When looking for loans, one thing becomes quite apparent: there are so many options! A few years ago, one company, Lending Club, became very popular due to the increase in demand for online loans. But who should use Lending Club, and what is it exactly? Read on to find out!
What Is Lending Club?
Lending Club first launched in 2007, opening on Facebook. In fact, it was one of the first applications that worked on the social media giant. As a peer-to-peer lending market, the company is more of a virtual marketplace that matches borrows to the best lenders. Since its launch, the company has simply grown and grown, becoming the biggest loan marketplace available today! In 2018, Lending Club’s brought in a whopping $694.8 million in revenue.
Most people recommend Lending Club for shorter-term loans, like debt consolidation, student loan payoffs, credit card debt, and home refinancing. But what do Lending Club’s terms actually look like?
How It Works
Hold on before you immediately jump onto Lending Club’s website: not everyone can start borrowing money at once. To make sure that they pay their loan back, every borrower has their profile graded after signing up. The grade is based on a combination of factors, including financial history, credit score, and income. To be an excellent borrower in the Landing Club, you need to have a low debt-to-income ratio, steady income, and a credit score of over 700. Yet, don’t worry if the income part is hard to reach. Any user can combine their income with a co-borrower to qualify for a larger amount.
The grade also determines the interest rate of each user, which will fall between 5.99% and 35.89%. Meanwhile, Lending Club also has a personal loan fee of 1%-6% on each loan. As for term lengths, most payments are spread out over 36-60 months. Then, if qualified, the borrower will usually receive the money in about a week.
Pros And Cons of Joining Lending Club
Pros of Joining
- The Lending Club uses soft inquiries, meaning applying won’t affect a user’s credit score, unlike other offline loans.
- Online lending makes Lending Club both convenient and cost-efficient. This will ensure a lower interest rate and reasonable offers from both individual lenders and banks.
- There are no fees for paying off a loan early or setting up automatic payments.
Cons of Joining
- Despite being an online service, it’s not an overnight service. Receiving the money will take around seven days. So, for faster money, use other lending services.
- The interest rate is determined by the Lending Club, a private company, so it might differ from other lending services.
- There’s an origination fee, which can be costly. As we already stated, this fee can be from 1% to 6%. Moreover, other charges may occur. For example, there’s a $7 fee for paying by check, a $15 fee for overdrawing, and a 5% late payment fee.
Before applying, keep in mind that at least three years of financial history is required to be a part of the Lending Club. Also, make sure you communicate with a financial advisor before applying!