Here is a small write up on Lending Club and its functioning.
Read on to find the legitimacy of the company and also details about how it works and the loan application process.
A few tips for both lenders and borrowers are discussed, along with the pros and cons of the Lending Club.
Lending Club is a Public company in the United States of America.
It is the first of its kind P2P lending company.
P2P lending is short for Peer to Peer lending, where in the lenders and borrowers are matched directly.
Like any peer to peer lending company, Lending Club also operates online, thereby cutting a majority of the overhead costs in comparison to the traditional brick and mortar finance lending institutions.
The effect of operating online, with low overhead charges, is that the investors or the lenders get a higher rate of returns for their investment and the borrowers get the loans at lower rate of interest.
Lending Club is supposedly the world’s largest peer to peer lending platform. The company gives personal and business loans apart from providing finance solutions for certain medical procedures.
Lending Club gives unsecured loans to the borrowers who have registered and applied for the same. In return they get lower rates of interest, when compared to the other finance lending institutions. The loan period is generally around 3 years and loans can be applied for $1000 upto $40,000.
The charges that Lending Club collects are called the origination charges for the borrowers. Applying for loans through Lending Club is absolutely free. Once the loan is approved, which is very fast, easy and convenient, Lending Club deducts the origination fee from the loan proceeds.
The origination fee is generally between 1% to 6% of the loan amount. This again depends on the borrower’s loan grade. The borrower’s loan grade ranges from Grade A1 to Grade G5, depending on the credit rating.
Investors search for loans that they would like to invest in, based on certain provided information such as the loan purpose, loan amount etc. In return for his investment in the loan, the investor gets higher rate of returns in terms of money, in comparison with other finance institutions and banks. The charge that Lending Club collects from investors is called the service charges.
Customers who are interested in taking a loan are called borrowers. Borrowers could be individuals or small scale business owners. There is a simple process for loan application. It is all done online. The various steps involved are:
Potential investors need to open an account at the website of Lending Club as Investors, by agreeing to the terms and conditions. Once the whole process is completed, investors then scour for different loans to invest in.
An investor can select the loans that he wishes to invest in. An investor invests in notes, which are nothing but fractions of various loans applied by the borrowers. Investing in different notes helps in diversifying the investment portfolio of the investor.
Once the borrowers start to repay the loans, amounts are deposited into the investors account. It is then up to the investor whether to invest back or withdraw the amount.
|Benefits for Borrowers||Benefits for Investors|
|Easy, fast and uncomplicated||Quick and easy to build a diverse portfolio|
|Lower fixed interest rates||Monthly cash returns|
|Fixed automated monthly instalments||Uncomplicated|
|No hidden fees||Great returns of up to 8.57%|
|Prepayment without fine||Reinvest or withdraw|
|Flexible and friendly terms and services|
** Source: Information provided on the Lending Club website.
Outlined here are some of the pros of taking a loan through Lending Club as well as for the investor.
Given below are some of the cons of borrowing or investing through Lending Club.
Here is a summary on Lending Club Review and BBB:
Lending Club is a great online platform which brings both the borrowers and the investors together. It has a very smooth and easy process. It follows absolute transparency in its dealings. The whole process of loan application and approval gets done quite fast, with all the requisite checks in place.
They follow certain strict rules, with regard to the credit score and credit history of the borrower. The borrowers have to maintain a high credit score in order get loans funded through Lending Club. Some loans may not be processed if they do not meet the requirements of Lending Club, such as a high credit score of 640 and above, a good job and a good salary.
It has been observed that most of the borrowers are satisfied with the low interest rates offered and there are substantially lesser borrower complaints. Following the right tips and rules ensures that borrowing from Lending Club is a great option.
One of the rule is that apply only for the amount required. If a higher amount is applied for, then the repayment rates become quite high and sometimes unmanageable, and hence the absence of the lower interest rate benefit.
A few prospective borrowers and lenders have had this notion as to whether Lending Club is an online scam and if it were legitimate. Going by the features and the security on the website, company’s history and other relevant details, it has been observed that Lending Club is a legitimate destination for borrowers to look for their loans and for investors to invest.
There are also several newspaper reports on the efficient functioning of the company. The company has had investments from Google. (Around $125 million were invested by Google in Lending Club) They have also had partnerships with Home Advisor, Alibaba.com, and Banc Alliance.
BBB accreditation for Lending Club:
BBB stands for Better Business Bureau. The business accreditation program run by BBB, determines if a company meets the standards of accreditation set by BBB. These standards include good resolution of consumer complaints and also the commitment of the business to do so in good faith.
A BBB accreditation indicates that the business is trustworthy, honest and fair. Consumers will always prefer an accredited business. Lending Club has been continuously accredited by the BBB for the past 8 years. It has been rated A+ by the BBB, for having met all the standards.
Some of the rating factors, according the information provided on the BBB website, that raised the accreditation rates of Lending Club are as follows: Length of time business has been operating, Complaint volume filed with BBB for business of this size, Response to 197 complaint(s) filed against business, Resolution of complaint(s) filed against business.
Lending Club has emerged as the largest online market place, making credit affordable to those in need and creating real rewarding experience with respect to returns for the investors.