Lending Club Review
Lending Club is one of the most recognizable names in the online lending industry. It uses an innovative peer-to-peer model that matches borrowers with investors who are willing to finance their loan requests. This unique approach has proven to be a big hit, as Lending Club has grown to become the largest online lending platform operating in the United States. Since its 2007 founding, Lending Club has filled more than three million loans with a combined value of more than $50 billion.
In this guide, we’ll break down the Lending Club platform, analyze the types of loans you can find through its network, and weigh in with our take on how the service stacks up in the competitive world of online borrowing.
How Lending Club Works
On the borrower side, Lending Club functions much like any other online lender. You visit the website and fill out an application form that covers important details like:
- The amount of money you’re looking to borrow
- The intended purpose of your loan
- Personal information, including your name and address, employment history, and income level
Lending Club then submits your loan application to its partner investors, who consider all requests on a case-by-case basis. Uniquely, your application is not evaluated by representatives of partner lenders or financial institutions. It is reviewed by investors who participate on that end of the site. They decide whether to approve your application, and on what terms.
If you meet Lending Club’s borrower requirements, your application is likely to be successful if the information you provided on your application was accurate. Upon the acceptance of your request, you will receive a list of loan offers that meet your needs. You can then choose the offer that appeals to you the most, finalize it, and receive your funds.
Lending Club does not perform a “hard pull” of your credit data. Instead, would-be borrowers are subject only to “soft” inquiries, which do not damage your credit rating.
What Kind of Loans Does Lending Club Offer?
Lending club specializes in unsecured personal loans. Many customers turn to the service when they need funding to finance a major purchase, or to consolidate high-interest credit card or loan debt. However, Lending Club offers loans for many other purposes, including:
- Home improvement or relocation expenses
- Medical bills
- Supplemental funding for a home purchase
- Car refinancing
Lending Club’s personal loans come with the following general terms as of August 2020:
- Borrow $1,000 to $40,000 for any approved purpose
- Choose a repayment term of 36 months or 60 months
- Annual percentage rates (APRs) range from approximately 8.45% to 35.89%
- Origination fee: 2% to 6%
- Late fees: $15 or 5% of the late payment amount, whichever is greater (the penalty triggers if you are more than 15 days behind on a payment)
- No prepayment (early payment) penalties
Entrepreneurs can also use Lending Club for small business loans. These loans work a little differently than those intended for private individuals. Here’s what you can expect to find as of August 2020:
- Borrow up to $500,000 in small business funding
- Repayment terms ranging from 12 months to 60 months
- Fixed monthly payments
- APRs starting at 4.99%
If you’re looking to refinance an existing car loan, you also qualify for special loan terms. Borrowers in this category can receive $5,000 to $55,000 in funding. Lending Club will pay off your current loan, and you will become responsible only for the new loan through your Lending Club account.
Requirements vary, depending on whether you’re looking for a personal loan or a small business loan. For personal loans, you must meet the following criteria:
- You must have at least three years of credit history
- Your FICO credit score must be at least 600 (higher scores qualify for more loan offers and better interest rates)
- You must have a debt-to-income ratio of no more than 40%
Advantageously, Lending Club considers joint loan applications. In these cases, joint applicants must have a combined debt-to-income ratio of 35% or less.
According to data compiled in May 2020, the typical Lending Club borrower has the following profile:
- Average annual income: Approximately $68,100 to $84,500
- Average FICO credit score: 640 to 705
- Average loan amount: Approximately $8,400 to $15,300
- Average loan APR: 8.46% to 30.99%
Small business loans are available to borrowers who have been operating continuously for at least one year and have at least $50,000 in yearly revenues or sales.
Pros and Cons of Lending Club
According to customers and reviewers, here’s what Lending Club does particularly well:
- It offers the ability to pre-qualify for loans through a “soft pull” of your credit data, which does not impact your score
- Lending Club accepts joint loan applications, which is relatively rare for online lenders
- The company can directly manage the resolution of your existing loans if you use the service to refinance or consolidate existing debt
- It offers a wide range of loan options to both personal and business borrowers
On the downside, Lending Club comes with drawbacks including:
- All Lending Club loans include origination fees
- Lending Club does not offer a mobile app to help you manage your loan on the go
- Your application may be turned down based on the intended purpose of your loan if your FICO credit score ranges toward the low end of eligibility
The Bottom Line
Lending Club has received positive coverage in prestigious publications including The Economist,The New York Times, and Inc., among others. It continues to enjoy a well-deserved reputation as one of the top online lenders in the U.S. market, with millions of satisfied customers speaking to its reliability and integrity.
Furthermore, Lending Club has a very impressive profile on Trustpilot. As of August 2020, the company had an impressive aggregate score of 4.8 out of 5 on more than 1,100 reviews. A whopping 89% of users gave the service a perfect 5 out of 5, while an incredible 95% scored it at 4 out of 5 or higher.
Our take: Lending Club is a solid option for borrowers, especially those who have good credit and are seeking to refinance higher-interest debt. You have nothing to lose by applying if you qualify, since Lending Club does not perform a hard credit inquiry.