Founded in 2007, LendingClub is a peer-to-peer lender that wants to transform the way people access credit, by matching borrowers with investors who are happy to fund their loans. In the pantheon of the best debt consolidation companies, LendingClub stands out for its commitment to responsible lending and, with $50 billion borrowed over the platform and three million plus customers, many obviously agree.
A debt consolidation loan through LendingClub effectively allows borrowers to bring together balances from credit cards and other high-interest loans into a single loan with a fixed rate and term. The aim is to help you save money by reducing your interest rate, while also making it easier to pay off your debt faster. However, as LendingClub does not pay your creditors directly, the onus remains on you to use the loan to pay off your debts.
Besides straightforward debt consolidation loans, LendingClub offers a specific option for those looking to solely refinance credit card debt, while balance transfer and home improvement loans are available too.
LendingClub Debt Consolidation review: Eligibility
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- 18 years old and US citizen
- Relatively strict lending criteria
In order to be eligible to apply for a debt consolidation loan with LendingClub, you will need to be at least 18 years old and a United States citizen or permanent resident, or living in the U.S. on a valid, long term visa. You must also have a verifiable bank account, and live in one of the 49 of the 50 states that LendingClub operates in - residents of Iowa and U.S. territories are out of luck.
LendingClub uses a high benchmark for checking that people are not borrowing beyond their means, so its lending criteria is relatively strict. However, the Check My rate option can be used to get an idea of whether you will qualify, the rate you might expect, and a prediction of your monthly payments, all without affecting your credit score.
LendingClub Debt Consolidation review: Application process
Loan amounts: $1,000 - $40,000
APR: 10.68% to 35.89% fixed
Loan terms: either 36 or 60 months
Fees: origination fee of 2–6% in APR, no prepayment fees
Waiting time for funds: Up to four business days
- User-friendly website
- Joint applications allowed
LendingClub says it is possible to apply for a debt consolidation loan “in minutes” online, or alternatively you can complete the whole process over the phone. In the first instance, you need to check the rate that you might be able to qualify for - this will involve a soft credit inquiry that will not affect your credit score. A hard credit inquiry that may affect your credit score only appears when a loan is issued. The process is quick, concise and impossible not to follow.
LendingClub also welcomes joint applications, which can be useful if you are struggling to qualify for a loan, or perhaps want to check whether you can qualify for a better rate. This option is flagged up early in the Check My Rate process, where you simply click Add a Co-Borrower on the application page to start a joint application.
Assuming you qualify, you should receive multiple loan offers from which to choose, and will then be asked to submit information such as your address and Social Security number in order to complete the application. Some income and employment documents might be needed too, but there’s a useful To-Do list to help you on your way. Documents can be submitted by uploading from your computer or your mobile device.
LendingClub then reviews your application, but you can visit your account any time to check on your loan’s progress. Once the loan is approved, the money is automatically deposited directly to your bank account, but it may take up to four business days.
LendingClub Debt Consolidation review: Essential details
- Choice of just two loan terms
- Low maximum loan amount
Personal loans through LendingClub range from $1,000 to $40,000, which means those with larger debts might need to look elsewhere - Wells Fargo, for instance, offers debt consolidation loans up to $100,000.
Unlike more traditional lenders, the loan terms available to borrowers are restricted to a choice of either 36 or 60 months. If you are looking to repay over a period longer than five years, or want a choice of more terms, then you will need to look at alternative debt consolidation companies, with Discover, for example, offering up to 84 months.
The cost of borrowing via LendingClub ranges from 10.68% to 35.89% APR. All rates are fixed, resulting in a fixed monthly payment, but the APR does include an origination fee, which is a one-time fee of between 2–6% of the total loan amount. The amount of the fee is based on your credit rating and the information in your application, but it will only be charged if you receive a loan.
In terms of late payments, borrowers get a 15-day grace period to make payments with no penalty, although interest will continue to accrue daily. However, if a payment is more than 15 days late, a late fee of 5.00% of your unpaid payment or $15, whichever is greater, may be charged, along with other penalties to compensate the investors who've backed your loan.
However, if you find yourself in position to make additional payments or pay off your loan early, this can be done at no extra charge.
LendingClub Debt Consolidation review: Features
LendingClub offers an autopay feature which automatically takes your payment from your account each month, although you are also free to pay by check or phone if you’d prefer. As mentioned previously, you are able to upload any documents either from your computer or a mobile device, but can also fax them as well.
The co-applicant option is also worth repeating, as it is not a feature commonly available across lenders - Wells Fargo is one alternative debt consolidation company that does.
LendingClub Debt Consolidation review: Service
- Accessible online support
- Comprehensive Help Center
As you would expect from a company looking to operate almost exclusively online, its website is accessible, easy on the eye, and simple to navigate. Managing your LendingClub loan account online is straightforward, while phone support is also available if you need. That said, the website offers plentiful opportunities to check any questions you may have in its Help Center, where everything is neatly sorted into sections such as How to Apply, About Your Offer, Your Account, and so on.
Stacks of information is also available in the Resource Center, which plays host to a number of guides and articles. There is a LendingClub blog too, with even more guides and advice, although this is a little hidden away. If you are interested, LendingClub also goes into great detail over how its business works.
In terms of turnaround times, LendingClub advises that it can take up to four days for funds to reach your account after the loan is approved. This is probably a little longer than you might typically find with a more traditional lender, so is worth considering if you want your money fast.
Should you use LendingClub Debt Consolidation?
If you’re comfortable managing your finances online and want the chance of a competitively priced debt consolidation loan, then LendingClub is worth a look. The application process is slick and the service after that is excellent too, but there are a few things that could put some people off.
There is little flexibility in respect of terms and a relatively low maximum loan amount, while you may find it difficult to get a good rate (or a loan at all) if your credit score is a little under par. You might also need to wait a little longer than usual to get your loan, but if you have time on your side, and appreciate a well put together website and good support, LendingClub could be for you.