Applying for a Debt Consolidation Loan in 2019

The LendIt Fintech News team has long featured reviews detailing the process for borrowers applying for loans through companies like LendingClub and Prosper. The reality is that the landscape for online loans today is much larger than these two fintech firms which dominated the industry a decade ago.

There are dozens of companies competing in the personal loan space, from the big banks who have either launched a new unsecured online loan or intend to do so, to the many successful fintechs we see in the ecosystem today. While receiving a loan online isn’t novel in 2019, every consumer lender today offers a slightly different user experience and most importantly, varying interest rates. Since we like to keep up to date with the current landscape we’re always excited when borrowers are willing to share the details of applying for a loan online. In this post we review the process of someone looking to consolidate approximately $10,000 of credit card debt.

One thing many borrowers don’t realize is that you don’t necessarily have to go to every single loan provider’s website to get an offer of credit. Sites like Credit Karma and LendingTree work with many lenders which can save time in finding the cheapest cost of credit. Below is a screenshot from this particular borrower’s Credit Karma account showing that they are pre-qualified for a loan through Prosper. This was just one of many of the options displayed to this borrower.

You can see in the table below that this borrower was able to receive a variety of offers with interest rates ranging from 9.47% to 13.99% and terms between 2 and 3 years. The most important field here in this person’s situation is the all-in cost of the loan, which includes interest and fees. While Prosper offered the lowest interest rate for this borrower, Lightstream was actually the cheaper loan due to the fact that they do not charge origination fees. Note that Prosper’s offer was a three year loan while Lightstream offered a two year loan term. Since this borrower planned to payoff this loan aggressively within the next 4-6 months the Lightstream loan was the best option. Other borrowers may value the flexibility of having a longer term loan which Prosper and others offered. Note that the FICO score of this borrower was around 720.

Lender Loan Amt Pre-qualified APR Length (Months) Payment Interest & Fees Phone Calls?
SoFi $10,000.00 10.60% 24 $464.22 $1,141.28 No
Lightstream $10,000.00 10.09% 24 $461.86 $1,084.64 Yes
Prosper $10,000.00 9.47% 36 $309.00 $1,472.00 No
LendingClub $10,000.00 10.35% 36 $311.00 $1,608.00 Yes
LendingClub $11,000.00 12.35% 36 $348.83 $1,557.88
Upstart $10,000.00 12.59% 36 $318.00 $1,954.00 No
Best Egg $10,000.00 13.49% 36 $326.00 $1,732.00 No
Marcus $10,000.00 13.99% 36 $342.00 $2,302.00 No

We also wanted to get an unbiased perspective on the actual user experience. Here is what this borrower had to say about each company’s process:

  • SoFi: User experience was friendly. Issues with uploading ID’s though. Had to try several times.
  • Lightstream: This is the loan I chose. The application was quick and the rates came within a day. The phone call I received was only to see if I required anything further or wanted more information.
  • Prosper: These rates were supplied by Credit Karma. Prosper wanted me to go through the full application and submission of my ID’s before locking in a rate.
  • LendingClub: I received several phone calls to verify my identity and needs which I thought was annoying and redundant. Plus they called me and wanted me to verify all of my SSN/etc. which felt more like a phishing call and less of a customer service call.
  • Upstart: Wasn’t a fan of the 3 year term, so I didn’t pursue.
  • BestEgg/Marcus: Didn’t consider due to the rates provided on Credit Karma.

Conclusion

There has been a dramatic power shift in consumers’ favor over the last few years when it comes to personal loans. Never before has the consumer had so much information about the loan options available to them in a matter of minutes. What’s interesting is that the list above of companies in unsecured lending is not comprehensive, there are many big banks and other fintechs who offer similar products. One of the things we’re keeping a close eye on is how fintech lenders and banks go beyond offering just an unsecured loan. When the borrower has transparency into many options, it becomes more important to differentiate with user experience and serving customers throughout their financial lives.

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E. Taylor
E. Taylor
Jan. 23, 2019 11:22 am

This story was interesting to me since I just got an online loan in November 2018 from Lending Club which I found thru Credit Karma. I wanted $14,000 but I requested $14,700 because my originating fee was over $800. My scores were around 712/701/698 and I should have waited because other offers came thru later without oringinating fees. The fee along with a new situation cut into the money I needed to consolidate my bills. I found them thru Credit Karma. Consequently I’m now looking for a new loan which I went through Credit Karma again to get the balance of the money I now need. I’m going to probably use White Rock Loans. I only wanted $2000 however they made one offer and it was for $5,000. The problem is now my credit score has gone down due to the $14,700 loan and the companies that are responding are coming with very high APR’s, interest rates and bill payment amounts. I also went online not using Credit Karma and I ended up getting a flood of offers to the point it was scary because I begin to wonder were some of the offers scams and now they ALL had my information. My email and my voicemail are being flooded with them and most of them are like payday loans offering $1,000. I didn’t even realize it was soooo many online companies out there. I tried to go online to verify if some of these companies were legitimate or not but it was just too many. All I can do now is pray that I get this new loan and that the many other companies that made offers were legitimate. I want to add that there are major players like Lending Tree, Lending Club but there are others that don’t have the originating fees like Avant so I think if you’re searching for a loan Credit Karma is your safest avenue. I’ve also been successful using them for getting credit cards as well.

E. Taylor
E. Taylor
Jan. 23, 2019 12:08 pm
Reply to  E. Taylor

Sorry I have a correction the new company I’m dealing with thru Credit Karma is not White Rock Loans it is Mariner Finance.