LendFu is a peer-to-peer marketplace for payday loans and short-term installment loans. The Silicon Valley company, which was founded in 2013, is similar to other peer-to-peer lenders, such as Prosper and LendingClub, but for people with bad credit who don't qualify for prime rates.
LendFu's platform allows individual investors to lend small amounts with short repayment terms without the need of using financial institutions as intermediaries.
Instead of using traditional loan underwriting methods, LendFu's platform works as an online prepaid credit card provider. Lenders purchase prepaid credit cards from LendFu and resell them to borrowers for an additional fee. Borrowers can then cash in the prepaid credit card and repay the lenders within the agreed term.
Although LendFu doesn't technically issue loans, the equivalent rates it charges in fees range from 26% APR to 365% APR.
LendFu only deals in small loans ranging from $100 to $1,000.
LendFu is only available in California, but there are plans to expand to other states. Residents from other states can register with LendFu and will be notified when the service is available in their state.
To apply for a loan, applicants must create an account LendFu, and post a loan request with the amount they want to borrow and the terms they are willing to accept. They then must wait and see whether lenders are willing to fund their loan request. There is no obligation to borrow when requesting a loan and LendFu will not check your credit history, so there's no credit penalty for requesting a loan.
LendFu is available for all types of borrowers, regardless of their credit score or credit history. It uses prepaid debit cards instead of relying on traditional financial institutions, so its fees and rates are very competitive. The small amounts and creative lending system make it possible for LendFu loans to be processed within 24 hours, just as long as there's enough lenders willing to finance a loan request.
LendFu uses an internal credit score system that is based on your payment history with LendFu. Repeat borrowers who pay on time can qualify for lower rates and fees.