I recently applied for a personal loan at Lending Club. It was Monday morning, and I had just finished a bowl of cereal. Still drinking my morning coffee, I picked up my laptop and turned it on.
I knew Lending Club had low interest rates, but was curious about what they would offer me. I clicked over to their website and checked my rate on a loan. It was good, so I finished the application. After verifying my identity, Lending Club emailed me to say my loan had been approved.
Two short days later, Lending Club deposited nearly $2,000 into my bank account.
How are the interest rates so low? Well, unlike a big bank that has to pay for employees and vaults at thousands of branches across the country, Lending Club is mostly just a website. Since they run completely through the internet, they can pass the savings over to borrowers in the form of lower interest rates.
Loans up to $40,000 via Lending ClubCheck your rate
Won’t affect your credit score.
In fact, most people get a rate 6% lower than their credit cards, which can mean thousands of dollars in savings. Also, Lending Club’s loans are fixed rate, which means they will never go up, even if you make a late payment. Compare this to credit cards, which have annoying variable interest rates that can go up and down.
Four Steps for a Loan with Lending Club
Applying for an unsecured loan at Lending Club was easy. Here’s what it looks like:
Step #1: Check your rate
Click over to the Lending Club website and check the interest rate they offer you for a loan (some people use MyInstantOffer.com). As seen below, this requires you to fill in some quick facts about yourself such as your date of birth and yearly income.
A few seconds after clicking the big green “Get Your Rate” button and you will qualify (or be denied) for a loan. Checking your rate is done with a soft inquiry (or soft credit check) so it won’t hurt your credit score.
As seen below, I qualified for a $2,000 loan with a 6.5% interest rate and an APR of 7.8% (APR = interest rate + fee).
I had the chance to choose a bigger loan or a shorter time frame (like a 2-year loan), but I decided to stay with my original request: a 3-year loan for $2,000. However, your needs might be different than mine. Realize that choosing a different amount will cause your monthly payment to change.
Once you’ve set up the right loan size and term (number of years), click “Get Loan” to move on to the next screen.
Step #2: Provide your personal information
Here you’ll give Lending Club a little more information about your situation. This helps them verify that you are who you say you are. For example, they will ask you for basic information like your phone number and employment info. They also need you to give them your social security number on this page, which can be a bit scary for some people. Just know their website is secured with very powerful SHA-256 encryption, so your private information is sent safely between your computer and Lending Club.
All finished? Click the Next button to move to the Loan Rate & Terms page.
Agreeing to the terms on this page is like signing your name to the bottom of the loan application. After doing it, your loan request is officially complete. Congratulations.
Step #3: Get funding from investors
These loans are peer to peer loans. Even though your application was with Lending Club, the money for your loan comes from investors around the country. Now that your application is submitted, Lending Club will add it to the investor side of their website. Thousands of people across the country can now add investment dollars to fund your loan. This way, loans as large as $40,000 can be funded by hundreds of investors all working together. You get a cheaper rate, and they get a great return from your paid interest. Pretty cool.
Worried you won’t get funded? Don’t be. As of today’s date in 2016, every single loan is getting 100% funding at Lending Club. The difference is some loans take just 5 minutes to get funded, while others may take over a week. Everybody’s application is different.
Below is an example of what my loan would look like on the investor side:
My own loan was funded by investors within 24 hours of my application.
Step #4: Last steps
To finish this entire process, there are a few final things you may need to do:
- Connect your bank account – This requires adding the account and routing numbers from your checkbook. For some applications, Lending Club may also need the bank account to be “verified”. For this, they make two small deposits (less than $1) and ask you to confirm them to prove the bank account is yours.
- Confirm your email – Click the link in the email they send you. Simple.
- Submit documents – They may ask you to provide some documents to further prove your identity and financial situation, such as an old tax return or bank statement. You can get these documents to Lending Club by scanning them to an electronic file (if you don’t have a scanner, try your local Staples or Kinkos).
To help, Lending Club will list these final steps on a to-do list. As you can see below, they didn’t even need me to verify my bank info or submit supporting documents. They simply wanted me to confirm my email, which is probably why I got the money so quickly.
Does Lending Club require a hard credit check to get a loan? No, not in my experience. They seem to only use soft credit checks for the entire loan process.
I got $2,000 cash in just 2 days
Just 24 hours after applying online, Lending Club sent me the following email saying my final review had been passed and my loan was approved:
In summary, here was my entire loan process:
- Monday, February 29 at 10:30am – Checked my rate and accepted the offer
- Tuesday, March 1 at 12:37pm – Received an email saying I was approved
- Wednesday, March 2 – Got $1,960 in my checking account from Lending Club
Why did Lending Club only deposit $1,960? Why not the full $2,000?
Lending Club Fees
I only received $1,920 because Lending Club kept $40 of my loan as a fee. This is how Lending Club makes money as a company. They call this their origination fee, and it is different for different people. Most will pay around 6%, while borrowers with excellent credit may pay just 2% like I did.
If getting an exact loan amount is important to you, it’s good to be aware of this fee early in the application. For example, say you need a loan for exactly $25,000. You would probably want to ask for $26,316 since $1,316 (5%) in fees would leave you with the full $25,000.
Paying Back the Loan is Easy
A month after your loan is approved, you will begin making payments. These payments will be taken automatically from the bank account you gave Lending Club when you applied, and they will continue every month until the loan is paid off.
Here are two ways to speed up the payment process:
- Pay off the entire loan early: What’s better than a loan through Lending Club? Not having a loan at all! Make this happen by paying off the entire loan early. Lending Club allows this without paying a prepayment penalty. Call toll-free @ 1-888-596-3157.
- Make extra payments: If you can’t pay the loan off early, you can still make an extra payment via this same phone number, costing you less interest overall.
Is Lending Club Legit? Is it Safe?
Lots of people wonder if this is a scam. After all, most people have never heard of Lending Club. It can all sort of sound “too good to be true”. But my application above is proof that Lending Club is a very legitimate company.
Still unsure? Perhaps read these news articles and come to your own conclusion:
- New York Times: Alibaba and Lending Club to Form Financing Partnership
- Bloomberg Business: LendingClub CEO Says He’s No Threat to Banks, Just Their Model
Finally, realize that Lending Club’s entire website is run through very secure SHA-256 encryption so your information is protected while being transferred from your computer to theirs. Electronic loans are said to be even more secure than normal loans through a bank since somebody can find paper documents in the trash or recycling.
Final Review: A Great Low-Rate LoanIf you’re sick of the high interest rates on your credit cards and want to move all your debt to one spot, this may be the perfect loan for you. It’s also a great option for other costs, such as home repairs.
- Low interest rates. Period.
- Fixed rate will never go up.
- Very simple application.
- FAST – I got cash in two days.
- No prepayment penalty.
- Max loan is still just $40,000. I wish it were closer to $100,000.
- Origination fee could be better explained. Even though I figured out that the APR is really just the interest rate plus the fee, others might not.
I’ve personally gotten multiple Lending Club loans, and every time it’s been smooth. Even my family members have gotten Lending Club loans. I recommend them to anyone who needs them. You do not have to be like most Americans, walking through life stressed by credit card debt. These loans are a much better option.
Checking your own rate takes just a minute. Try it for yourself.
Won’t affect your credit score.