A Comprehensive Review of The Lending Club
When you are short on money or trying to get out of debt you may want to check out Lending Club. It is credited as being the largest online credit marketplace in the world, as they facilitate business loans, financing for medical procedures, and personal loans. While some people may still be skeptical or unsure how peer-to-peer lending works, the following information will provide a comprehensive overview of Lending Club.
What is Lending Club?
Lending Club is an American peer-to-peer lending platform that allows borrowers to apply for loans that are directly funded by investors. The company is registered with the Securities Exchange Commission (also known as the SEC), and has issued over $5 billion worth of loans since the beginning. With Lending Club personal loans of up to $35,000 can be obtained. However, individual amounts and interest rates will be determined based upon an individual’s credit risk and other factors. When it comes to borrowing loans, this can be a great place to look because they offer rates as low as 6.78% and as high as 29.99%.
What is Peer-to-Peer Lending?
Peer-to-peer lending, or simply P2P lending, allows investors to lend money to unrelated people, or “peers”, without the assistance of traditional financial institutions such as banks or credit unions. P2P lending is enabled by websites that utilize online lending platforms and tools for credit checking.
How does the Application and Approval Process Work?
Prospective borrowers simply visit the Lending Club website and fill out a loan application. Before attempting to do so, it’s a good idea to make sure you meet basic requirements, such as being over the age of 18 years, having a valid social security number and bank account, a debt-to-credit ratio of below 25%, and a FICO score of no less than 660.
If you make it past those requirements, there are several steps to the loan process. The following is a look at the steps involved in the process:
- Obtain a rate quote. This is a great way to determine if you want to go through the entire process or not, as it gives you an idea of what your interest rate will be.
- Choose your offer. If your application is approved you will be provided with offers of interest rates and loan terms to choose from.
- Check your funding process. Lending Club lists your loan for two weeks free of charge. Just keep in mind that during the two weeks you might only gain a portion of your total funding needs. If this is the case, you must resubmit a loan request. Hence, it’s a good idea to check-in often to see if your loan is being funded. Some loans get fully funded during the two week period, which means the borrower is all done!
- The money is transferred to your bank. After your loan has received full funding, Lending Club will send the funds to your bank account for immediate use.
- Begin making monthly payments. The monthly payment will be automatically deducted from your bank account, with repayment beginning one month after the loan is funded.
What are the Pros and Cons Associated with Lending Club?
As with any other type of loan or lending system, Lending Club is not without pros and cons. Here is a look at the pros and cons associated with Lending Club:
Lending Club Pros
- You have a great chance to find an affordable fixed interest rate. With Lending Club you always get a fixed rate, so this is a great system to use if you are looking to consolidate credit cards with high interest rates. Lending Club takes any dangers of an increased interest rate out of the picture.
- They offer free interest rate quotes. This platform offers you the opportunity to get a free rate quote without having it negatively impact your credit score.
- Lending Club offers impressive savings on interest rates. In fact, the company claims that they save borrowers 29% on average. With huge interest rate savings like that, it can really move a debt pay off plan ahead faster.
- Some people borrow and invest at the same time with Lending Club.
- Your credit score temporarily decreases upon applying for a Lending Club loan. Each loan application you complete is equal to a hard credit pull which is reflected not only on your credit score, but also on credit reports.
- Many applications are denied. The biggest complaint most people have with Lending Club is they not only want you to have a good job and salary, but they also require a rather high credit score. Basically, if you have bad credit, don’t even try!
- Lending Club cannot facilitate loans to residents of certain US states. Residents of Idaho, Iowa, Maine, Nebraska, and North Dakota are ineligible.
- Lending Club representatives call regularly. Many people who have used Lending Club complain that the company calls repeatedly if you do not pay your loan on time. The solution is rather easy to this problem – pay your bill!
- Loan payments can be higher than expected. Keep in mind that if Lending Club approves you for a loan of $35,000 the monthly payments will be around $1,000.
If you are wondering if Lending Club is the right platform for you or not, the first thing you should consider is if peer-to-peer lending is right for you. If you are looking for a traditional loan from a bank or other type of brick-and-mortar financial institution, then look somewhere else. Lending Club loans can take some time to reach complete funding, so for those in need of money fast – this may not be the system for you. Also, if you live in one of the five states listed above it’s not worth your time, as Lending Club does not operate in those places. However, if you have time to spare, a good credit score, and the income to repay the loan, then Lending Club can be the perfect option for you.
Jeremy Sikkens has worked in Salesman since 2010, working with small and medium sized enterprises supporting them in making marketing investments. He believes that Return on Investment should always support an educated guess whilst minimizing risk and optimizing the desired outcome.
He recognized personal finance sstralia as his base of operations.hares many similarities in making the right decision at the right time, acknowledging risk and forecasting the desired outcome. He blogs at CreditLoansAustralia.com and due to the confusing (and uncertain) financial climate, felt the need to provide invaluable insights in the area of loans, choosing Australia as his base of operations.