LendingClub Personal Loan Review

Personal loan shoppers now have more options than just banks and credit unions.

Peer-to-peer lending lets you ask ordinary people for a loan.

When you apply, online investors can decide whether to invest in your loan.

LendingClub helped pioneer peer-to-peer lending (P2P).

Since 2007, LendingClub has been matching borrowers with the funding they need.

In this review, I’ll focus specifically on LendingClub’s personal loans.

Table of Contents:

  • What is LendingClub?
  • How LendingClub Personal Loans Work
  • Interest Rates
  • Application Process
  • Customer Support
  • Pros & Cons

What is LendingClub?

Lending club personal loans logo

So, what, exactly, is LendingClub?

LendingClub is an online, peer-to-peer lending marketplace that can help borrowers whose loan may not be approved by a traditional financial institution.

When you apply for a personal loan on this platform, LendingClub’s members can join together to provide the funding you’re asking for.

When you repay your personal loan, with interest, the profits from your loan go back to these individual LendingClub members rather than to a bank.

LendingClub offers quick and flexible loans for borrowers and an investment opportunity for personal lenders.

Is LendingClub Legit?

Because it’s a peer-to-peer platform, LendingClub cannot guarantee every lender on its platform is legitimate.

But LendingClub has a page designed to fight scam artists who may try to reach you through the marketplace.

You can see safety guidelines that share red flags to look for if you’re suspicious of a new loan offer.

This can help you choose a reputable lender when you do eventually close on a personal loan.

How Do LendingClub Personal Loans Work?

You could use a personal loan for a variety of things. Some common uses are consolidating debt, credit card debt refinancing, funding a big purchase, or paying off medical bills.

Whether you get your personal loan from a bank or through a platform like LendingClub, your goal will be the same: to borrow a lump sum of money and then repay the loan gradually.

Your experience with LendingClub will resemble working with an online bank. You’ll still get a credit check, wait for approval, receive funds, and then pay off the loan according to its repayment terms.

What’s different from a peer-to-peer lender is what happens behind the scenes. When you apply for borrowing, you aren’t completely at the mercy of one or two staff members at a bank.

Instead, a variety of investors can decide whether to fund part of your loan application.

LendingClub encourages people of any credit background to check their prequalified rates. The platform recommends borrowers have a minimum credit score of 600, but you could still apply with any credit score.

As with any kind of borrowing, a shaky credit history will require loans with higher annual percentage rates and, as a result, higher monthly payments.

Compare Rates with Lending Club

LendingClub Personal Loans Interest Rates

With a personal loan through LendingClub, you can expect APR ranges from 10.68 to 35.89 percent and loan terms ranging from three to five years.

Borrowers can apply for fixed-rate loans as small as $1,000 and as large as $40,000.

LendingClub transfers your loan proceeds in as little as four days, but it could take a full week to receive your loan.

While LendingClub does not charge a prepayment penalty, it does add on a number of other fees.

  • LendingClub charges an origination fee ranging from 2 to 6 percent on all loans.
  • You’ll also see a $15 fee if you don’t have enough money in your bank account to cover your monthly payment when it gets automatically withdrawn.
  • LendingClub charges a late fee of 5 percent or $15, whichever is more. But you do have a 15-day grace period before getting hit with the late fee.

LendingClub ultimately charges more in fees than other personal loan lenders.

LendingClub Personal Loan Application Process

The peer-to-peer lending process is different than traditional lending, so it’s important to understand the application process before you begin.

To apply for any kind of borrowing on LendingClub you must:

  • be at least 18 years old
  • be a US citizen, permanent resident, or long-term visa holder
  • have a bank account
  • have at least 36 months of credit history.

LendingClub does not operate in Iowa, West Virginia, or any US territories.

Qualifying to Apply

If you meet the above criteria, you are ready to get started, but meeting the criteria doesn’t guarantee you’ll get a loan; it just means you’re qualified to apply.

On LendingClub’s personal loan home page, you will see a button that says, “Check my rate.” Clicking that will take you to the initial loan application.

For the first form, you will need to provide:

  • Name
  • Date of Birth
  • Address
  • Email
  • Total income before taxes
  • Loan amount
  • Loan purpose

Joint Applications

If you are worried about your credit report, you can apply with a co-borrower. Your co-borrower would have to provide the same personal information.

Your co-borrowers debt-to-income ratio must be less than 35 percent. (The primary borrower’s debt-to-income ratio can be as high as 40 percent.)

Assessing Loan Options

With this information, LendingClub will estimate loan rates for you. These estimates include fixed-rate APR ranges, monthly payments, and loan terms.

If you decide to move forward with a loan offer, you will need to provide additional information for the formal application.

Formal Application will include:

  • Social Security number
  • Phone number
  • Employment situation
  • Employer’s name and address
  • Whether you rent or own

Rating You as a Borrower

At this time, LendingClub will perform a soft credit check. Based on its results, you and your loan are assigned a rating between A (best) and G (worst.)

You won’t see your application’s rating but potential loan investors will.

The potential investors can also review your lending request as they decide whether or not to invest in your loan by providing part of the funding you need.

LendingClub members deciding whether to fund your loan can also see your credit score and credit history, your debt-to-income ratio, and the amount you owe in other debt such as student loans, business loans, or mortgages.

Fair Credit Borrowers May Get Approved

Riskier loans have high-interest rates which means an investor could make more money — assuming you repaid the loan as agreed.

So having fair credit doesn’t mean there’s no chance you’ll get your loan funding.

If enough members decide to accept your loan, you can either close on the loan or you can still back out.

If you choose to move forward with your application, the lender will conduct a hard credit inquiry and close the loan.

Fund Disbursement

After loan closure, you will see the funds deposited into your account in about four business days.

It may take as long as a week to transfer the funds.

Then it’s time to check your repayment schedule so you don’t miss the first installment and get charged a late payment penalty.

Customer Support

LendingClub’s support team can help if you run into problems applying or accepting a loan offer.

LendingClub also has a thorough FAQ page which can provide answers to a lot of problems.

And you can always call 1-888-596-3157 to speak with a customer service rep.

Unlike some LendingClub products, this platform’s personal loans do not have a dedicated account manager.

This means that if you cannot get your question answered by LendingClub’s customer service team, you will need to contact the lender directly.

Pros and Cons

LendingClub.com has grown into a big player in the personal loan space, but how does it actually stack up against its competition.

We’ll discuss some of the pros and cons of LendingClub personal loans below.

Pros

  • Direct payment to creditors: Debt consolidation is a great reason to get a personal loan. If you’re consolidating several different accounts into one, LendingClub can do a lot of the legwork by paying those creditors directly. In fact, the platform will pay off up to 12 separate creditors — a nice shortcut when it’s time for these balance transfers.
  • Joint applications: Not all personal loan platforms allow co-borrowers. If you don’t have a full three years of credit history, you’ll need help from a co-signer. A joint application could get you better loan rates and it also gives you a chance to develop your own credit history.
  • No prepayment penalty: You may think paying off a loan early is a good thing, but lenders don’t always see it that way. Some lenders still charge a fee if you pay off your loan early. LendingClub does not charge prepayment penalties.

Cons

  • Requires good credit: To qualify for a loan with LendingClub, you will need to have fair to excellent credit. While you can still technically get a loan through LendingClub with poor credit, this will result in high-interest rates. If you have poor credit, your chances of getting approved will be slim.
  • Potentially high origination fees: A 1 percent loan origination fee charged to the borrower upfront is common. But LendingClub charges origination fees that could reach as high as 6 percent of your loan amount. On a $2,000 loan, 6 percent is $120. On a $20,000 loan, 6 percent would cost you $1,200, due upfront. You can get this fee deducted from your loan proceeds if you can’t pay it out of pocket.
  • FICO 8: LendingClub still uses the FICO 8 scoring model. Most lenders do still use this model. The new FICO 9 model places less emphasis on medical debt which means some borrowers will have better credit scores based on FICO 9.
  • Potentially high-interest rates: The best personal loan for you should have a low-interest rate. LendingClub’s rates can surpass credit card rates for some borrowers. Chances are you’ll find the lowest rates on personal loans elsewhere.

Is LendingClub For You?

If you’re searching for a personal loan, you’ve probably come across LendingClub. This is a big name with more than a decade of online presence.

LendingClub has written more than $11 billion worth of loans since 2007.

But LendingClub can’t provide the best personal loan for every applicant.

Because of its strict criteria, additional fees, and potentially high-interest rates, some borrowers may be put off by LendingClub.

They prefer an option like Prosper or LightStream which has a more traditional underwriting process.

But other borrowers will get just what they need with LendingClub.

Specifically, borrowers with good credit and low debt who still can’t get financing through a traditional bank or credit union because the bank doesn’t approve of the loan’s purpose.

If you need to file a joint application or have good credit, LendingClub can assist you where many other lenders may not be able to.

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