How long does a Lending Club loan take?

What to Know Before Getting a Personal Loan

Personal loans can be a quick way to access cash when you need it, but it’s important to use them wisely. Before taking out a personal loan, you should consider whether it’s really necessary and come up with a plan to pay it off. Always do your research and comparison shop with multiple lenders to find the best personal loan rate

Be aware that the exact rate you get may differ from the advertised rates since rates depend on your credit score, income, and loan value and terms. Some lenders will let you pre-qualify for a loan or check your rate with only a soft credit inquiry, which won’t affect your credit score. Other lenders may require a hard credit inquiry, which could lower your credit score by a few points. When you officially apply for a loan, all lenders will require a hard credit inquiry. In addition to the interest rate, check if the lender charges any fees — such as origination fees, prepayment penalties, or late fees — that might raise the cost of the loan. 

Pro Tip You can check your rate with LendingClub without a hard credit inquiry. We recommend checking rates from multiple lenders in order to find the best deal. 

Once you’ve taken out a loan, be sure to make payments on time to avoid any additional fees or interest charges. Late payments can also damage your credit score.

Finally, know the difference between a secured loan, which uses an asset such as a house or car as collateral, and an unsecured loan, which requires no collateral. Secured loans may offer lower interest rates, but they’re riskier for the borrower since you can lose your collateral if you default on the loan. 

How Im Investing Using Lending Club

What I really want to do today is walk you through how I am investing with Lending Club. While we’ve already covered details on how to invest and borrow with Lending Club, I thought I’d show you a little bit of my personal experience with investing using the peer-to-peer lender.

I have been investing with Lending Club for a few years now. I don’t have a whole lot invested, and you’ll actually see that here in a minute because I really didn’t understand it and I wanted to test it out first. I wanted to test-drive it before 1) I put more money into it and 2) before I recommended people take a look at it.

Below, you’ll see a screenshot of the website. I went ahead and logged in so you can see where I’m at right now. Right now, I have invested a total of $2,200, so not a big investment by any means.

My net annualized return is 10.83%, so right off the cuff, you can see I’m already making more than the average investor at Lending Club is making – almost a full percentage point more. That’s not because I am a uniquely great investor. I’m actually very passive in the way I choose my notes, which I’ll show you here in a minute.

I currently have $525 sitting in cash in my Lending Club account that I need to invest, and that’s exactly what I’m going to use today to show you how to invest.

I love Lending Club because they keep things simple. For the people who don’t like to spend a lot of time doing research, they make it very, very simple in that you can choose option one, option two, or option three. Let’s just assume you have a high tolerance for risk and you are looking at the 17% figure. You look at that number. You’re drooling over it. You want it. That’s how much you want to make.

By quickly clicking that option, they will show you where you are investing your notes (the agreements you have with people you’re lending your money to). They’re ranked similarly to that of a report card or a bond.

Initially, you’ll notice by going the more aggressive direction you do not have any of the A- or B-type investors. These are your higher credit score people. They are less likely to default on their loan, so this is definitely more of a high-yield approach when it comes to peer-to-peer lending.

Of that $525 I have to invest, $100 is going into C notes, $200 is going to D notes, $150 going to E, and $75 going to F. Immediately, Lending Club breaks it down for you automatically. And I can’t tell you how much I love that! That’s actually my strategy. I don’t select the third option. I typically select option one, but immediately they break down the notes for you.

They also show you your average interest rate on that is 17.9% (in this example), but because some of those folks are going to default on their loans, they are estimating you’ll lose 4.42% based on default.

Then there is Lending Club’s charge of 0.52%, so your projected return after it’s all said and done is going to be approximately 12.25%. And that’s approximate. Maybe all of those people do pay you back where you’re all good and you actually make more, but that should just give you an idea.

Lending Club Notes

Let’s just go to the next step real quick. Here is another area where you can start seeing what some of these loans are used for. For example, you might see listed: credit cards, debt consolidation loans, small business loans, and more. You can actually see what these notes are.

Note: You should know I’m going through this process in real-time, so I can make sure to show you my thought process along the way and you get a real Lending Club review as I move from screen to screen.

The amount left is how much more that person needs to borrow to take care of the debt. If you want to take it one step further you now can see more about the individual, their gross income per month, if they’re a homeowner or not, their length of employment, their current employer, where they are located, their debt-to-income, and their credit score range. It just gives you a lot more details about the borrower.

Even more, if you want you can ask them questions if you’re not confident or just need some reassurance.

Lending Club actually gives you some direct questions to ask. They did change that a little bit over the past few years (I think because of a privacy act), but they give you a lot of the good basic questions to ask.

One thing I didn’t mention is that of the $525 I have to invest, typically only $25 of that is going toward each individual note, so that’s where the diversification comes into play where you’re not putting all your eggs in one basket.

I am going to try option one. I’m much more comfortable with that option. My projected rate of return is going to be lower, but as you can see I’m actually doing better than what was predicted. I think I might have done some high-risk investing in the beginning, but typically I have stuck with option one. You can see I have a lot more of the B borrowers and none on the F and G side. I’m not much on the high yield. I like to be a little bit more conservative with this aspect. Immediately they break it down and it looks like I’m doing some overlap of my last entry so let’s see if we can get that straightened out.

The other thing too is you could actually choose the term of the note. Lending Club initially just started out with a 36-month, three-year note. They now offer a 60-month note so that’s actually a little bit more of a return on that one, but you are locked into your own money. You can also sell these notes too, so if you are not wanting to hold it for the maturity you can find a buyer – just like selling stock on the open market.

Choosing Note Options

All right, let’s see if I can finally get this figured out. I just want to invest. I should’ve started with the option one to begin with. Let’s start over. Sorry about that.

Let’s go with option one. I can actually go in there and select notes by themselves. I can add more money to one note, take some money away from another note, etc. You have that ability! You also have the ability to build your own portfolios from scratch, so if you want to go through all of the different available notes, you can do that as well. I personally don’t have interest in that so I don’t. So, with $525 I’m going to invest into 21 different notes and my average rate of return will be approximately 9.58%. A quick look at the notes and we are going to place the order.

You can then give your portfolio a name. I haven’t done a very good job of managing this so I’m just going to assign it to “portfolio 10” and we can go from there. I will soon get a confirmation.

One notable thing is that I’ve just invested $525 into 21 individual notes. Most likely, not all of those notes will get the entire funding. In some cases you won’t get the investment you initially were after. In that case, you would get a refund. From there, you can go out and find some new notes. It most likely will happen, just so you know.

That is it as far as how to invest with Lending Club. It’s so simple! As far as who I would recommend this to – this is not a savings account replacement. This is not a certificate of deposit replacement. Even though you can get a three-year or five-year note you might think of that as a three-year or five-year CD.

How Lending Club Fits in My Overall Portfolio

How do I view Lending Club in my overall investment portfolio? Well, we already have our emergency fund and we have our savings account – this is just something to complement what I’m doing in my stocks. Like I said, I only have a small investment now, but after doing my initial Lending Club review we are planning on shifting some more money there.

We were building a house, had some other improvements we were doing, and having a third child, so we wanted to have more in cash then we probably should, but we just felt more comfortable doing that. Now that we have some of those things out of the way I am definitely a lot more comfortable moving some more cash into Lending Club and start making some more interest.

I should also say I have never had any notes default on Lending Club up to this point. I’ve been doing it for just over two years, and I believe and have not had a default yet. I’m not saying I won’t, but I haven’t had one yet. If I do I will definitely report it.

If you have any more questions let me know. You’ll find an affiliate link, so if you do click and open an account I do earn a bit of money for you doing that. You can also go to LendingClub.com directly. I won’t get the commission and that’s fine by me as well.

If you have more questions on my Lending Club review or if you have any experiences, please share. I’d love to hear more about it as this becomes more of a mainstream investing approach for a lot of people.

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How to Qualify for a LendingClub Personal Loan

LendingClub requires that all borrowers be at least 18 years old, have a verifiable bank account, and are either a U.S. citizen, a permanent resident, or living in the U.S. on a valid, long-term visa. LendingClub loans are not available to residents of Iowa or the U.S. territories.

Although LendingClub doesn’t list any credit score requirements on their website, a PR representative confirmed that the minimum credit score required to qualify for a personal loan is 600. Keep in mind that even if you qualify for a loan, having a lower credit score will likely mean getting higher interest rates or qualifying for a lower loan amount.

LendingClub doesn’t have any minimum income requirements, although they do require proof of income. Your debt-to-income ratio, along with your credit history and credit score, may affect your loan approval and interest rate. 

If you have trouble qualifying for a loan due to a poor credit score, LendingClub allows you to add a co-borrower, which may help you qualify. Adding a co-borrower to a personal loan has its risks and benefits, so be sure to consider the pros and cons before starting a joint loan application.

LendingClub allows members to have up to two active personal loans through LendingClub at the same time. However, the combined minimum outstanding amount must be less than $40,000, and you’ll need a history of on-time payments on your first loan in order to qualify for a second one. 

2. How Long Does LendingClub Take to Deposit Money?

Sep 11, 2020 — In most cases, you shouldn’t have to wait too long for LendingClub’s review to finish. A typical loan takes 7 business days or fewer from the 1 answer  ·  Top answer: LendingClub says it can take up to “a few days” to deposit money after they approve an application, depending on the bank the borrower uses. The funds (4)

Jul 20, 2021 — You can get loans ranging from $1,000 to $40,000, and get your money in as little as seven days. In some cases, this may take a little longer, (5)

May 1, 2020 — How long does it take to get approved? The whole application, approval, and funding process takes on average 7 business days.(6)

8. Best Peer-to-Peer Lending Websites of September 2021

If you accept your rate and proceed with your application, we do another (hard) credit inquiry that will impact your credit score. If you take out a loan, (24)

Jun 27, 2021 — How long does it take to get your money from the Lending Club? Typically, you will be able to get your loan within 3 to 4 business days. What is (25)

LendingClub enabled borrowers to create loan listings on its website by supplying details about themselves and the loans that they would like to request.(26)

Lending Club Rates and Fees

While Lending Club advertises rates as low as 6.46%, it is improbable that you will see a rate that low. It is only available to individuals with near-perfect credit.

Even borrowers with an A-grade loan may pay as much as 8.81% APR for a 36-month loan. Borrowers whose loans are graded D or E may want to think twice before signing up since the interest rates can go up to 27.27%.

In addition to your APR, Lending Club charges an origination fee of 1% to 6%, depending upon your credit. The origination fee is how Lending Club makes its money.

This fee is something you need to take into account when you request your loan. For instance, if you need to have exactly $5,000, you should apply for $5,260 to compensate for the 5.2% average origination fee.

What to Expect From a Lending Club Loan

The Lending Club loan application process is relatively simple. You can apply online in minutes by filling out an application indicating how much debt you want to consolidate.

From there, you will:

  • Review your options for monthly payments and interest rates.
  • Pick the consolidation option that works best for you.
  • Have the loan deposited into your bank account.

How Much Can You Borrow From Lending Club?

You can get loans ranging from $1,000 to $40,000 and get your money in as little as seven days. In some cases, this may take a little longer, depending on what information you need to provide. You can complete the entire process online or by phone.

Once your loan is approved and backed by investors, the money is deposited into your bank account. This step can take anywhere from one to several days, depending on your bank’s policies.

Lending Club Rates and Fees

Lending Club interest rates vary between 6.46% and 27.27%, depending on the loan grade. Loans are graded from A to E, with A being the best grade with the lowest rate. There are no application, brokerage, or prepayment fees.

There is an origination fee you pay for each personal loan. The fee ranges between 1 and 6% of the loan amount. How much you pay depends on your credit rating and what information you provide in your application.

Keep in mind the APR includes the origination fee. The fee is also deducted from the loan when it’s issued, so the funds received when you get the loan are less than the total amount of the approved loan. Make sure to factor this when requesting the loan amount.

If you’re late on your loan payments, you may be charged a collection fee of up to 40% on all amounts collected on a delinquent loan in cases involving litigation. The charge is up to 30% for cases not involving litigation on all payments collected on a delinquent loan.

You can go on the website and check your rate before applying for a loan. According to Lending Club, checking your rate won’t affect your credit score. Applying for a Lending Club loan generates a soft inquiry, which is only visible to you. If your score needs to improve, you can check out Experian Boost to see how it can help.

Improving Your Chances of Qualifying for a Personal Loan

Once you’ve decided that you want to apply for a personal loan, you should work to improve your chances of qualifying.

There are two big things to focus on when it comes to getting approved: your credit score and your debt-to-income ratio.

Your credit score is a numeric score determined using a formula that takes five factors into account:

FICO Credit Score Factors and Their Percentages

FICO credit score factors Percentage weight on credit score: What it means:
Payment history 35% Your track record when it comes to making (at least) the minimum payment by the due date.
Amounts owed 30% How much of your borrowing potential is actually being used. Determined by dividing total debt by total credit limits.
Length of credit history 15% The average age of your active credit lines. Longer histories tend to show responsibility with credit.
Credit mix 10% The different types of active credit lines that you handle (e.g., mortgage, credit cards, students loans, etc.)
New credit 10% The new lines of credit that you’ve requested. New credit applications tend to hurt you score temporarily. Learn more about FICO credit score

In the short term, you can improve your credit score by lowering credit utilization ratio. You can do this by avoiding using your credit cards or paying down any balance you’re carrying.

Another way to improve your credit score is to remove derogatory marks from your credit report.

These marks, such as a missed payment or account in collections can really hurt your score.

Try contacting the lender that placed the mark on your credit report. Many will be willing to negotiate a pay-for-delete agreement. Under such an agreement, you pay the balance of the loan and the lender removes the mark.

Related to credit utilization is your debt-to-income ratio. The higher this ratio, the less likely it is that you’ll be able to make payments on a new loan.

That’s because all of your current income will be going towards paying your current loans. You can reduce this ratio by increasing your income or paying down your other loans.

What are the pros and cons of borrowing from Lending Club?

Like any agency, Lending Club has pros and cons for its customers. Here are some that you should consider before making an application:

Advantages

  • You have long repayment terms, ranging from three to five years.
  • They don’t have a hard credit inquiry to verify rates, so it doesn’t hurt your credit score.
  • They require a low credit score with a minimum acceptance of 600 points.

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