LendingClub is America's largest lending marketplace for personal loans. LendingClub started as a Facebook application, which generated the buzz and investors needed to take the concept to the next level. As of December 2016, LendingClub has helped fund over $26 billion in loans and helped nearly two million borrowers achieve their goals.
As with other marketplace lending platforms, LendingClub provides borrowers with instant loan offers and faciliates the funding of a chosen loan offer through the investors that participate in the marketplace. The loans are made by WebBank, Member FDIC, LendingClub uses the capital of marketplace investors to purchase the loans from WebBank. Investors then receive the payments of borrowers plus interest. LendingClub makes money by charging an origination fee to borrowers and a servicing fee to investors.
LendingClub assigns borrowers a score based on a grading system, which will determine what rate they qualify for. Subsequent APRs range from 5.99% APR to 35.89% APR.
There is no application fee for a loan through LendingClub; however, an origination fee will be taken from the proceeds of your loan before they are deposited into your bank account. The percentage of this fee ranges from 1% to 6% of the total loan amount and depends on the grade of your loan — which is, in turn, based on your credit rating. It is good to keep this in mind when deciding what amount to request because you will need to factor in the origination fee to be sure the amount you receive will cover whatever it is you need to pay for.
Payments on your loan are withdrawn automatically from your bank account starting the following month. Alternatively, you can pay by check but an additional $7 processing fee is tacked on to each payment if you choose this route. You are free to repay the full loan amount at any time or make larger payments without risk of penalties or fees, but you must notify customer support to do so. If there is an issue with your payment, such as an error with your bank account or a bounced check, LendingClub will charge a $15 unsuccessful payment fee. There is a 15-day grace period before late fees are charged, but interest will continue to accrue. Your late fee will be either 5.00% of the late payment or $15, whichever is greater.
Borrowers can apply for loans ranging from $1,000 to $40,000. LendingClub offers access to 36-month and 60-month loan terms, but you can always pay the loan off early with no prepayment penalty to worry about.
LendingClub's loan application is processed online. Your first step is to check what rate you qualify by filling a short questionnaire. This will not affect your credit score. If you are eligible, you will receive several loan offers. Choose the loan you like the most and complete an online application form and data verification process. You will get a response within minutes, and the money should be deposited in your bank account in as few as five days.
LendingClub provides solid returns for investors and access to lower rates for borrowers than most traditional bank lending programs.
Borrowers who used a personal loan* via LendingClub to consolidate debt or pay off high interest credit cards report in a survey that the interest rate on their loan was an average of 24% lower than they were paying on their outstanding debt or credit cards.1
1Based on responses from 7,715 borrowers in a survey of 122,975 randomly selected borrowers conducted from 1/1/16 - 3/31/17. Borrowers who received a loan to consolidate existing debt or pay off their credit card balance reported that the interest rate on outstanding debt or credit cards was 20% and average interest rate on loans via LendingClub is 15.2%. The origination fee ranges from 1% to 6% and the average origination fee is 5.49% as of Q1 2017. Best APR is available to borrowers with excellent credit.