Lending Club Review for Borrowers: Is it Legit?

I applied myself and got $2,000 cash in six days.

A few weeks ago I applied for a loan at Lending Club. It was a Monday morning, and I was still in my pajamas. After having some cereal and coffee for breakfast, I went to the living room and turned on my computer.

I knew Lending Club had low rates, but I wanted to see what they would give me. I loaded their site up and checked my rate. The rate was good, so I applied. After filling out some forms and verifying my identity, I got an email from them saying the loan was approved.

Loan Withdrawn as Cash

Six business days later, nearly $2,000 in cash was deposited into my bank account.

Loans up to $35,000 via Lending Club

Check your rate
Won’t affect your credit score.

How are the rates at Lending Club so low? Well, unlike a bank, Lending Club does not have local branches, so they have no vaults or tellers to pay. Since they run completely online, they can pass on the savings to us in the form of better interest rates. Most people get a rate 5% lower than their credit cards, which can mean thousands of dollars in savings. Also, the rates are fixed. They will never go up, even after a late payment.

4 Steps for a Loan through Lending Club

Getting an unsecured loan at Lending Club turns out to be really easy. There are just four things to do:

Step 1. Check your rate

Go to the Lending Club website and check the interest rate they offer you for a loan (some people use MyInstantOffer.com). This requires you to give them a little bit of information like your name, address, and date of birth.

Check-Your-Rate

One minute after clicking the big green Get Your Rate button, you will be approved (or denied) for your loan. As you can see below, I was approved for a loan with a 9% interest rate, which is an APR of 12% (APR = interest rate + fees).

Lending-Club-Loan-Approved

If you like the loan amount and interest rate they offer you, click the big green Get Loan button. If you want to increase or decrease your loan, select the amount you prefer and click the Get this loan instead button.

Step 2. Provide your personal details

Here you give Lending Club the information they need to verify your identity, including giving them your social security number. You can feel safe about doing this since Lending Club secures this page with 128-bit encryption.

Provide-Phone-Number-Social-Security-Number

After clicking Next you will arrive at the Disclosure Statement.

Lending-Club-Conditions-Terms

Agreeing to these terms is like signing your name to the loan application. Once done, your application is officially complete.

Step 3. Wait for your loan to get funded

With all that out of the way, the loan opens for funding. Lending Club loans are a kind of loan called peer to peer loans. This means Lending Club does not actually fund your loan themselves. Instead, they have lots of investors around the country combine their money to fund your loan. Note: currently every single loan is getting 100% funded at Lending Club, so don’t worry too much about this step.

Below is my B-grade loan on the Lending Club platform. At the time of this picture it was 60% funded by 11 different investors:

Lending-Club-Listing

Click to enlarge

Within an hour of my loan being open to investors, it reached 100% funding from 28 different investors from states including Texas, New York, and Virginia:

My Investors

Step 4. Verify your information

To finalize the process, you need to verify your identity with Lending Club. They will probably give you three steps to complete: submitting extra documents, confirming your email, and verifying your bank account.

Loan-In-Review

  • Submitting documents: This is probably the most complicated step. Lending Club may ask you to provide old tax returns or paystubs. Every application is different. If you have digital versions of your files, you can submit them online. If you only have physical copies, you will need to make them digital with a scanner (or fax them). For my loan, I was asked to submit three months of bank statements. My bank provides these online in PDF files, so no scanning or faxing was needed. A few clicks and the files were uploaded.
  • Confirming your email: just click the link in the email they send you. Simple.
  • Verifying your bank: Lending Club makes a small deposit in your bank account (less than $1). Once they make this deposit, you log into their website and type this number in, verifying the bank is yours. For my loan, the trial deposit was there on Tuesday, the morning after I applied.
  • Credit history: At this point in the process, Lending Club may run a hard inquiry on your credit history (also called a hard credit pull). Hard inquiries will temporarily lower your credit score, but only for a few months. They remain on your report for two years. Remember that getting a good rate on a loan (like a mortgage or car loan) is more difficult if you have a large number of recent inquiries. A decent rule of thumb is to wait 6 months between every loan you apply for.

My $2,000 Loan Was Approved in 5 Days

Just five days after applying and verifying my identity, Lending Club sent me an email saying my 3-year loan was approved:

Loan-Approved-at-Lending-Club

My application process:

  • Dec. 1, Monday: Checked my rate at 10am and accepted their offer. Loan was 100% funded that afternoon. I submitted my documents, verified my email, and waited for bank deposit.
  • Dec. 2, Tuesday: Verified my bank account (deposit was 38 cents).
  • Dec. 5, Friday: Lending Club moved from ‘Under Review’ to Issued.
  • Dec. 8, Monday: $1,920 cash was deposited in my bank account in Seattle

Why did Lending Club give me just $1,920? Why not the full $2,000?

Lending Club did not give me the full loan amount. They took $80 of my loan (4%) as a fee ($2,000 X 0.04 = $80). This is how Lending Club makes money, and this fee is called an origination fee. It is different for every borrower. If you have excellent credit you will pay just 1% in fees. Most borrowers will pay 4-5% in fees like I did:

Lending-Club-Rates-2015

It is important to include this fee in your loan request if you need to. For example, if you need exactly $20,000 and expect to pay 5% in fees, you would probably want to ask for $21,052 since $1,052 (5%) in fees would leave you with the full $20,000.

Paying Back the Loan is Easy

A month after your loan is approved, you will begin making payments. These payments will automatically be taken from the bank account you gave Lending Club when you applied. They will happen once per month until the loan is paid off.

Make extra payments: a very good idea. Any extra payments you make mean less paid interest overall, so try to do them. Lending Club allows both one-time and permanent extra payments. You can make these by calling them: 1-888-596-3157.

Pay back the loan early (no fee): also a great option, and Lending Club does not charge prepayment fees. Pay in full at any time.

Is Lending Club Safe? Is it Legit? Yes.

Many people wonder if this is a scam. After all, most have never heard of Lending Club before. But I can personally say that Lending Club is a very legitimate way to get a loan. Lots of positive press in major media prove that fact:

Secondly, applying for the loan is very safe. Every page of the application is protected with 128-bit SSL encryption, so you can feel secure knowing your information will remain private and confidential.

Review Verdict: A Great Loan at a Low Rate


Reviewed by:
Rating:
4
On December 23, 2014
Last modified:February 25, 2015

Summary:

Easy. Low rates. Origination fee could be stated more clearly, but overall Lending Club remains one of the best places for an online loan.

If you need cash or simply want to pay back credit cards, Lending Club is one of the best options around.

Pros:

  1. Lowest rates nationwide
  2. Easy and quick application
  3. Fast cash – I got a loan in six business days
  4. No prepayment penalty, pay it off for free at any time

Cons:

  1. Maximum loan is only $35,000
  2. Origination fee should be more clearly stated

Final Word

For a quick low-rate loan, Lending Club is one of the best options nationwide.

Loans up to $35,000 via Lending Club

Check your rate
Won’t affect your credit score.

Comments

Profile pictures via Gravatar

  1. Kim says

    After you get fully funded by investors and verify bank / email…. Does that mean it is definetely approved?? They haven’t ask for additional info yet (taxes, bank statements, etc).

  2. Destiny says

    Why would you wait 6 days to fund a loan when you can receive a signature loan from a credit union or bank usually in 24-48 hours with no origination fee?

    • says

      Hi Destiny,
      A few reasons. The biggest is, getting a signature loan from a credit union can be difficult for most people. Second, it requires driving somewhere, whereas you can get a Lending Club loan just by going on your home computer. That said, if you can get a better rate at a credit union then definitely consider that! Lending Club is a great option, but it isn’t necessarily perfect for everyone.

      • Brad says

        Glad you wrote this up. I just completed the application process. I’m usually skeptical of any of these type of things because so many companies (since graduating college) has tried to lock me in to some crazy loan with crazy interest rates.

        My credit is a little on the poor side… so the APR was still around 20%, but I went with a small loan that I can pay back this year to try them out first. 20% is still lower than one of the credit cards that I have (that carries a balance).

        This is an interesting idea.

  3. Thomas Wilson says

    I was asked to pay $200 for a verifying voucher. I was denied due to my credit score. However, received an email from Steve Hart (408-905-1835) from Lending Club.
    He stated this was common practice and my funds would be received upon my verification of $200. Please inform if this is valid

  4. Rob says

    Can I please quote from the above very useful guide for a presentation on Crowdfunding / P2P to some institutional investors? Thanks.

  5. Beverly says

    I am interested in seeing what kind of interest rate I would get but I don’t want to fill out all the information they are asking for and not be able to decline if the rate is not what I would consider a good rate. Am I able to delete and get out of it should I decide I don’t want to get the small loan??

  6. Bama says

    I received a preapproved offer from Lending Club. I applied for $15k online Sunday night and was approved. It showed my credit score from Transunion, which was 715. Next, I verified my email address. Monday morning, I was at 30% funding. Tuesday, I verified my bank account after LC deposited/debited a small amount of change. I was fully funded by the end of the day. On Wednesday, I received the bank deposit of $14,400. My interest rate is 11.99%, which is way below any of my credit cards. The process was fast and easy for me.

  7. Lindsay says

    I was approved at lending club for $10,000 (requested amount) with 685 credit score for 11.99% rate (14.24% APR), however I was declined at Prosper due to credit score. From what I’ve read, it is usually the opposite so I’m not sure what happened. I applied to lending club through the readyforzero platform so maybe that made a difference?

    I decided to reduce the loan amount by several thousand to pay off one high interest credit card from Citibank (29.99% with no late payments ever!) that recently reduced my credit limit for no reason under my control. I would have consolidated more but my other cards are not much higher than the lending club loan so thought I’d start small to try out the service.

    We recently bought a new house and my credit dropped as a result of starting a new mortgage loan with 100% financed . With my old house, I had equity so it reported more favorably.

    I am currently at the stage of waiting for money to deposit into my account and I can’t wait to pay off that CITI card!

    • Lindsay says

      Just to update, prosper also noted on my disapproval email that I had too many credit accounts that exceeded 90% utilization in the past 6 months which impacted my “prosper score” I bet that is where they differ because they reported my credit score at 695 which is slightly higher than what lending club reported. (I applied for both on the same day)

      • Itgirl AJ says

        Hi. Can you tell me what payment schedule they gave your for the $10K at 11.99% (14.24 APR)? (PS. I want to get away from CitiCards also!!! Thank you!

        • Lindsay says

          I actually decided to take only 6000 because I wanted to pay off just the one high card and be conservative since I had no experience with peer to peer lending. For 6000, I chose a three year plan with payments at 197/month. When you apply, it shows three year and five year payment options and all the loan amounts you qualify for so you can compare with the amount you requested. Hope that helps. Just to let you know, I applied on Monday and the money was in my bank account this morning so I’m officially free of Citicard!

  8. Meghan says

    I am interested in paying down credit card debt from multiple credit cards. I was sent a pre-approval letter from the Lending Club. I am just curious of the rate and amount that I would be approved for. Will checking my offer put a hard inquiry onto my credit score immediately or only if I accept the offer?

    • says

      Hi Meghan. You’ll have to check your rate using the button above to see. Everybody’s rate is different. However, checking your score is only a soft inquiry. It will not hurt your credit score.

      Also, I did not even get a hard inquiry when I accepted the loan, but others have.

  9. Mary says

    Hi I want to take out a loan for 10K. My credit is very low. what are the chances of me getting approved. And how do I know this is not a scam.

  10. Vilma says

    Hello I’m trying to apply but on the state there’s no Guam selection, Does this loan applies to Guam USA very interested are you familiar with CS-Express Loan County This is where i found Lending Club on their website, I was approved for 17,000’but they want me to pay $1,599 for the insurance fee I have to wire the amount before funding can commence on my bank account, any idea if this CS -Express Loan County is legit.

  11. jan says

    I have a score of 685, all payments for all credit cards made early, so no missed payments.
    I have had only 20 months history, Will i be declined. I asked for 5k

  12. Arturo says

    Has anyone used lending club for a personal business loan? and if so is the process different from applying for a personal loan? I would be interested in applying for a small business loan.

  13. Patty says

    Hello I got an email that mentioned me that I am preapprove for 20k.. but I have bad credit score. Since My Wedding Is Coming I need money to do my stuff. Do you think it will be good idea to apply. Because I don’t want to drop my credit score nomore.
    thanks in advance

  14. Gary says

    I am interested in a LOan but do not like having automated withdrawls for my payments. I like making them myself due to getting paid at various times of the month. Somewhere I read this is available. How does someone accomplish this ?

Leave a Question or Comment