Lending Club Review
Who Is Lending Club?
Lending Club is a revolutionary new, microlending service that provides borrowers the ability to take out loans at very affordable rates, and for lenders, to earn interest rates averaging 9.9%! The basic concept behind Lending Club is to let users control everything. All the administration does is monitor transactions, run background/credit checks, and ensure that everything goes smoothly. Lending Club, as a company, has never loaned a single dollar in their nearly two-year lifespan. Instead, they provide a medium for private lenders to give out loans to well-qualified borrowers.
Lending Club Delivers Peace of Mind
Since its founding in early 2007, Lending Club has overseen more than $27 million dollars in loans. Though that figure may sound impressive, consider this; Lending Club has declined more than $250 million in loans. That essentially means that only 10% of the loan requests actually go through. Why? Because Lending Club takes protecting their users’ financial integrity very seriously. In short, stricter loans means a more stable institution — something borrowers and lenders can surely appreciate. Perhaps, if banks followed these best practices years ago, we wouldn’t be bailing them out today 
Strict Borrowing Guidelines, But Fair
While the requirements are strict, they are most certainly fair.
Lending Club has the exact same authority as a bank, so they can take legal measures as a bank would. Potential borrowers are required to have a minimum of a 660 FICO score to be considered for a loan. However, a good credit score does not necessarily guarantee you a loan. There are also a number of other requirements.
Below is a complete list of requirements you must meet to be considered for a loan.
- A FICO score of at least 660
- At least 1 year of credit history, that shows no current delinquencies, open tax liens, charge-offs, or recent bankruptcies (within the past 7 years)
- Less than 10 inquiries on your credit report from the last 6 months
- A revolving credit utilization of less than 100%
- At least 3 accounts in your credit report, of which at least 2 are currently open
- US citizenship
If you meet the above requirements, it is very likely that you will be approved for a loan. Once you are approved, your application will be given to investors for review. If an investor likes what they see, you will receive the loan within days. The whole process can be done very quickly, and there are rarely problems.
If there are problems, such as missing or late payments, Lending Club will take any necessary legal action to protect their clients. They will also employ collection agencies in the event of a non-paying client.
Benefits of Lending Club for Borrowers
Now that you know the basics of the program, it is time to examine the benefits for borrowers.
- Low Interest Rates
Interest rates vary from person to person depending on your credit, but regardless, the rate you get from Lending Club will almost always be lower than a bank or credit card rate. Rates on loans start as low as 7.88%, where the average credit card rate is around 13%, and the average personal loan rate is about 11%.
- Quick Cash
Loan applications at Lending Club are processed and approved in as little as 2 weeks. If no investor accepts your loan, you can choose to either re-list your loan application for an additional 2 weeks, or accept a partial loan.
- No Hidden Fees
Unlike many lending agencies, there are absolutely no hidden fees at Lending Club. The rate you are quoted is the rate you will be paying – it’s as simple as that.
- Flexible Limits
At Lending Club you can borrow as little as $1,000 and as much as $25,000, so you can borrow for whatever your needs — credit card debt, student loans, a small business venture, etc.
- Convenience
Lending Club makes the entire process of applying for a loan easy. From the minute you submit your application to the minute you make your last payment; you will never have to do any complicated work. In fact, you can set up an automated payment system through Lending Club’s user-friendly interface, so you won’t have to worry about making payments.
Benefits of Lending Club for Investors
- Great Returns
The average return at Lending Club is 9.05%. That means that if you invest $10,000, you will see a return of $10,905 – Not bad considering the low rate of return on the leading money market account is just over 3.00%.
- No “Dirty Work”
As a Lending Club investor, you will never have to do any of the “dirty work” that is associated with lending. For instance, Lending Club verifies borrowers’ identities.
- Hand-Picked Clients
Similar to other forms of investing such as the stock market, Lending Club allows you to hand-pick each and every client. You can browse through hundreds of applications, and choose the ones that fit your budget and your own personal requirements. Of course, unlike the stock market, you’ll be given a guaranteed, high rate of return.
- Reputable Borrowers
When investing at Lending Club, you will be dealing with only respectable, reputable individuals with high credit scores. In fact, the average FICO score at Lending Club is 713.
- The Ability to Buy and Sell Loans
Recently Lending Club introduced a new feature; the ability for investors to buy and sell existing loans. Using their user-friendly trading platform, you can easily buy or sell loans that have already been taken out. This is a great solution for investors that are looking to quickly increase their amount of available funds, or investors looking to invest in several long-term investments without the long wait.
Final Words
Lending Club is a great solution for borrowers looking to get a great loan rate, or lenders looking to invest in a high-yield, stable endeavor. The peer-to-peer concept of Lending Club is relatively new, but I expect the business model to become more popular in the future, especially now that individual investors are often more reliable than banks!
