Lending Club Review
Lending Club was founded in 2006 with one goal in mind: Change the way that financial institutions lend money. This Lending Club review will give you, the reader, some insight as to what Lending Club does, and what the advantages and disadvantages are. Note that this is a review though, if your looking for Lending Club’s website then click here
About the Company:
Lending Club Corporation is a San Francisco-based company of about 80 employees. Lending Club allows people to obtain better interest rates on their money, and likewise it allows borrowers to get better deals on the loans they apply for. Today, Lending Club has over $540 million in loans set up, and has several rounds of venture capital backing their enterprise. The idea behind Lending Club is very similar to that of peer-to-peer networking, and it is the largest company of its kind in the world.
Getting a Loan from Lending Club
So, how do you go about getting a loan from Lending Club? It’s simple. The first step is to apply, and at that point, Lending Club does a quick review of your credit history and tells you exactly what your interest rate will be for the loan amount you want. After submitting the application, your loan goes into a funding pool, where those who have money to loan out can fund your loan. This is what it has in common with peer-to-peer networking. Suppose your loan request is a file. People who have pieces of that file (in this case, money) can send portions of your total loan amount to your loan request until it is complete. The entire process might take a week or two, but about half of all loans will fund in less than a week. After the process is complete, the funds go into your bank account electronically. Lending Club manages the repayment process, and will automatically distribute your payments proportionally to the lenders who funded your loan. All of your payments go to Lending Club; it will handle the rest.
Lending Club loans can be used for any purpose, and they can be as low as $1,000 or as high as $35,000. The interest rates range from 6.78% APR to 27.99% APR. There are also no prepayment penalties. All of this sounds great, but keep in mind that the method in which you present your loan request matters a great deal. Some people will not fund loan requests that are not put together in a professional manner. This is one of the downsides to using Lending Club. While credit score matters, individual loan requests matter too. Remember that these are actual people loaning money, not financial institutions, so they’re going to want to know more about those who they lend money to. This is why the loan request is so important.
Furthermore, investors will be privy to significant parts of your credit history in order to make a decision on whether or not they will want to invest in your loan. This means that total strangers will have access to very sensitive information. However, if you’re in the market for a loan, and the normal avenues are not attractive to you, having investors with money to give you making a loan decision based on your credit history actually seems fair. After all, these are investors, and they want to see a return on their investment. If you don’t have a good history of paying back your loans, you may be seen as an unattractive investment risk. Lending Club is generally for borrowers with good credit at a minimum, with relatively few exceptions.
Making Loans with Lending Club
What can investors get out of using Lending Club? Well, this Lending Club review is going to tell you. Just create an investor account and electronically transfer funds to your account. From here, you can review the various loan requests being made by prospective borrowers. These requests will include detailed credit information. If you wish, you may ask the borrowers questions before you fund (either partially or completely) their loan request. Lending Club allows investors to use filters to narrow the loan request field to just those that a particular investor is interested in possibly funding. For example, you can filter out those who have had no credit inquiries in the last six months, since they may be less likely to default on their loans.
After seeing what kind of loan requests are out there, you may choose to fund as many requests as you wish. Lending Club will deliver the funds to the borrower, and investors will get their first payment about a month later, plus interest. It’s a rather simple process, but like any investment, there are inherent risks. The possibility of default is always out there when dealing with loans, but that risk can be mitigated by spreading out money to different loans. The key is to use the filters that Lending Club give to investors to give them the best possible return on their investment
Most Lending Club reviews won’t give you the downsides to participating in this system, but both investors and borrowers must be mindful of the risks involved here. That being said, Lending Club is an innovative way for people to both loan and borrow money without a bank being involved at all. The system is easy, and for many people, the interest rate savings is well worth it.