Lending Club

The Good

• Competitive, transparent terms
• No pre-payment penalties
• Allows co-borrowing
• Funding in as few as 3 days

Lending Club is one of the largest U.S. lenders and at the time of this writing, it lends in every state EXCEPT Iowa and West Virginia.

Competive, Transparent Terms

Lending Club has built a clear-cut framework of services – there are no hidden fees or prepayment penalties, and information is easily accessible on their website. The amount you will pay over the three- to five-year course of your loan is laid out before you commit, so you won’t have any unpleasant surprises.  And at interest rates as low as 6.16%, for borrowers who are approved, they are typically one of the most competitive rates.

In fact, for borrowers with exceptionally good credit, the interest rate can reach as low as 6.95%.

Co-Borrowing

Lending Club does have fairly strict standards when it comes to your credit score. Unlike most other peer-to-peer lenders, however, Lending Club allows joint borrowing. One of the applicants must have a credit score of 600 or higher and the other applicant’s score must be at least 540.

Competitive Interest Rates

Lending Club offers some of the lowest APR rates in the industry. It advertises rates ranging between 6.95 to 35.89%, but there is one exception: an incredibly low 4.99 percent APR for applicants with exceptional credit. However, the majority of applicants receive an APR of 7.26 to 25.72%. These low rates make Lending Club a top choice for consolidating high-interest debt.

No Prepayment Penalty

Another money-saving feature of a Lending Club personal loan is the lack of a prepayment penalty. For example, if you take out a $10,000 personal loan to consolidate multiple high-interest debts with a maximum loan term of 36 months (three years) and are able to pay it off in only a year and a half, not only will you not have to pay as much interest as you would have otherwise but you will not be assessed a penalty for paying the loan off early (a common loan feature). This too can be worth thousands of dollars in savings over the lifetime of the loan.

The Bad

• More stringent criteria on credit score
• Low Debt-to-Income Ratio Required
• Origination Fees

Only Accepts Good to Excellent Credit

The most consistent complaint among Lending Club applicants is the company’s potentially challenging approval process. Only applicants with good to excellent credit are approved. In fact, the average Lending Club borrower has a 699 credit score and roughly 16 years of credit history. Further, Lending Club does not approve applicants who have had any late payments on their report in the last 12 months. Because of these reasons, it can be a huge challenge for subprime applicants to get approved.

Origination Fees

Like many lenders, Lending Club has experimented with how much to charge for origination fees or if to charge them at all.  An origination fee is the amount you pay upfront when taking out a loan – like a “setup fee.”  It’s typically a percentage of the overall amount borrowed.  At the time of this writing, Lending Club charges a 5.2% fee.  This is slightly more than some competitors, but unless you plan on paying the loan back immediately, their lower rates could still mean Lending Club is the cheapest option for you.

The Summary

We would be remiss if we didn’t acknowledge the shakeup that Lending Club experienced in May 2016, when founder and CEO Renaud Laplanche stepped down amid buzz about a questionable transaction between the company and an investor.

Lending Club President Scott Sanborn was quickly named as the new CEO and operations have continued since that time. In fact, LC has added auto refinance loans to its bag of tricks, saving well-qualified borrowers up to 2.5% on their car loans.

Despite its challenges, Lending Club remains one of the main contenders in the personal loan sector, offering competitive rates that save qualified borrowers a significant amount over alternative funding sources.

Check your rate from Lending Club