For those looking for a loan, Lending Club can be a great option. They offer some of the lowest interest rates in the country (as low as 6%) on personal loans as large as $35,000. Additionally, the rate is fixed. Unlike a credit card, it will never go up. Finally, Lending Club is a peer to peer lender, so the money for these loans comes from people across the country.
I wanted to see just how easy it was to get a loan from Lending Club, so two weeks ago I applied for one myself. I went to the Lending Club website and checked my rate. After accepting their offer, I had to submit some paperwork and answer some questions.
Six business days later the cash was in my checking account.
5 Steps to Get Approved for an Unsecured Loan at Lending Club
For those who are new to Lending Club, the process can seem hard to grasp, so I have reviewed the entire borrower process below:
#1. Check Your Rate
Go to the Lending Club website to check the interest rate they offer you for a loan. This will require you to fill out some information about yourself, such as your name, address, and yearly income. It is important that you be honest here, because any false information will get your application denied. Once you submit this information, Lending Club will verify your identity and check your credit history (using TransUnion).
Note: checking your rate will not hurt your credit score since it is done through a “soft” credit check.
Remember, the more money you ask for, the higher your interest rate will be. In this way, it is a good idea to only ask for the amount you need. This will not only give you a lower interest rate, but your monthly payments will be more affordable.
Here is what the application looks like:
I checked my rate at Lending Club for loan of $1,950.
#2. Accept the Offer
Less than a minute after submitting your information, you will see whether or not you qualify for a loan. If you do qualify, Lending Club will offer you an interest rate as well as the option to increase or decrease your loan amount.
When I applied for $1950, I was offered a 3 year (36-month) B-grade loan with an interest rate of 12.99%. I was given an option to increase the loan amount, so I increased it to $2350 by clicking the box with that number.
If you like the interest rate and amount, you can click the Get Loan button. Lending Club will then ask you for some additional information, like your employment history and whether you rent or own your home. Also, you will be asked to give a title to your loan. For my title I simply entered the words Debt Consolidation.
Finally, you will have to agree to the official loan terms as well as submit your banking information, specifically your bank’s routing and account number.
You can find these numbers listed at the bottom of a check in your checkbook. You can also get these numbers by calling or visiting your bank.
#3. Wait for Your Loan to Get Funded
Once all this information is submitted, Lending Club will take a few days to review your loan themselves (seen in your status being “Under Review”). Lending Club will also create a listing for your loan and add it to their investor platform. People around the country will have the chance to examine your credit history and loan, funding you if everything passes their inspection.
When I applied Monday morning, the loan was listed on the platform at 2pm that same afternoon. My loan quickly reached 100% funding from 33 different investors.
Interestingly, most lived in California. A few had asked me to answer some questions like “What are your monthly expenses?”, but the loan hit full funding before I could give them an answer. Alas.
#4. Verify Your Identity & Bank Account
While you wait for your application to get funding and pass a final review, you will have to verify your bank account, your email address, and submit some additional paperwork. To verify your bank, Lending Club will make a small deposit in the account you gave (mine was 36 cents). You can prove that you own your bank account by looking at your recent deposits, finding Lending Club’s deposit there, and typing this amount into the box on their website.
When Lending Club asks for some additional paperwork, there are a few ways to get them these documents:
- Digital Scanner: If you can scan your documents, this can be a quick and easy option. Many print shops like Kinkos offer to do this for you for a small fee (find your closest Kinkos).
- Fax Machine: You can also fax your documents directly to Lending Club.
Each application is going to have different requirements, but I was asked to submit last year’s W-2 forms as well as the first couple of pages from my last tax return. I scanned each of these documents with my home scanner to PDF files, and then uploaded them through the Lending Club website.
Lending Club will probably call you over the phone to verify your identity. When they called me, a San Francisco number showed up on my cell phone’s caller ID. A nice-sounding guy congratulated me on my qualified status and asked me to verify a few things like my address and yearly income. He then said I would be notified soon if I was approved for a loan.
Finally, Lending Club will run a hard inquiry on your credit history (also called a hard-pull). This inquiry will temporarily lower your overall score by a small amount, and will remain on your credit report for two years. Remember: getting a good rate on an additional loan (like a mortgage or car lease) will be more difficult if you have a recent hard inquiry. It is a good idea to wait at least six months between every credit application.
#5. Get Approved & Get Cash
That Friday, five days after I applied for a loan, my application status changed from Under Review to Approved and the loan was officially issued. One business day later, $2,256 was deposited into my checking account. In total, it took six business days (eight days if we include the weekend) to get a loan from Lending Club.
Even though I applied for $2350, only $2256 was deposited into my account. Why did this happen? Where did $94 go?
Lending Club took 4% of my loan in fees (they call this an ‘origination fee‘). Borrowers with great credit are charged 1-4% in fees; most borrowers are charged a 5% fee. It is important to think about including this fee in your loan amount. For example, if you need a $10,000 loan then the 5% fee would be $500, so you might want to ask for $10,500. That way, when your loan is issued, the full $10,000 would be deposited into your bank account.
Repaying the Loan
After receiving the loan, you will begin to make monthly repayments. These payments will be automatically withdrawn from your bank account each month until the loan is paid back: 3 years for my loan.
If you want to do extra payments on your loan (just once or permanently), you can always call Lending Club to set this up. (888) 596-3157 was the phone number they gave me. I called Lending Club up today and asked them to increase my next payment to $100. They said it would be no problem. The reality is, I will be paying my entire loan back after one payment (heh – sorry lenders), but I wanted to see how easy it was to make an extra payment.
I Got a $2,350 Loan in 6 Business Days
Let’s look at the calendar of my loan process:
- Nov 18 - Monday: Checked my rate, accepted the offer. Loan was added to platform at 2pm and 100% funded within 45 minutes.
- Nov 19 - Tuesday: Lending Club called by phone to verify my information
- Nov 22 - Friday: Lending Club approved and issued the loan
- Nov 25 - Monday: Lending Club deposited $2,256 in my bank account
Note: your process may be different than mine – either faster or slower.
Review Verdict: A Great Loan at a Low Rate
For those of you who need quick access to cash, Lending Club is one of the best options available today.
- Very low rates for a loan
- Easy to apply
- No hidden fees
- Fast! (got cash in 6 business days)
- Zero prepayment penalty (pay the loan off early without a fee)
- Funded by people like me
- Maximum loan amount is only $35,000
- Scanning/faxing paperwork
- Origination fee could be stated more clearly
Honestly, I really enjoyed applying for and receiving a loan through Lending Club. The process was largely a quick and easy one. For those of you who are thinking of applying for a loan through them, I hope this information is useful. Personally speaking, I would have no issue recommending a Lending Club loan to my friends and family if they needed one.
Check your rate at Lending Club (won’t hurt your credit score).