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Lending Club was one of the first to market in the peer-to-peer lending space. If you’re not familiar, peer-to-peer or marketplace lending is when the loan is funded by other individuals, not the financial institution. The matching, issuance of the loan, and repayment is facilitated by the organization. Read our full Lending Club review to see if they’d be right for you.
Lending Club Quick Info
|APR Range||5.99% - 35.89%|
|Loan Amounts||$1,000 - $40,000|
|Origination Fee||1% - 6%|
|Loan Duration||3 - 5 Years|
|Time to Fund||Up to a Week|
|Soft Credit Check?||Yes|
Who Is the Typical Lending Club Borrower?
- They have a good credit score. The minimum credit score is 600, though the average borrower has a 706 FICO score.
- They have an income above the national average. Lending Club borrowers have an annual household income average of $76,135.
- They have an established credit history. The minimum required is 3 years but the average is around 16 years.
- Their debt-to-income ratio is low. The maximum ratio is 35% but the average is 18.32%, not factoring in a mortgage.
- They can wait. A loan from Lending Club is not a quick, emergency loan. They can take up to a week to verify the application and get investors to back the loan.
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Lending Club Review
Lending Club started in 2007 (well 2006 technically but the site went live a year later) and has since grown into an online lending giant. They are currently the largest online lender in the United States with over 26 billion dollars borrowed and 1.5 million customers.
When you apply to Lending Club they will analyze your application and credit history with a soft credit check (doesn’t impact your credit score). Once you’ve submitted your preliminary info you’ll be notified almost immediately whether you’ve been approved or denied. If you’re approved you’ll move on to provide more detailed info for your loan.
You’ll be assigned a rating from A to G, and each letter is further broken down 1 through 5. A1 is the best rating with the lowest interest rate while G5 is the worst, carrying the max interest rate.
If your application is approved your loan will be available to investors. Just because you’ve been approved doesn’t automatically mean you’ll be funded. Investors can choose to fund all or part of a loan based on a number of criteria including borrower grade. Most investors invest small amounts in hundreds or even thousands of loans to reduce the risk of defaults.
Once you’ve been funded the money will be deposited in your bank account, generally within a few days. Repayment is very standard, you’ll have a set monthly payment to Lending Club. They take care of dividing up the payments to all the individual investors.
Lending Club has competitive rates. The lowest cited rate is 5.99% but in some cases, borrowers with great credit and a good history can get a special rate of 4.99%. Borrowers with poor credit aren’t going to find any great deals here but unless you’re at the bottom of the barrel you may still be able to beat your credit card rates.
Lending Club borrowers take out loans for a variety of reasons. The most common being refinancing (45.5%), credit card payoff (15.5%) and home improvements (5.5%). A big advantage is that the interest rate is fixed. With credit card debt a late payment can cause your interest rate to balloon. We’re not saying to be late but it’s good to know that if you are you just have a set late fee.
Lending Club compares well to Prosper, their rates are similar, though Prosper has a bit lower max loan amount of $35,000.
Visit LendingClub.com to Apply
Additional Lending Club Features
Here are a few things Lending Club has that not all lenders offer:
- For individuals who meet the requirements, there is the option to have the creditors paid off directly when using the loan for debt consolidation. This isn’t a game changer but it does remove an extra step from the process.
- They allow joint loan applications. This means you can get a co-signer if you don’t qualify. One needs to have a credit score of at least 640 while the other can be as low as 540. Just be sure everyone understands what is involved when bringing in a co-signer.
- If you’re having trouble making your payments Lending Club may allow a hardship plan for up to 3 months. During this time you’re only paying on the interest.
Note to Investors
Our Lending Club review focuses on the borrower side but we’ve looked into the investor side as well. On paper, the returns look great, anywhere from 5% up to 11%+. But there’s a catch. The default rates aren’t factored into these returns and you need to be aware of this ahead of time.
We’re not saying you can’t make a good return, but keep in mind these are unsecured loans and people are going to default. This is why the most successful strategy is greatly diversifying by taking very small parts in many loans.
If you want to learn more details you can check out the story CBS did on the issue.
Lending Club Reviews From Around the Web
|Better Business Bureau||4.2/5 - 61 Reviews|
|Credit Karma||4.5/5 - 1,555 Reviews|
|Consumer Affairs||3/5 - 27 Reviews|
Lending Club issued a statement informing people that their name is being used in scams. You can tell by some of the reviews we’ve seen that people do fall for it and still believe they are dealing with Lending Club.
While there are a lot of variations the most common seems to be people signing up at a site that mimics the real one. They are then contacted by the scammers and tricked into sending money, usually in iTunes or other pre-paid gift cards. As you can guess no loan is ever provided.
While it seems plainly obvious that Lending Club is not going to have you send them iTunes cards people still do it. Don’t do it. The origination fee comes out of the loan amount, there are no upfront fees to pay.
Lending Club Fees and Penalties
- Origination fee: 1% to 6% of the loan amount, based on borrower grade
- Prepayment fee: None
- Late fee: 5% of payment due or $15, whichever is greater
- Check processing fee: $7
- Declined payment fee: $15
Business Contact and Profile for Lending Club
|Address:||71 Stevenson St STE 300
San Francisco, CA 94105-2985
|Type of Business:||Financials Services, Peer-to-Peer Lending|
|Principal:||Mr. Scott Sanborn, CEO|
|BBB Accreditation:||This business is accredited with the BBB and has an A+.|