Lending Club is a peer-to-peer lending platform that launched in 2007. They offer a wide variety of loans for things like credit card refinancing, home buying, business, medical expenses and more. As of September 30 2015, Lending Club has funded over $13.4 billion in loans.
You must be a US citizen, permanent resident or on a valid long term visa to apply for a loan on Lending Club. You must also be at least 18 years old with a verifiable bank account. Lending Club is currently unavailable in two states, Iowa and Idaho.
Lending Club groups loans into three different categories: personal, business and patient financing. This post will give you an idea of how each of these work along with some review from past borrowers:
Personal Loans
It only takes minutes to apply for a personal loan on Lending Club, and you can get funded in as little as a few days! Borrowers that use Lending Club to consolidate debt or pay off high interest credit cards in one fixed monthly payment see rates reduced by an average of 33%!
There are no prepayment fees or penalties either – which gives you a chance to eliminate future interest payments and save more. Even better, getting a loan from Lending Club can actually boost your credit score!
“76% of borrowers experience a FICO score increase three months after obtaining their loan, with an average increase of 21 points!” Lending Club’s 2014 – 2015 survey data shows.
The process is easy – just complete the fast application (which won’t affect your credit score) and instantly review the loan offers you qualify for.
Business Loans
Lending Club can provide you with a business loan or line of credit up to $300,000, with rates that start at 5.9% for the best borrowers. Applying for a business loan takes less than five minutes and you instantly get to see your loan offers. Repayment terms are longer than most online lenders (1 – 5 years) meaning lower monthly payments!
When considering loans, Lending Club looks for businesses who have been operating for 24 months and have made at least $75K in annual sales. Other requirements include having no recent bankruptcies and owning at least 20% of the business.
For loans under $100K, there is no need for collateral, business plans or projections, visits to your business, costly appraisals or title insurance. Lending Club takes out some of the tedious aspects of traditional loans to streamline the process and make securing a loan for your business a breeze.
Patient Loans
Lending Club’s patient financing service offers doctors a way to easily provide their patience with better financing options so they can take more time to focus on their practice.
There are two different options for patient financing on Lending Club: Extended Plans and True No-Interest Plans. Extended Plans can be used to cover up to $50K in medical expenses with APRs starting at 3.99% and True-No Interest plans go up to $32K at 0% APR for up to 24 months.
Lending Club currently offers specialized patient services in four areas: dentistry, fertility, hair and bariatric (weight loss surgery).
Reviews
Lending Club has a 4.3 star rating on Credit Karma, with over 2000 total reviews. In October 2015, one loan holder shared:
“I have looked into consolidation loans before and nothing really worked or they seemed more complicated than I could deal with. This was so easy AND QUICK I’m still kind of spinning that the money is already in my account. WOW. Would recommend this to anyone.”
Many people have left similar positive reviews of Lending Club, but one of the issue that people seem to have (that I’ve also seen with a few other P2P lending sites) is that people often get preapproved fast but some are declined a few days later. That’s what happened to this user who left a review on Pissed Consumer:
“Filled out app. Pre-approved instantly.
The initial process seemed easy. Submitted all information as requested. Received email that loan was fully funded and should have my loan soon. They even had access to my checking account.
I waited and waited. Finally received a call. They stated my numbers did not match their numbers exactly and they denied the loan. They did admit they were way behind … Sounds too good to be true, it probably is. Would not recommend.”
Lending Club does address the issue in an FAQ on their website. They note that:
“Common reasons for being declined for a loan after receiving a pre-approved offer are that an applicant’s current outstanding debt is too high relative to their income or that changes have occurred in their credit report since pre-screening.”
They also do mention that the application and funding process can take up to 14 days (or longer). I think that Lending Club could better manage this negative feedback by making some of this information a little more upfront. It’s all there for those who look deeply enough, but a quick scan of their home page doesn’t necessarily give borrowers the most realistic expectations – in most cases they are seeing the best case scenario.
Conclusion
One big issue that often comes up with new crowdfunding platforms is the issue of scaling their growth. This can lead to the confusing experience of some people coming to think that Lending Club has bad customer service and is too good to be true, while many others have used the platform to successfully finance multiple loans.
It seems that while the current focus is on making things faster and easier for borrowers, sometimes it backfires in that people sometimes get denied unexpectedly. One thing to remember is that the peer-to-peer lending industry is still growing and evolving. Platforms like Lending Club and Prosper are still trying to figure out the best ways to serve their customers, something to keep in mind if you decide you want to give this alternative a try.
For more information on Lending Club, check out our review for investors!
