Lending Club personal loans: 2017 comprehensive review


Lending Club, the big dog among peer-to-peer lending companies, offers unsecured loans to borrowers with fair to excellent credit. Although borrowers must have a minimum credit score of 660 to qualify, the typical Lending Club borrower has a score of nearly 700.

Founded in 2006, the company touts its status as “the world’s largest online marketplace.” Lending Club offers personal loans, auto loan refinancing and small business loans and lines of credit.

Who is this loan good for?
Lending terms
Minimum borrower requirements
Fees and penalties
How to apply
What to do if you’re turned down

Because the screening process for its unsecured personal loans is entirely virtual, there are fewer loan underwriting costs, which means Lending Club may be able to offer better interest rates and quicker turnaround times than brick-and-mortar lenders.

Who is a Lending Club personal loan good for?

  • Anyone with good to excellent credit. Lending Club borrowers have an average credit score of 699. The minimum credit score required is 660, according to the company. Check your credit score for free before you apply.
  • High-income earners. Lending Club borrowers have an average annual income of $76,860. Real median household income in the U.S. is about $56,500.
  • Consumers with a low debt-to-income ratio. That’s the amount of debt you have compared to your gross monthly income. The average Lending Club borrower has an 18% DTI, although the maximum allowable is 40%. Calculate your debt-to-income ratio before applying.
  • Borrowers who want to file a joint application. Lending Club is one of a few lenders that allows multiple borrowers on a single loan. By considering multiple incomes, Lending Club may approve a larger loan line. Maximum DTI on a joint application is 35%.
  • Anyone looking to improve their credit score, as Lending Club reports to the three major credit bureaus.

Who should not accept a loan

  • Anyone with bad credit. If Lending Club quotes a high interest rate along with a steep origination fee, you may be better off with a different type of loan.

Consider applying for a balance transfer credit card or a home equity loan if either of those offer more favorable terms.

Lending terms

When you get a loan from Lending Club, you’re not actually getting the money from Lending Club. Instead the company acts as a broker, matching investors with would-be borrowers and charging an origination fee for their matchmaking services. Think of it like an application fee or a processing fee — a sunk cost that may or may not seem reasonable, but it’s non-negotiable. Some, but not all lenders, charge this fee.

Lending Club offers loans that range from $1,000 to $40,000. Its personal loans carry a fixed annual percentage rate of between 5.99% to 35.89%. The quote you receive is based on multiple factors, including credit history, the amount you’re asking for, and if you want 36 or 60 months to pay it off.

Lending Club borrower snapshot
Borrower average
Loan size $14,739
Annual percentage rate 14.21%
Income $76,860
Credit score 699
Debt-to-income ratio 18%

Lending Club charges an origination fee in the form of an upfront cost taken off the top of the loan. For example, if you’re approved to borrow $10,000 and you’re charged a 3.5% origination fee, you’ll only receive $9,650. Keep in mind, though, that you’ll be making payments on the entire $10,000. You should factor the origination charge when calculating the total amount you’re looking to borrow.

Once approved for a loan it takes about four business days to receive the funds in your bank account.

Minimum borrower requirements

The minimum credit score to borrow is 660, but that’s not the only factor Lending Club considers in evaluating an application. The company also will examine “information a customer provides on their loan application, information provided by credit bureaus and other information that predicts the likelihood that you’ll make on-time payments until your loan is fully repaid,” a spokesman said.

Fees and penalties

  • Lending Club charges an origination fee of 1% to 6% depending on creditworthiness.
  • You’ll be charged $7 if you pay by check. There is no fee if you set up an ACH debit through your bank account.
  • You’ll be charged $15 if you don’t have enough money in your bank account to cover your monthly installment.
  • Late payment fee is either 5% of the unpaid installment amount or $15, whichever is greater. A 15-day grace period is included.
  • You won’t be penalized for paying off your loan early.

How to apply

The application process is straightforward and fast. Enter some basic information in the online application, including the loan amount you want, your estimated credit rating (range is from poor to excellent, although “I don’t know” also is an option), what you want to use the money for and your yearly individual income.

Lending Club then will conduct a “soft” credit check, which won’t impact your credit rating.

If you’re approved, the online calculator displays a chart with individualized options, including the fixed monthly payment due on a 36-month loan, a 60-month loan and the interest rates for each.

The chart also shows loan offers above and below what you’re asking for. For example, if you apply for a $10,000 loan, you’ll also get rates and monthly payment breakdowns for $6,000, $8,000, $12,000 and $14,000.

Behind the scenes, Lending Club assigns you and your loan request a letter grade ranging from A to G, where A ratings receive the most favorable terms — lower interest rates from 5.32% for the “A” rated investors to as high as 30.99% for those considered high-risk borrowers.

Origination fees, which are included in the annual percentage rate, typically skew lower for those with a better rating, too.

How Lending Club compares
Lending Club Prosper
Loan amounts $1,000 to $40,000 $2,000 to $35,000
APR range 5.99% to 35.89% 5.99% to 35.9%
Origination fee 1% to 6% 0.50% to 4.95%
Minimum credit score 660 640
Time to funding 14 days 3 to 5 days
Soft credit check with application? Yes Yes

Investors decide if they want to back your loan by reviewing your information anonymously and choosing to fund all, or more often, a portion of your loan. In return, they receive a percentage back above their investment amount once you’re fully paid up.

The whole process takes on average five to seven business days.

Before finalizing your loan, Lending Club, like all lenders, will do a “hard” credit check, which can adversely impact your credit score.

What to do if you’re turned down

If Lending Club rejects your application and you believe your financial standing is strong enough, consider asking for clarification. The explanation could be as simple as a processing error. Or there may be a negative mark on your credit report that you need to investigate.

If you know your credit history is poor, consider applying for a loan from OneMain Financial or for a secured credit card, which can help you rebuild your credit.