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LendingClub Lender Review
21 May 2018

LendingClub Lender Review

When it comes to peer-to-peer lending, there are many firms offering similar services. Yet, LendingClub very well may be the largest. They were even called by Forbes one of America’s Most Promising Companies.

Since launching in 2016, LendingClub has originated more than $33-billion in small personal loans to over 1.5-million borrowers. Their unique business model benefits both consumers and investors.

So, can LendingClub be a benefit to you? Let’s take a look at the pros and cons of pursuing a personal loan with this firm, and you can decide for yourself.

The Basics

LendingClub is a platform where consumers can request funding. Likewise, investors can use that same platform to find requests to fund. By removing the “middleman,” LendingClub allows higher returns for the investor and lower rates for the borrower.

LendingClub allows a borrower to make a loan request, and investors can search those loan requests for ones they may want to take part in. Because of this, many factors that could cause a denial from a bank loan may not be as important to LendingClub.

When you request a no credit check loan through LendingClub, you allow a “soft inquiry” of your credit report. This is to determine your credit score. A soft inquiry has no effect on your credit score (like a hard inquiry would), but it also doesn’t reveal the complexities of your credit report.

From there, LendingClub assesses your request form and determines an interest rate based on your credit score. Based on your credit score, your interest rate can be as low as 5.32% for borrowers with the best credit. From there, investors will review your request form, and decide if they want to invest in your request or not.

So what sets LendingClub apart from the competition? Here at Bonsai, we’ve taken a look at the company, and we’re excited to report back to you what we’ve found.

The Pros

LendingClub may be one of the originators of the peer-to-peer lending business, but don’t let think that means they’re falling out of style. In their years in the industry, they have managed to completely transform the peer-to-peer lending style that they helped to create.

The factor that serves as the biggest pro to LendingClub is their unique business model. By bypassing banks, LendingClub has created an online-exclusive environment for providing personal loans no credit check.

More than that, this unique business model benefits both the borrower and the lender.

I know this all sounds like a risk, exposing your information to potential investors in this manner. But rest assured, LendingClub does not expose any of your personal identifiable information at any time. Even once a loan disburses, the lender will still have no idea who it was lent to.

Furthermore, LendingClub vows to never sell your personal information to third parties. For many, this is reassuring to hear, considering the recent scandals in the news.

A major advantage for borrowers aligned with LendingClub is that they only offer fixed rate payments. Furthermore, these rates are fully amortized over the course of your installment loan. These means you don’t need to worry about your payment amount changing during the life of your loan.

This is a major difference between a Lending Club personal loan, and another credit line a credit card.

Another positive to LendingClub and their personal loans is that they are unsecured loans. Loans like auto loans or mortgages are backed by the car or house it is funding.

But with an unsecured loan like LendingClub offer, you don’t need collateral to qualify. And more than that, these loans are offered in balances as high as $40,000!

LendingClub offers loans with term lengths of 36 months or 60 months. This comes out to 3 years or 5 years. However, there is no penalty for pre-payment. This even applies if you pay the whole loan amount off early.

The Cons

When it comes to LendingClub, it is clear there are a good number of pros. But are there cons as well? Of course, there are.

One of the biggest downsides to LendingClub is their minimum credit score. While they don’t advertise their guidelines, it has been determined that an applicant with a credit score less than 600 will be rejected.

While a score of 600 isn’t the worst it could be, it should also be clear that it comes with the risk of credit rejections. If you think or know that your credit would disqualify you from LendingClub, you may be better suited looking into bad credit loans.

The unfortunate side effect of having less than perfect credit is the scale of interest rates that LendingClub offers. While interest rates can be as low as 5.32% for well-qualified borrowers, the less than qualified buyers can end up with interest rates as high as 30.99%!

Another downside to LendingClub is that the maximum loan amount offered is $40,000. While that may sound high to many readers, it’s worth noting that there are several firms that offered loans up to $100,000, or more.

This may not be a big deal to some borrowers, but depending on your intent, it could be a deal breaker.

Finally, the last major issue that we’ve run into when it comes to LendingClub is their loan origination fees and timeframe. LendingClub charges a fee that varies between 1% and 5% as a loan origination fee. But, most of these fees average between 4% and 5%, with only the most qualified borrowers paying a 1% fee. There also might be a delay on getting you the funds, depending on how quickly LendingClub can find someone in the marketplace to back your loan. If you can’t stand for this delay, you may want to look into quick loans instead.

While assessing a loan origination fee is pretty common, it is worth noting that some servicers charge no fees at all. Again, this is likely not a deal breaker, but it is worth knowing as you examine your options.

The Verdict on LendingClub

While there are advantages to doing business with LendingClub, there are also disadvantages that you need to consider. While we have laid out what we feel are the important factors, you need to analyze your own needs and make a decision based on the information you have.

Do you have a good credit score? Your credit score should be at least 600, but the higher it is, the better.

Do you have a long credit history? The average borrower has 17 years of credit history!

Is your income high? The average income of a borrower at Lending Club is nearly $80,000!

Maybe these factors do describe you. If so, LendingClub may be the right choice for you. But if not, feel free to contact us today and we’ll be more than happy to help you find the lender who is.