This is part of our semi-regular series where we take an in-depth look at the platform experience from the borrower side. A few months ago I took out a loan on Lending Club and I recorded the entire experience for Lend Academy readers. This was my second time applying for a loan on Lending Club, I first did this back in 2011 and you can read about that experience here.
Now, I didn’t actually need this loan from Lending Club, I just wanted to get a first hand look at their entire borrowing process. For investors I think it is important to have some understanding of the borrowing process, this is the core of what marketplace lending is all about and something few of us stop to consider. And for potential borrowers it is good to know how the process works before you apply for a loan.
When I was applying for this loan I created a screencast video of the process. This video walks you through the different screens and lets potential borrowers know what to expect. It runs just under six minutes and if you are looking to obtain a loan on Lending Club I highly recommend you watch the entire video.
Find Your Rate Without Entering Your Social Security Number
Most borrowers typically want to know two things: their interest rate and whether or not they have been approved. So, Lending Club makes it quite easy to find out those two pieces of information quickly. Lending Club will do a soft pull on your credit after you enter your name, address and income. No social security number is entered until you see whether you have been approved or not. If approved, you will see your interest rate and monthly payment and only after that do you have to enter in your social security number.
Once you have been approved and received your interest rate you are under no obligation to accept the terms that Lending Club offers to you. I chose a small amount of $2,500 and my loan was graded A2 with a 6.24%% interest rate (7.60% APR). Once you accept the loan terms Lending Club will do a hard pull on your credit and then you will see an inquiry for this loan on your credit report.
A couple of interesting points to note here. One, when I applied for a loan back in 2011 I was actually rejected by Lending Club. Back then I was self-employed and Lending Club made it very difficult to get a loan in those circumstances – I ended up getting a loan in my wife’s name so I could record the experience. Two, I noticed when applying for this loan that Lending Club offered me a lower rate 2-year loan option. I have never seen 2-year loans offered to investors so I thought that was interesting. Clearly, this is a special program Lending Club has recently created and my guess is that it is for one of their bank partners.
A Quick Turnaround on My Loan
When you have completed the online loan application process there is still more you need to do. Lending Club does verification on all their borrowers. Given that I had been an investor for 6+ years this verification was minimal. In fact all Lending Club did was to call me up to answer some questions to verify my identity.
Just like my my recent Prosper loan, my Lending Club loan was funded instantly by one investor – it obviously went to their whole loan platform. For those interested you can see my listing here.
Four Working Days from Loan Application to Money Received
The entire process was quick and easy. From the time I started the process until the money was in my bank account was just four working days. Here is a timeline with most of the steps involved:
Day 1 – Applied for a loan on Lendingclub.com
Day 2 – Loan is made available to investors
Day 2 – Loan is fully funded by one investor
Day 5 – Lending Club telephoned to do identity verification
Day 5 – Loan issued
Day 6 – Money appeared in my bank account
I did not have to provide any additional information to Lending Club beyond a phone call. I did have to verify my email address and bank account but that was basically it.
Overall, I was very happy with the entire process at Lending Club. Now, if you want to take out a loan from Lending Club then you can use this link (it is an affiliate link).
All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage & history. The APR ranges from 6.95% to 35.89%*. The origination fee ranges from 1% to 6% of the original principal balance and is deducted from your loan proceeds. For example, you could receive a loan of $6,000 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at the time of application. The average origination fee is 5.49% as of Q1 2017. In Georgia, the minimum loan amount is $3,025. In Massachusetts, the minimum loan amount is $6,025 if your APR is greater than 12%. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months. Borrower must be a U.S. citizen, permanent resident or be in the United States on a valid long term visa and at least 18 years old. Valid bank account and Social Security number are required. Equal Housing Lender. All loans are subject to credit approval. LendingClub’s physical address is: LendingClub, 71 Stevenson Street, Suite 1000, San Francisco, CA 94105.
†Per reviews collected and authenticated by Bazaarvoice in compliance with the Bazaarvoice Authentication Requirements, supported by anti-fraud technology and human analysis. All reviews can be reviewed at reviews.lendingclub.com