All of you who have been looking for peer-to-peer investment company have heard of Lending Club. It has been the synonym for personal loans for a few years now and it is probably going to stay like that in the near future. Almost all Lending Club reviews suggest that it is the best of the best, but why? Now we will have an opportunity to check the matter closely and to determine is this loan provider right for your needs.
What to know about Lending Club before you apply for a loan?
As many other peer-to-peer investment companies, Lending Club uses investors to fund the loans and provide them to borrowers. Obviously, investors do make a profit, thanks to your interests you pay. A good thing is the fact this provider has decent rates and is known for spotless services. However, they have some requirements. You will have to:
- A credit score is something which must be spotless as well. Your score of 600 is the bare minimum on which you can apply. An average borrower according to the company has 699.
- Your credit history must be longer than 3 years. Most borrowers have 16 or more years of credit history.
- An income should be above average. The average income is $56.000, but you must have a higher than that in order to get a loan. Lending Club claims that their borrowers have around $76.000 income.
- The debt-to-income ratio must be below 35%. This is the maximum allowed ratio, while most borrowers have impressive 16%.
If you can pass these requirements, Lending Club is perfect for you. There are a few more things you should know about the company. First of all, they need 7 days to process your request. The time is needed for the investors to fund your loan.
Average APR is between 6% and 35.9%. The amount of money you can raise is anything between $1.000 and $40.000. The origination fee is between 1 and 6% and soft credit check is included.
Lending Club compared with other providers
As we have mentioned earlier, Lending Club is one of the biggest peer-to-peer lending companies in the business. They have invested more than $24 billion. Keep in mind that the company only accepts requests of the borrowers and they send them to the investors. They are those who will determine will your loan be funded and approved.
Each borrower will get a grade, which will determine the interest! Only investors can have the insight to the grade, while borrowers don’t. On average, the annual percentage is 6% (more precisely 5.99%) for most borrowers. Only those with exceptional credit score can expect more affordable interests, around 4.99%.
The only company with a similar system is Prosper, however, they offer a mobile app, which will allow for all borrowers to keep track of their loan, finances, and rates.
One of the possibilities we appreciated is a joint loan. It allows to two borrowers to get the same loan. But, if you are planning to try it, make sure one of you has a credit score 600 or above, while the other one must have 540 or more! Even then, the debt-to-loan ratio must be under 35% (combined for both borrowers).
Hardship is another feature, more than just appreciated. It allows for all borrowers with issues paying back the loan to pay for interest only. This option lasts only 3 months and it is available to all borrowers.
When it comes to penalties, they are almost identical to other companies. For example, we have the origination fee, which will vary between 1 and 6%, depending on the grade a borrower has. Late payment and unsuccessful payments are $15 each, which isn’t very serious. In addition, check processing is $7.
The bottom line
Now is your turn. Should Lending Club be tried? The answer is definitely. It offers a lot of ‘’affordable’’ features and possibilities, which allow you to get the best loan and to pay it back as they prefer. Compared to other companies of the same time, it is ranked among the top 5! Being the largest company really has a few advantages.
Before applying for a loan, make sure to pay attention to all the requirements we mentioned at the beginning. Don’t forget that investors are those who choose should you get a loan or not, and if we know that they will invest their real money, approval isn’t something which is 100% guaranteed.