. You can learn more on basic portfolio diversification and then read a statistical analysis of p2p lending diversification.
  5. Liquidity risk – There is a secondary market on Lending Club where loans can be sold but if you need to liquidate your entire investment you will likely lose some principal in the process.
  6. Market-wide event or recession – While p2p lending has been around since the latest recession in 2008, the asset class still remains untested when platforms were originating significant volumes. In a recession, defaults will increase and thus will result in a decrease in investor returns.

Conclusion

Lending Club is the largest and most successful p2p lender in the world. They have a long track record now of providing excellent returns to investors. This is why I have over $100,000 of my own money invested in Lending Club and continue to add to that amount. If you want to take the plunge and open an account then just click the link in the box below.

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