Are you considering taking out a small loan from LendFu?
LendFu is one of many several online marketplaces that provides peer to peer loans to select borrowers.
Unlike online lenders and brokers, LendFu doesn’t actually lend money to individuals. Rather, individual members and non-profit organizations provide financial aid to applicants.
For this reason, LendFu may be an attractive lending option for individuals needing online loans.
Nonetheless, it’s important to be informed before you get started on your application.
In this post, we’ll look at the pros and cons of obtaining a loan through LendFu so that you can make your decision wisely!
LendFu: The Basics
According to its website, LendFu is a five-year-old lending marketplace that was first created by Silicon Valley entrepreneurs. It is a service of Social Lending FPC, a California Flexible Purpose Corporation.
LendFu claims on its website that it is a marketplace, “not a payday lender, broker, or check casher.”
This means that any loans obtained through its website are obtained via other lenders, both individuals, and non-profit organizations. LendFu is merely the pathway to get to those loans.
Specifically, LendFu is a peer to peer lending marketplace that is an alternative to payday loans.
What does this mean for borrowers?
Essentially, it means that borrowers can take out small loans that aren’t beholden to the high-interest rates payday loans often have in the industry. According to its website, a borrower can take out a $500 payday loan, for example, and only pay $69 for doing so.
LendFu also states that it does not have any hidden fees, cash advance charges, or rollover fees. It only charges borrowers a flat fee for principal amounts.
LendFu claims that it can offer such nominal rates because it relies on peer-to-peer lending and uses high-tech automation to reduce transaction costs.
It’s even possible to become a lender yourself through LendFu. Lenders can choose the individuals they want to assist.
Because the LendFu marketplace deals with small loans only, borrowers can request between $100 and $1,000.
Once you obtain a LendFu loan, you can choose your repayment plan. Some individuals opt for a single repayment, while others choose an installment repayment plan. Borrowers repay lenders themselves on those lenders’ terms.
Allegedly, requesting a LendFu loan does not affect your credit.
Lastly, LendFu itself does not specifically approve or reject loan requests. The lenders themselves decide an application’s fate.
The Pros: LendFu Loans
There are several advantages when it comes to requesting a LendFu small loan. Let’s discuss these now.
1. Low Rates for Payday Loans
Many payday or cash advance loans come attached to high rates. Many payday loan borrowers end up paying twice to three times the principal amount over the course of a repayment plan.
For many individuals, this can be prohibitive, especially if they have requested a small loan for less than $1,000.
LendFu’s alleged flat rate fee is minimal at best, giving individuals a more cost-effective means of getting the loan they require. LendFu also enables potential borrowers to compare its rates with that of other lenders via its website to prove the industry difference.
2. Flexible Re-Payment Plan
LendFu borrowers get to set their own terms for repayment, within limitations. They can choose to repay a loan in a single payment by a specific date.
They can also choose to pay back their loan in small installments by a certain deadline. It is possible to extend a payment plan for a minimal fee (at least $5).
This can give borrowers some needed breathing room, especially if they are in a financial dilemma. Some online lenders don’t give borrowers such autonomy in choosing repayment plans.
3. No Credit Impact
Obtaining a loan through the LendFu marketplace does not impact a borrower’s credit score.
LendFu does require individuals to show proof of income on their accounts prior to requesting a loan. However, it does not require a credit score or history.
LendFu will obtain an alternative data risk score from public records and other financial reporting services. This may be used by lenders to assess your credibility in taking out a loan, but this does not influence your credit score in any way.
The Cons: LendFu Loans
Despite these advantages, there may be a few disadvantages to requesting a LendFu loan.
1. Limited Amount & Payment Fees
The maximum amount that an individual can request through LendFu is $1,000. If you are in need of more cash, this marketplace may not be for you.
It is, however, possible to request multiple loans at once from different lenders.
LendFu also states that it charges a $6 flat fee per scheduled repayment. If borrowers wish to repay their loan in several installments, these fees can quickly add up.
In this sense, LendFu coaxes its borrowers to repay loans in one go, which may not be feasible.
2. Approval Isn’t Guaranteed
Borrowers must establish a LendFu profile and submit a loan request to the entire marketplace of private lenders and non-profits.
A lender must decide whether or not they want to meet your request.
For this reason, approval for a LendFu loan isn’t guaranteed. It can also be difficult identifying why your request hasn’t been approved, given the fact that borrowers cannot communicate with potential lenders.
3. A Marketplace is a Marketplace
Peer-to-peer lending can be mystifying to some borrowers. At the end of the day, as a LendFu borrower, you have no control over which lender chooses to respond to your request.
Borrowers also have to negotiate payments with lenders on their own terms. This may make for an uncertain and/or sketchy experience for borrowers.
Final Thoughts: LendFu Review
LendFu is an online lending marketplace that connects individual or non-profit lenders to prospective borrowers. For this reason, LendFu loans have lower rates than most online loans.
LendFu borrowers don’t have to worry about loan requests impacting their credit scores, or even needing substantial credit to apply. However, approval isn’t guaranteed and negotiating a lending marketplace can be tricky for some borrowers.
LendFu is ideal for borrowers who like the idea of peer-to-peer lending and don’t mind its limited loan amount.
At Bonsai Finance, we are here to help you navigate your financial options. Start a conversation now to learn more about our payday loans!