LendingClub has offered fair-credit, unsecured, personal, peer to peer (P2P) loans for debt consolidation and other major purchases since 2006. Their core offer is a personal consolidation loan that can help borrowers pay down high interest debt faster or simplify their finances. The company has certainly had it’s ups and downs, which leads some people to think LendingClub may have gone out of business.
The truth is that, as of today, LendingClub has proven their ability to roll with the punches and their offer is very much alive and kicking. So, for all of you wondering if you should try to get financed with or invest in LendingClub, here’s my honest answer.
In summary, here’s what we’ll cover:
- Is LendingClub Going Out of Business?
- LendingClub Loan Review
- Frequently Asked Questions
- Debt Consolidation Competitor Overview
- Conclusion: Is LendingClub Legit and Safe?
Feel free to skip around or read straight through. Now, let’s go!
Is LendingClub Going Out of Business?
For the record, LendingClub is not going out of business… not completely. Since 2016, the entire lending industry has been moving away from P2P loans. And, recently, this lender announced that they will no longer offer retail investing. This means that prospective investors should look elsewhere for opportunities.
As of 2021, LendingClub loans will be serviced through a more traditional online lending sytem. The company will no longer provide new peer-funded loans and will retire the Notes platform. Into the forseeable future, they will offer funding and other financial services through LendingClub Bank.
LendingClub Loan Overview
Now that we have all of that out of the way, let’s explore what you can get from LendingClub’s financing offer(s).
What Bank Does Lending Club Use?
Lending Club funding has customarily been serviced through WebBank, a company that has partnerships with many online Lenders. Above, I mentioned LendingClub Bank, which is technically a new name in the lender game. So, what’s the story?
In February 2020, LendingClub Inc. acquired Radius Bank, which they are merging with and relaunching under a self-branded title. This merger will cut out the middle man, which should lead to lower rates and is promised to bring high yields on new savings accounts.
Now, I need to note here that Radius Bank and WebBank currently offer similar savings account yields (up to 0.25% APY), which makes me think that rates for borrowers may not vary too much from LendingClub’s current offer.
Does LendingClub Charge High Fees?
You may have heard that LendingClub has no application, brokerage, or prepayment fees, and that might sound like a good deal. But, this is standard with today’s online lenders. The truth is that Lending Club charges fees that can sometimes be slightly than some of their competitors.
LendingClub’s Origination fees range from 2% to 6% of the total loan amount. On personal loans (up to $40K), APR ranges from 10.68% to 35.69%. Late fees of 5% of your unpaid payment or $15 will also be charged for payments that are 15 days late or more.
Businesses that have been in operation for at least 12 months, have a minimum of $50K in annual income, own at least 20% of the company, and have no bankruptcies or tax liens could qualify for up to up to $500K. LendingClub business loans come with 5.99% origination fees and interest as low as 4.99%.
LendingClub also offers auto refinancing and patient solutions. Let’s look at all of LendingClub’s current financing offers, side-by-side.
LendingClub Loan Comparison Chart
Frequently Asked Questions
Here are answers to some of the top questions people have asked about LendingClub.
What Credit Score Do You Need for LendingClub?
As with all loans, you will get the best rates and highest amounts with excellent credit and high income. But, the minimum requirement for a LendingClub loan is a FICO score of 600.
Does a LendingClub Loan Hurt Your Credit?
Checking your rate for a LendingClub loan will not impact your credit, since they do a soft inquiry. After pre-approval, a hard inquiry will be made, which could ding your FICO score a few points. A hard inquiry is standard for nearly all financing options.
Does LendingClub Verify Income?
Yes. To qualify for a LendingClub loan, you may need to submit pay stubs, recent bank statements. Alternatively, they may request W-2, 1099, or 4506-T IRS forms.
How Long Does LendingClub Final Review Take?
The time it takes for you to submit all of your required documentation and complete your to-do list will impact how long the LendingClub review process takes. Once you’ve done your part, LendingClub reports that they could have your application processed in as little as four days.
How Long Does it Take LendingClub to Pay Off Credit Cards?
It can take anywhere from a few days to a couple of weeks before other debts are paid with a LendingClub balance transfer loan. Electronic payments can take from 3-5 days while check payments may take 5-10 days. Allow an additional 1-3 days for payment processing.
Can I Pay Off LendingClub Early?
Yes, you can pre-pay a LendingClub loan at any time. If you choose to do so, you will not incur any prepayment penalties and you will not owe any more interest.
Can You Have Two Loans With LendingClub?
Yes, you can have up to two active, personal LendingClub loans at any given time. The combined outstanding loan amount must remain below $40K.
Does LendingClub Report to Credit Bureaus?
LendingClub reports on-time and late payments for personal loans to Experian, Equifax, and TransUnion. Business loan payments are reported to business credit bureaus, including Dun & Bradstreet.
What is the LendingClub Scandal?
In May 2016, LendingClub’s founder and chief executive, Renaud Laplanche resigned following what was labeled “improper decision-making.” LendingClub’s board stated that Laplanche went against investors’ wishes in a multi-million dollar deal. The company also stated that Laplanche’s abssence from the company had no bearing on credit quality or pricing.
LendingClub Competitor Overview
Before you apply for financing, it’s important to see how competitors stack up side-by side. So, here’s how Lending Club’s debt consolidation offer looks next to Prosper, Upstart, SoFi, and Payoff.
So, is LendingClub good for debt consolidation? Sure. They definitely have a competitive offer. But, are they the best? In some cases, yes. In others, no. You may need to prequalify with a couple of lenders to see which one has the best offer for your situation.
What I think is most important to note here is that LendingClub is the only one of the above lenders that offers business loans, which aren’t listed on the table above. They also have the lowest FICO score requirements of their top competitors.
Conclusion: Is LendingClub Legit and Safe?
If you’re a borrower, LendingClub’s offer is legit, yes. The company is established and has grown to become a trustworthy source of funding for personal loans, business loans, auto refinancing, and patient solutions. You could qualify to get up to $40K in personal financing and from $5K to $500K in business credit through the platform (If you know how to build business credit).
As for investors, however, they are changing the way they do business. If P2P loans are where you wanted to put your money, you should look into other options. Find more information about your new LendingClub investment options here.
Now, if you want to learn how to take control of your company’s financing options and get up to $100K in business credit in 30 days, join Business Credit Workshop.