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LendingClub vs. Best Egg

LendingClub and Best Egg are two online lenders that work in a similar fashion: Both connect borrowers and investors directly. Neither company has a physical building, and this, combined with a streamlined underwriting process, helps keep costs low, which means they can offer low interest rates to consumers.

LendingClub began as a peer-to-peer investing company, but today, large institutional lenders are the company’s primary source of capital. However, average people can still invest their savings in LendingClub.

This makes the company different from Best Egg, which only uses large investors. Also, Best Egg requires its investors to buy whole loans, whereas LendingClub allows smaller investors to buy portions of loans.

Another difference: Best Egg takes on some of the loan’s risk, aligning its interest with the investors. Because of this, it also takes a greater share of the profits.

If you’re in need of a personal loan, which company is best for you? Let’s take a look at the nitty gritty so you can make an informed decision.

The details

Interest rates: LendingClub assigns borrowers a score based on a 25-grade system, which will determine what interest rate they qualify for. Rates range from 5.99% to 35.89%.

Best Egg’s Interest rates range from 5.99% to 29.99% APR and are fixed during the life of the loan. The company doesn’t specify the criteria for qualifying for a particular rate.

Fees: LendingClub does not charge an application fee, but it does charge an origination fee. This is taken out of your loan before it’s deposited in your account and the amount is determined by the grade of your loan, which is based on your credit rating. The percentage of this fee ranges from 1% to 6% of the total loan amount. It’s important to consider this fee when you’re deciding how large of a loan you need, so you can ensure that the amount you borrow–minus this origination fee–will cover your needs.

Best egg is similar in this regard. The company charges no application fee but does have a .99% to 5.99% origination fee.

Loan amount: LendingClub offers loans for as low as $1,000 up to $40,000.

Best Egg’s loans range from $2,000 to $35,000.

Application process: LendingClub’s application is done entirely online. First, you fill out a short questionnaire. If you qualify, you will receive several loan offers from individual investors. From these, choose the loan that best fits your needs and complete an online application form and data verification process. You should get a response within minutes, and the money should be deposited in your bank account in as few as five days.

Best Egg’s application is also entirely online and you can get an answer very quickly because Best Egg has investors who have pre-approved borrowers that meet certain criteria.

LendingClub

Pros
  • Low rates
  • Easy application process
  • Flexible loan amounts.
  • Loans as low as $1,000 available
  • Loans as high as $40,000 available
Cons
  • Must have a minimum credit score of 680 or higher to qualify
  • Origination fees

 

Best Egg

Pros
  • Low rates
  • Easy application process
  • Extremely fast response to application
  • Flexible loan amounts
  • Loans as low as $2,000 available
  • Loans as high as $35,000 available
  • All loans go through one FDIC-insured bank
  • All loans are funded by a single investor
Cons
  • No clear guidelines on what you need to qualify
  • Origination fees

LendingClub is great for people with good credit who want a low interest rate.

If your credit score is at 680 or above, LendingClub is a good place to apply for a personal loan. You can get a low interest rate, a loan for under $5,000 if you just need a small infusion of cash, and the application process is quick and simple. Or, if you need more, you can borrow up to $40,000.

LendingClub’s loans are a really good fit for people who have longer-term debt or carry balances on several credit cards. At LendingClub, you can consolidate high-interest debt into a lower interest loan with a fixed rate.

Best Egg is great for people who need to be funded quickly and securely.

As with any loan, a higher credit score gives you a better chance of qualifying. If your scores are high as well as your income, you should be able to qualify for an interest rate on the low-end of Best Egg’s scale, even though the company doesn’t give specific criteria for its decisions. Another plus: All loans are made by Cross River Bank, a New Jersey chartered bank that is insured by the FDIC.

Remember, before you borrow from any lender, do your research and make sure the loan is a good fit for your income and lifestyle.

To read about more types of personal loans and learn about the pros and cons of other lenders, visit Supermoney.

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