What are the best LendingClub alternatives?

Personal loans affect your credit score in the short-term and in the long-term. In the short-term, a personal loan may damage your score because it causes a hard credit inquiry and increases your debt load. But in the long-term, a personal loan can either help or hurt your credit, depending largely on whether or not you pay the bills on time. Ultimately, it’s up to you how much impact the personal loan will have.... read full answer

How a Personal Loan Affects Your Credit Score:

• Does temporary damage with an initial hard inquiry. When you first apply for a personal loan, your credit score will immediately take a small hit. That’s because applying for a personal loan triggers a hard inquiry into your credit history. But this shouldn’t drop your score by more than 5 points or so, and you should be able to bounce back quickly.
• Adds to your overall debt. If you’re approved for a personal loan, you will immediately have a higher debt load, which may cause your credit score to drop in the short-term. That’s because the more debt you have, the riskier it is for banks and credit unions to lend to you.
• Reports to the major credit bureaus monthly. The banks, credit unions and online lenders that issue personal loans report payment information to the major credit bureaus on a monthly basis. If you make on-time payments, you can expect your score to increase. But if you are late or don’t pay altogether, your score will drop.
• Improves your credit mix. Proving yourself capable of managing multiple types of loans and lines of credit responsibly is good for your credit score. It shows you can be trusted to repay what you borrow in a variety of situations. So if you only have one or two other types of accounts on your credit report, such as credit cards or student loans, your score may benefit in the long run from getting the personal loan.
• Could help reduce credit utilization. Personal loans give you a lump sum up front, which you pay back in monthly installments. This is different from a credit card, where you can borrow up to a certain amount any time you want. Credit cards are known as “revolving credit,” and a big part of your credit score is how much of your revolving credit you use up each month, or your “credit utilization ratio.” Personal loans don’t count toward this ratio, so if you use them to pay off revolving debt, you can lower your ratio and improve your score.

In conclusion, as long as you’re sure to pay on time each month, a personal loan should eventually increase your score by a lot more than the initial inquiry caused it to fall. You can also avoid wasting hard inquiries by getting pre-qualified for a loan first. Pre-qualification only uses a harmless soft inquiry. And while it doesn’t guarantee approval, it will let you know if your odds are good.

LendingClub’s rates range from 6.95% to 35.89% on personal loans. LendingClub also charges an origination fee of 1% to 6% of the loan amount. This fee is not built into the APR.

The LendingClub personal loan APR range is about average compared to other personal loan providers. Some competitors have minimum APRs closer to 6%, though, and few can top LendingClub’s maximum APR. It’s one of the highest on the market.... read full answer

LendingClub’s average APR for personal loans is 12.74%. The average has stayed below 15% from 2012 through 2019. Currently, 36-month loans have an average APR of 11.5%, while 60-month loans have an average of 14.35%. So it’s often cheaper to get a shorter loan.

Below, you can see how the overall average APR has changed over time.

LendingClub’s Average Rate by Year

LendingClub assigns loans a grade of A through G depending on the borrower’s creditworthiness. A-grade loans have had average APRs well below 10% from 2012 onward. In contrast, G-grade loans averaged around 20% in 2012 and now have an average APR of over 30%.

LendingClub has a few other rates you should know about, too, since they offer more than just personal loans. APRs on LendingClub business loans range from 9.77% to 35.98%. On auto loans, LendingClub’s rates are 3.99% to 24.99%. And for patient financing (medical loans), there’s a possibility for a 0% APR at first, but rates can go as high as 26.99%.

Those are all the important rates for the borrowing side of LendingClub. But LendingClub is a peer-to-peer lending site, meaning that applicants’ loans are funded by investors, rather than LendingClub itself. If you decide that you want to be an investor, you’ll have to pay some of the interest you make on loans to LendingClub. The site charges investors a fee which is typically a rate of 1% of each monthly payment received.