Are They the Best Deal?

Do you need to refinance consumer debt or fund a side hustle? If so, taking out a personal loan may be your best option. (This is especially true if you don’t qualify for credit cards with a 0% APR).

But where should you take out your personal loan? If your credit score is between 650 and 700, LendingClub may offer the best interest rates and the most streamlined process for borrowing. Here’s what you need to know about personal loans from LendingClub.

LendingClub offers unsecured personal loans. These are loans with fixed interest rates, and terms of either 36 months or 60 months. LendingClub charges a loan origination fee ranging from 1% to 6% on its personal loans.

Proceeds from a LendingClub loan can be used for almost anything except gambling, investing, or higher education.

Anyone who borrows must be a U.S. citizen or permanent resident and at least 18 years old, and have a valid bank account and Social Security number or FEIN. LendingClub also underwrites based on factors such as credit scores and debt-to-income ratios.

You may have a joint personal loan from LendingClub in which both borrowers can contribute towards income or credit score criteria.

Right now, the minimum credit score for a borrower is 640, with a maximum debt-to-income ratio of 30%. These requirements may fluctuate from time to time, but the average LendingClub borrower has a credit score of 700.

Personal loans from LendingClub are loans with fixed interest rates with terms of either 36 months or 60 months.

Unlike many leading lenders, LendingClub charges an origination fee of 1% to 6% on all its loans. This fee is subtracted from the amount you receive when LendingClub sends you the funds. For example, if you take out a loan for $10,000 with a 5% origination fee, LendingClub will send you $9,500.

After accounting for the origination fees, APR on LendingClub’s personal loans range from 6.16% to 35.89%. You can borrow between $1,000 and $40,000 from LendingClub.

Borrowers considering loans from LendingClub should carefully consider two particular areas of concern.

First, LendingClub charges a hefty origination fee. This fee is baked into the APR of the loan, but people who want to pay off the debt faster pay a higher effective interest rate when they pay origination fees. If possible, it’s better to work with a lender that doesn’t charge an origination fee.

The other area of concern has to do with joint borrowing or co-signing loans. Co-signing a loan is always risky, and it’s not something that should be considered lightly. If the primary borrower defaults on the loan, you’re on the hook to pay it off, and your credit score will get dragged through the dirt too.

In general, we advise against co-borrowing except spouses with joint finances (and even then, typically only joint mortgage borrowing makes sense).

If your payment is more than 15 days late, LendingClub charges a 5% late fee or a minimum of $15.

Loans from LendingClub make sense for borrowers with fair credit who cannot find decent rates elsewhere.

However, borrowers with good or excellent credit should shop around to find the best possible rates on personal loans. Even borrowers with fair credit may find better loans (without origination fees) with some diligent shopping around.

Overall, LendingClub isn’t likely to be the best deal on a personal loan for you.


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