Is Lending Club Legit or a Risky Investment Option

Lending Club has been around since 2007, making it a relatively established player in the peer-to-peer lending market. It's grown to become one of the largest platforms of its kind.

The company has facilitated over $50 billion in loans, with a strong focus on small business and personal loans. This suggests a commitment to helping individuals and businesses access much-needed capital.

Lending Club's platform allows investors to lend money to borrowers, earning interest on their investments. This model has attracted a diverse range of investors, from individuals to institutional investors.

However, Lending Club has faced criticism and controversy in the past, including a high-profile scandal in 2016 that led to the resignation of its CEO. This event highlighted the need for greater oversight and regulation in the peer-to-peer lending space.

Lending Club offers a variety of lending services, including personal loans, business loans, and medical financing.

Their personal loans can range from $1,000 to $40,000, with repayment terms of 36 or 60 months.

You can borrow money for anything from consolidating debt to financing a home improvement project.

The interest rates on Lending Club loans can be as low as 6.95% APR.

Business loans through Lending Club can provide up to $5 million in funding.

They also offer a line of credit, which can be used to cover unexpected expenses or cash flow gaps.

Repayment terms for business loans can be as short as 6 months or as long as 5 years.

Lending Club's lending services are designed to be flexible and accommodate a range of financial needs.

Their platform allows borrowers to apply for multiple loan options at once.

This can be especially helpful for small business owners who need to juggle multiple financial obligations.

By offering a range of loan options, Lending Club aims to make borrowing more accessible and affordable.

LendingClub has faced its fair share of scandals and struggles in the past. In 2016, the company's share price dropped significantly due to concerns over its business model and the slowing US economy.

A major controversy erupted when LendingClub's CEO, Renaud Laplanche, was found to have not fully disclosed his involvement in an investment fund and his knowledge of problematic loans. This led to his resignation in May 2016.

The company's internal governance was also called into question, with an investigation revealing that $22 million in loans did not meet the investment criteria of Jefferies bank. LendingClub had to buy these loans back and resell them.

Here are some potential drawbacks to consider:

The company's struggles continued in 2017, with the Financial Times reporting that LendingClub was still battling to regain investor confidence and had raised its loss estimate. This led to further drops in its share price.

LendingClub's troubles began in 2016 when it struggled to attract investors, leading to a significant drop in its share price. The company was forced to increase interest rates on loans three times in the first few months of the year.

In April 2016, a whistleblower reported that $3 million in loans had altered dates, sparking an investigation. This investigation uncovered further issues with loans, including $22 million that didn't meet investment criteria.

The investigation also revealed that LendingClub's CEO, Renaud Laplanche, hadn't disclosed his ownership in an investment fund the company was considering buying. Laplanche's lack of transparency led to a loss of confidence in him among the board, resulting in his resignation on May 9.

The scandal led to a further 34% drop in LendingClub's stock price, leaving it at 70% of its initial public offering value. The Securities and Exchange Commission began investigating the company's disclosures to investors.

By December 2017, LendingClub was still struggling to recover from the scandal, with the Financial Times reporting that the company had battled to keep big investors buying loans. This led to a raised loss estimate and further drops in its share price.

Missing payments can have serious consequences, starting with a 15-day grace period before a 5% late fee is charged.

If you're having trouble making payments consistently, LendingClub has a customer service email and phone number you can reach out to for help.

Missing payments can lead to defaulting on your loan, which will be sent to a collections agency and negatively impact your credit.

This is a serious outcome, and it's essential to communicate with LendingClub to explore options that are specific to your situation.

Some services come with drawbacks.

One of the downsides is that it charges origination fees.

Another con is that it has higher rates than some of its competitors.

Some users have left negative reviews, which might be a concern for potential customers.

LendingClub has a solid financial foundation, with total assets of $8 billion as of February 2023. This stability is a positive sign, especially considering it's relatively low exposure to the Silicon Valley Bank collapse.

Most importantly, LendingClub is insured by the Federal Deposit Insurance Corporation (FDIC), which means deposits up to $250,000 are insured in the event the bank goes under. This provides an added layer of security for borrowers.

LendingClub faces risks like economic instability and low profit margins, but since its acquisition of Radius Bank in 2021, it's subject to banking regulations, which makes its processes more stringent and stable. However, complying with these regulations takes up resources, which could lower overall profitability.

LendingClub's pre-IPO growth was a period of rapid expansion. In April 2010, the company raised $24.5 million in a Series C funding led by Foundation Capital.

This funding was joined by existing investors including Morgenthaler Ventures, Norwest Venture Partners, and Canaan Partners. By August 2011, LendingClub had raised an additional $25 million in venture capital from Union Square Ventures and Thomvest.

This led to a $275 million post-money valuation and an increase of $80 million in valuation from the preceding year. Thomson-Reuters founder Peter J. Thomson also invested an unspecified amount of his personal fortune into LendingClub.

In fall 2011, LendingClub's headquarters moved to downtown San Francisco from its earlier offices in Sunnyvale and Redwood City. Co-founder Soul Htite moved to China to start Dianrong.com, a peer-to-peer lending company based in Shanghai.

By 2012, the company employed about 80 people, with Renaud Laplanche continuing as the company CEO and chairman of the Board of Directors. The company averaged about $1.5 million in loan originations daily.

In April 2012, LendingClub's SEC registration from 2008 was renewed for $1 billion USD in Member Payment Dependent Notes and became effective on April 10, 2012. This was a significant milestone for the company.

In June 2012, the company received $15 million in new funding from Kleiner Perkins Caufield & Byers and $2.5 million of personal investments from John J. Mack. This led to a $570 million valuation of the company.

By November 2012, LendingClub had surpassed $1 billion in loans issued since inception and announced they were now cash flow positive.

LendingClub's journey as a public company began with a significant milestone - filing for an Initial Public Offering (IPO) with the SEC in August 2014.

In December 2014, LendingClub raised almost $900 million in the largest U.S. tech IPO of that year.

The company's stock price ended its first trading day up 56%, valuing LendingClub at $8.5 billion.

LendingClub planned to expand into mortgages, as announced by Laplanche in 2015.

This move would have allowed individuals to access mortgage financing through the platform, potentially making homeownership more accessible.

In 2015, LendingClub also partnered with Google to extend credit to smaller companies using Google's business services, showing a commitment to innovative financing solutions.

This partnership aimed to provide financing options to businesses that may not have qualified for traditional loans, promoting economic growth and development.

LendingClub's expansion into mortgages would have provided an alternative to traditional lenders, potentially offering more competitive interest rates and terms.

However, the article does not provide further information on the status of this expansion or its current impact on the mortgage market.

Balance transfer loans can help you save money by using a lower-interest loan from LendingClub to repay high-interest loans from other lenders.

You can use a balance transfer loan to pay off loans with high interest rates, freeing up your monthly budget for other expenses.

The loan funds can be deposited directly with your creditors, with any leftover funds then sent to your account.

LendingClub charges an origination fee ranging from 3.00% to 8.00% of the loan amount, determined by your creditworthiness.

The cost of your APR and origination fee will be determined when you initially apply for the loan. LendingClub does not charge application fees, broker fees, or prepayment penalties.

If you make a payment more than 15 days late, LendingClub may charge a late fee of 5% of the outstanding payment or $15, whichever is greater.

Origination fees are generally taken out of the loan funds or added to the principal amount and depend on several factors, including your creditworthiness and the loan’s duration and amount. LendingClub charges fairly high origination fees of between 3% - 6%.

LendingClub Personal Loans have an APR range of 8.98%-35.00%, determined based on your application and creditworthiness as a borrower.

Applicants must have a credit score of at least 600 to qualify for a LendingClub loan, and the higher an applicant’s credit score, the lower the APR and origination fee will be.

To qualify for a loan, LendingClub doesn't have a minimum income requirement, but they do check if you can afford to pay it back.

Your debt-to-income ratio is a key factor in getting approved. It's the combined total of your debts compared to your gross income, and it can't exceed 40%.

LendingClub will verify your income and employment before approving a loan.

You can initiate the process of applying for a LendingClub loan by visiting their website and choosing the type of loan you want to apply for.

The application process is relatively quick and easy, requiring you to specify your loan amount and answer a few simple questions to confirm your identity.

You'll then get an estimate of the rate you'll be charged, after which you can choose to initiate your loan application with LendingClub.

The lender will then perform a credit check to finalize the application process.

Home improvement can be a daunting task, but having the right financing options can make all the difference. LendingClub offers fixed-rate home improvement loans of up to $40,000.

These loans are unsecured, which means you don't need to put your home up as collateral. Eligibility is based on your credit history, not your home value.

This can be a huge relief, especially if you're looking to renovate or repair your home without risking your home's value.

Applying for a LendingClub loan is a relatively straightforward process. You can initiate it by visiting their website and choosing the type of loan you want to apply for.

You'll need to specify your loan amount and answer a few simple questions to confirm your identity. This is a quick and easy step.

After that, you'll get an estimate of the rate you'll be charged, which can help you plan your finances.

Once you're satisfied with the terms, you can choose to proceed with your loan application. This will trigger a credit check, which is a standard part of the process.

Some users have reported being satisfied with the simple and relatively quick application process, but others have experienced issues with high APRs or delayed loan payouts.

If you're turned down by LendingClub, don't worry, there are other options to get a loan with bad credit.

Upstart is a viable alternative, allowing borrowers with credit scores as low as 300 to apply for a personal loan.

Prosper is another option, similar to LendingClub, but with a slightly different set of terms, including a debt-to-income ratio of up to 50% and APRs ranging from 6.99%-35.99%.

SoFi is a good choice for borrowers with good credit, offering APRs as low as 8.99% and no origination fee, although the website doesn't specify a credit score minimum.

Discover is another alternative that doesn't charge an origination fee, with APRs ranging from 6.99%-24.99% and loan amounts up to $40,000.

Lending Club has been around since 2007, making it a well-established player in the peer-to-peer lending space.

Lending Club has facilitated over $50 billion in loans, with a default rate of around 5%.

The platform offers a range of loan options, including personal loans, business loans, and medical financing.

Lending Club has been involved in some high-profile controversies, including a 2016 SEC investigation.

The platform has a strong focus on transparency, with detailed information available on borrower creditworthiness and loan performance.

Lending Club's interest rates are generally competitive with traditional lending options, with rates ranging from 6-36%.

The platform has a large and active community of investors, with over 3 million registered users.

If you're turned down by LendingClub or don't feel the terms offered are a good fit, there are other options to consider. First, make sure your credit report is accurate, as an error on your report can be corrected and improve your score.

Upstart is one alternative, allowing borrowers with credit scores as low as 300 to apply for a personal loan. The loan term is either 36 or 60 months, and borrowers can get up to $50,000.

Prosper is another option, similar to LendingClub in many ways. It doesn't specify a required credit score, but scores under 600 likely won't qualify.

SoFi is a good choice for borrowers with good credit, offering manageable APRs (8.99%-23.43%) with no origination fee. Loan amounts range from $5,000-$100,000 and repayment plans are 3-7 years.

Discover is another alternative that doesn't charge an origination fee, with APRs ranging from 6.99%-24.99% and loan amounts from $2,500-$40,000.

If you're looking for a quick comparison of these alternatives, here's a brief rundown:

Keep in mind that each of these alternatives has its own terms and requirements, so be sure to research and compare them carefully before making a decision.